Media Economics |
Sahil Avi Kapoor; 20140121
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Introduction The rapid growth in the Indian Media and Entertainment economy has the world talkin talking. g. Boasti Boasting ng of the world’ world’s s younge youngest st popul populati ation on,, beside besides s being being home home to a massive demographic footprint of more than .! Billion, India is the haven for new technolo technologies gies,, consumer consumer media media and e"pansion e"pansion in communica communication. tion. #omplimen #omplimenting ting these these number numbers s is the growin growing g propen propensit sity y to spend spend among among the popula populatio tion n that that doesn doesn’t ’t shy away away from from pouri pouring ng in the the moolah moolah for enter entertai tainme nment nt consu consumpt mption ion.. Enamored by this promise of e"ponential growth and demand, global media houses have already locked India into their growth and investment cycles for the near future. The growing middle class has ensured that foreign investment in the media industry is consistent as well sustainable.
As is around the world, the Indian media today is facing a brand new inection point, an opportunity to adapt and expand as well as a challenge to stay relevant – the growth and growth of igital Media! "oing only by the humungous scale of the Indian mobile phone user base – more than #$% million – and that too further in&ected with the mass adoption of '" and (", the potential in digital content creation, pac)aging and distribution in the country is massive! *hus, avoiding or ignoring the new face of multi+platform multi+platform media networ)s is only bound to be suicidal for any any big or small small media provide providerr! And this is exact exactly ly wher where e the the more more than than subst substant antial ial amount amount of positi positive ve networ networ) ) exter external nality ity )ic)s )ic)s in to suppl supplem ement ent this this transition! ith increasing number of people consuming news, entertainment as well well as educa educatio tional nal media media throug through h digita digitall and mobil mobile e platfo platform rms, s, the value value to advertis advertisers ers and subse-uen subse-uently tly media houses houses to move move towards towards more robust robust and responsive, digital mass media is growing at an exponential pace! *hus, to say the least the transcend of digital content and platforms has radically rede.ned the desirable business models and has spurred and thrown the Indian M/E players into a loo)out loo)out for global global partners partners,, be it for technology technology upgradation upgradation,, )nowledg )nowledge e and content sharing or foreign investments! 0oo)ing at the )ey drivers for the growth in the sector, we cannot ignore the large pool of opportunities available for media businesses stemming from the low media penetration in the country at the moment! An Ernst / 1oung report published in 2%3% shows an 334 increase in household income in the *op 2% largest cities of the nation in the 2%%( – 2%%5 period! *his growth is unprecedented shall certainly drive advertising spends in India, that are currently substantially low when pitted against the world average – India6s advertising spend to "7 ratio stands at %!'(4 as compared to a world average of %!#$4 82%339! :usiness strategies are also bound to change with the ever increasing internet penetration in India! As is the case with media penetration, internet penetration in India is also extremely low – #4 compared to '(4 in ;hina and '34 in :ra
penetration will be supplemented by networ)s such as wireless broadband, smart devices as well as digital content that will spi)e with increase in networ) externality externality of higher bandwidth! hat shall be vital to incorporate into media business strategies would be the revenue potential from *ier 2 and *ier ' Indian cities that account for #'4 of the media consumption in urban areas! It will be these regional mar)ets that shall allow media media houses houses to piggy piggy bac) bac) on them them towar towards ds grow growth th e-uip e-uipped ped with with regio regional nal language *=, print and advertising! Apart from regional content, niche content holds anothe anotherr )e )ey y for media media matur maturati ation on in India! India! *he ever ever modif modifyi ying ng lifest lifestyle yles s and growi growing ng incom incomes es hold hold large large incen incentiv tives es for advert advertis isers ers to target target the wealth wealthy y residen residents ts in urban urban areas! areas! >ence, >ence, home shopping, shopping, travel, travel, lifestyle, lifestyle, crime shows, shows, coo)ing shows as well as intellectual reality reality shows are the ones that shall gain most revenue from this segment of consumers! Another driver that cannot be ignored is the digiti
has given broadcasters another revenue stream! e also see a large growth in the number of new channels owing to the increasing fragmentation of audiences and virtually nonexistent barriers to new new entr entran ants ts!! Mor Moreove eover, r, to coun counte terr band bandwi widt dth h cons constr trai aint nts s we are are seei seeing ng broad broadca caste sters rs formi forming ng allian alliances ces and pooli pooling ng in reso resour urces ces in a shift shift from from earlie earlierr busin business ess practi practices ces!! As afore aforemen mentio tioned ned,, the incre increase ase in niche niche and regi regiona onall *= content is another driver to television growth! Movin Moving g onto onto publis publishin hing, g, we observ observe e a large large scale scale divers diversi. i.cat cation ion of newsp newspape aperr houses into multi+platform domains such as news channels, education, events, as well as radio and @@>! As is with *=, the growth in regional language content has also also seen seen wide wide spect spectrum rum growt growth! h! ewspa ewspaper per compan companies ies have have also also mass massive ively ly streamlined their processes to decrease cost and improve pro.tability! Maga
broadcasting rights has further boosted the .lm revenues! *his has further been supplemented by the large scale funding and investments in the .lm industry from global media houses, as well as the rise in outsourcing of movie production by Indian .lmma)ers to improve content and reduce setup and talent costs!
;onclusion The growing middle class, high incomes and increasing consumption of content holds unprecedented potential for media businesses. $doption of digital thus, o%ers both both challe challeng nges es to adapt adapt as well well as opport opportuni unitie ties s for those those who who are ready ready to embrace the change. Thus, the only way to succeed for Indian as well as global media players in India would be to understand and adapt to this dynamic but wonde wonderfu rfull ecosys ecosystem tem that that is India. India. There There’s ’s fraud, fraud, corru corrupt ption ion,, incons inconsist istenc encies ies,, politics as well as unpredictability unpredictability that surrounds surrounds the industry today, today, but the fruit that lies e"posed to the ones that are convinced and determined to grow their businesses here, is sweeter than any other part of the world today.
