Entertainment Industry in India

Entertainment Industry in India
Entertainment Industry in India has registered an explosive growth in last two decades making it
one of the fastest emerging industries in India. Television itself witnessed its transformation from
a single government owned channels to a medium telecasting more than 300 national and
regional channels. At present Indian film industry or Bollywood is a perfect combination of
entertainment and commercial sector, producing close to thousand movies in a year in various
Indian languages. Indian film industry supersedes Hollywood in terms of movie production
quantity by more than three times.
As per the recent report by PricewaterhouseCooopers (PwC), Indians are likely to spend more on
entertainment in the coming years with a steady growth in their disposable income. And as per
the combined survey report by KMPG and FICCI, the entertainment industry in India is expected to
expand by 12.5% every year and is likely to reach US$ 20.09 billion by the year 2013.
Key sectors of Indian Entertainment Industry


Music, radio, digital media are some of the other fastest growing sectors in the Indian
entertainment industry.

Indian film Industry

Indian film industry over the past few years has been receptive towards foreign investments. This
has paved way for many international production firms to make their debut in Bollywood along
with opening their offices in the country. As per FICCI-KPMG report, Indian film industry is worth
US$ 2.11 billion and is likely to witness a 9.1% growth till 2013.

World's largest film industry in terms of production volume is undergoing a massive international
presence with Reliance ADA Group signing a production pact with DreamWorks Studios,
endorsed by Steven Speilberg, a well known Hollywood director, to produce movies with the
preliminary investment of US$ 825 million.

Following the lines, Yash Raj Films has signed joint partnerships with Walt Disney, to produce
animated films. Other such east meets west stories include, Sippys' film projects being sponsored
by Warner Group, Sanjay Leela Bansali Films' collaboration with Sony Pictures Entertainment and
TV 18's association with Viacom to form Viacom – 18.

Adlabs has emerged as the only movie chain in India providing 3D and 6D formats and PVR is all
set to infuse around US$ 52.2 million to grow its film production and bowling trade in India.

Indian Television Industry

With the introduction of digital distribution platforms like direct-to-home (DTH) and Mobile TV,
Indian television industry has undergone a revolutionary change. As per KPMG and FICCI reports,
the Indian television industry is worth US$ 4.63 billion and is estimated to grow by 14.5 per cent
during 2009-13. Moreover, by 2013 the television advertising industry is likely to own a share of
41% in the Indian advertising sector, which indicates a steady increase of 2% from the current
share of 39%.

The DTH industry is likely to touch US$ 620.25 million in 2009-10 as compared to US$ 310.16
million in 2008-09. The growth will be triggered by the increase in the marketing budget of DTH
companies like Bharti Airtel DTH, Big TV and Sun Direct by 20-25% in 2010.

Doordarshan, the government owned national television broadcaster of India is expected to
become fully digitalized by 2017 and TV channels like MTV, Cartoon Network, Disney, Star Plus
and Pogo are all set to grow their service market to cover India's promising licensing and stock
market.

India Music Industry

The latest products in Indian music industry which have increased the industry's revenue
generation are the non-physical formats like electronic downloads and ringtones. Currently the
Indian music industry worth US$ 149 million and is estimated to touch US$ 164.56 million by 2012.

The sales of digital music are likely to contribute 88% in the total music sector's profits in India in
2009. This trend is likely to continue in the year 2008, with digital music accounting for 16% of the
total music sales and slowly reaching 60% in 2013.

India Radio Industry

Radio is the medium of masses reaching out to 99% of Indian population. Over the years it has
seen vibrant changes and will see some more in the near future.

In the year 2008-09, the government cashed in US$ 11.05 million from private owned radio
channels. As per PwC report radio sector is estimated to expand at a CAGR of 19% during 2009-13
from the current US$ 170.87 million.

In context of radio industry's share in advertising, the radio advertising industry is expected to
witness an increase a 5.2% growth during 2009-13 from the present 3.8%.

Indian Animation Industry

India is fast emerging as an ideal hub for graphics industries such as graphic designing and
animation. With the emergence of hi-tech games incorporating 3D effects, companies like Intel
and Advanced Micro Devices (AMD) are revising their marketing strategies in India to expand their
operations in computing sector. By 2013, the Indian animation industry is likely to grow from the
present US$ 362 million to US$ 811.2 million, as per the combined FICCI-KPMG report.

Digital firms like Reliance MediaWorks have signed joint venture with In-Three for transformation
of 2D movies and videos into 3D and Tata Teleservices has launched India's first mobile television
- Photon TV with high accessibility broadband services through which users can avail channels
on laptops as well as desktops.
Government Reform policies for Indian Entertainment Industry


The Government has introduced some reform policies to trigger the growth of entertainment
industry in India. They are:
Allowing 100% FDI on advertising and film industry through regular channels
Authorizing 49% foreign stake in DTH and cable TV
Allowing establishment of uplinking destinations to private TV broadcasters for satellite uplinking
from India
Certifying the repute of an industry to the movie sector
It has given its consent on the guidelines for Headend-in-the-Sky (HITS) operators, an equipment
that will offer electronic cable content to Indian viewers
Permitting Foreign Direct Investment (FDI) in FM radio industry with a 20% restriction
Paving way for FM Radio functioning to the private sector
Including development projects of film industry in its five-year plans and allocating US$ 50.13
million to it.
Hospitality Industry in India
The Indian hospitality industry has emerged as one of the key industries driving growth of the
services sector in India. It has evolved into an industry that is sensitive to the needs and desires
of people. The fortunes of the hospitality industry have always been linked to the prospects of the
tourism industry and tourism is the foremost demand driver of the industry. The Indian hospitality
industry has recorded healthy growth fuelled by robust inflow of foreign tourists as well as
increased tourist movement within the country and it has become one of the leading players in the
global industry. Foreign tourist arrivals (FTAs) into the country increased steadily from 2002 to
2008. FTAs dipped in 2009, due to the global economic slowdown; however, the impact on the
Indian industry was much lower than that on the global counterparts. FTAs are expected to
increase in 2010. On the other hand, domestic tourist movement within the country was the
highest in 2009.
Growth drivers
The fortunes of the hospitality industry are closely linked to the tourism industry and hence
tourism is one of the most important growth drivers. In addition, all factors that aid growth in the
tourism industry also apply to the hospitality industry. The Indian hospitality industry has
recorded healthy growth in recent years owing to a number of factors:
Increased tourist movement
Increased FTAs and tourist movement within the country has aided growth in the hospitality
industry. Healthy corporate profits and higher disposable incomes with easier access to finance
have driven the rise in leisure and business tourism, thus having a positive impact on the
hospitality industry.
Economic growth
India is one of the fastest growing economies in the world. It recorded healthy growth in the past
few years, at more than 9% each during FY06-FY08. Despite the global economic slowdown, the
Indian economy clocked growth of 6.7% and 7.4% in FY09 and FY10 respectively. Attractiveness
of India has encouraged foreign players to set up their operational facilities in the country.
Domestic industries have also made heavy investments to expand their facilities through
greenfield and brownfield projects.
Changing consumer dynamics and ease of finance
The country has experienced a change in consumption patterns. The middle class population with
higher disposable incomes has caused the shift in spending pattern, with discretionary purchases
forming a substantial part of total consumer spending. Increased affordability and affinity for
leisure travel are driving tourism in India and in turn aiding growth of the hospitality industry.
Emergence of credit culture and easier availability of personal loans have also driven growth in
the travel and tourism and hospitality industries in the country.
Measures undertaken by the government
Various policy measures undertaken by the Ministry of Tourism and tax incentives have also
aided growth of the hospitality industry; some of them include:
Allowance of 100% FDI in the hotel industry (including construction of hotels, resorts, and
recreational facilities) through the automatic route
Introduction of ‗Medical Visa‘ for tourists coming into the country for medical treatment
Issuance of visa-on-arrival for tourists from select countries, which include Japan, New Zealand,
and Finland
Promotion of rural tourism by the Ministry of Tourism in collaboration with the United Nations
Development Programme
Elimination of customs duty for import of raw materials, equipment, liquor etc
Capital subsidy programme for budget hotels
Exemption of Fringe Benefit Tax on crèches, employee sports, and guest house facilities
Five-year income tax holidays for 2-4 star hotels established in specified districts having
UNESCO-declared 'World Heritage Sites'.
Trends in the industry
The hospitality industry recorded healthy growth in early-2000, leading to a rise in occupancy rate
during 2005/06 and 2006/07. Consequently, average rates for hotel rooms also increased in
2006/07. The rise in average rates was also a result of the demand-supply gap for hotel rooms,
especially in major metros. Hotels were charging higher rates, at times much higher than that
those charged by their counterparts in other parts of the world.
Lured by higher returns experienced by the hotel industry, a number of players, domestic as well
as international, entered the space. India became one of the most attractive destinations for such
investments.
While on the one hand, investments continued to flow into the hotel industry, hit by sharp rise in
rates, corporates started looking for alternate cost-effective lodging options. This led to
emergence of corporate guest houses, especially in major metros, and leased apartments as
replacements for hotels. While average room rates rose in 2007/08, occupancy rates dropped.
Occupancy rates plunged sharply next year, as demand declined following the global economic
slowdown and the terror attacks in Mumbai. As a result, hotel rates declined during 2009-10.
The hospitality industry reported improvement in 2009-10, with domestic tourist movement in the
country being at a high. While average rates remained lower, occupancy rates rose, supported by
surge in domestic tourist movement. The industry is expected to report healthy growth in 2010/11,
with expected increase in domestic tourist movement and rise in international tourist arrivals.
Development of other markets
A major trend in recent times is the development of the hotel industry in cities other than major
metros. As real estate prices have been soaring, setting up and maintaining businesses and
hotels in major metros is becoming more expensive, leading to search for other cities entailing
lesser costs. Consequently, hotel markets have emerged in cities such as Hyderabad, Pune, and
Jaipur. This has led to increase in hotel development activity and expansion of hotel brands
within the country.
The industry has also seen development of micro markets, especially in primary cities. As cities
grow larger and more office spaces come up across the city, travelers prefer to stay at hotels
closer to the place of work/visit to save on time. This has led to the same hotel company setting
up hotels across different location within a city.
Marketing strategies
Marketing strategies in the hospitality industry have changed drastically over the past decade. A
decade back, the brand name of the hotel was a major driver. However, with the arrival of well
educated and experienced travelers, hotel companies have had to change/realign their marketing
strategies. Today, hotel companies marketing strategies are differentiation, consistency,
customer satisfaction, delivery of brand promises, and customer retention. Development and use
of technology have also changed the way hotel companies operate, creating the need for online
marketing. Travelers increasingly conduct basic research on the Internet. Blogs, networking sites,
and travel sites are therefore being used for making choices and the information provided tends
to influence opinions and choices. Several travel portals have emerged in recent times and
travelers are increasingly using these portals to make hotel reservations.

Healthcare growth in India
The healthcare sector in India will grow to $158.2 billion in 2017 from $78.6 billion in 2012, a
report has said. "The healthcare sector is growing at a 15% CAGR and jumped from $45 billion in
2008 to $78.6 billion in 2012 and expected to touch $158.2 billion by 2017," Equentis Capital said
in its report.

India being a country with growing population, country's per capita healthcare expenditure has
increased at a CAGR of 10.3% from $43.1 in 2008 to $57.9 in 2011 and going forward this figure is
expected to rise to $88.7 by 2015.
The factors behind the growth is rising incomes, easier access to high-quality healthcare facilities
and greater awareness of personal health and hygiene, the report said.
The country's healthcare system is developing rapidly and it continues to expand its coverage,
services and spending in both the public as well as private sectors, it said.
The private sector has emerged as a vibrant force in India's healthcare industry, lending it both
national and international repute. Private sector's share in healthcare delivery is expected to
increase from 66% in 2005 to 81% by 2015. Private sector's share in hospitals and hospital beds is
estimated at 74% and 40%, respectively.
There is substantial demand for high-quality and speciality healthcare services in tier-II and tier-III
cities. To encourage the private sector to establish hospitals in these cities, government has
relaxed the taxes on these hospitals for the first 5 years.
Many healthcare players such as Fortis and Manipal Group are entering management contracts to
provide an additional revenue stream to hospitals.
Over the years, health insurance is gaining momentum in India; gross healthcare insurance
premium is expanding at a CAGR of 39% over FY06-10. This trend is likely to continue, benefitting
the country's healthcare industry
Strong mobile technology infrastructure and launch of 4G is expected to drive mobile health
initiatives in the country. Mobile health industry in India is expected to reach $0.6 billion by 2017,
the report said.
To standardise the quality of service delivery, control cost and enhance patient engagement,
healthcare providers are focussing on the technological aspect of healthcare delivery.
Digital health knowledge resources, electronic medical record, mobile healthcare, hospital
information system are some of the technologies gaining acceptance in the sector. Going forward,
the healthcare sector's spending on IT products and services is expected to rise from $53 billion
in 2012 to $57 billion in 2013.
Telemedicine is also a fast emerging sector in India. In 2012, the telemedicine market in India was
valued at $7.5 million, and is expected to rise at a CAGR of 20% to $18.7 million by 2017. With
increased private participation, the healthcare sector has also witnessed rise in FDI inflows. As
per law, 100% FDI is permitted for all health-related services under the automatic route.
Demand growth, cost advantages and policy support were instrumental in attracting FDI inflows
into the healthcare sector. During April 2000-March 2013, FDI inflows for drugs and
pharmaceuticals stood at $10.3 billion, while inflows into hospitals and diagnostic centres, and
medical appliances stood at $1.6 billion and $0.6 billion, respectively.
India's primary competitive advantage over its peers lies in its large pool of well-trained medical
professionals in the country. Also India's cost advantage compared to peers in Asia and Western
countries is significant — cost of surgery in India is one-tenth of that in the US or Western
Europe.
India's competitive advantage also lies in increased success rate of Indian companies in getting
Abbreviated New Drug Application ( ANDA) approvals. India also offers vast opportunities in R&D
as well as medical tourism, the report said.
Telecommunication;
he Indian Telecom sector has proved to be an international success story. The sector has
witnessed a commendable growth over the past two years. With an overall subscriber base of
914.60 million and a teledensity of 76.03%, the sector continues to grow from strength to
strength. With the urban teledensity reaching 166.54%, the market has been showing signs of
maturity. Rural India is the key target market likely to drive the next round of growth, particularly
for voice based services. It is envisaged that ruralteledensity of 40% would be reached by end of
2014. 3G and BWA are expected to reinvigorate the maturing urban markets and help in bringing
balanced growth of economy. The aggressive growth observed by mobile services is yet to be
replicated in case of broadband service, where the subscriber base currently stands at more than
12 million. The Government has a vision to provide telephone connection and broadband facilities
on demand across the country at an affordable price and it strives to achieve the same.

The growth of telecom sector since 2007:

Subscribers
Subscribers' base ( in million)
March'07 March'08 March'09 March'10 March'11 October'11
Wireline 40.77 39.41 37.96 36.96 34.73 33.19
Wireless 165.09 261.08 391.76 584.32 811.60 881.41
Total Phones 205.87 300.49 429.73 621.28 846.33 914.60
Internet 9.21 11.05 13.65 16.10 19.69 -
Broadband 2.29 3.81 6.22 8.77 11.79 12.84
*



The 11
th
plan (2007-2012) had envisaged provision of 600 million connections. The number of
telephone connections both wireline and wireless put together stands at 914.60 million on
31.10.2011. This registers an addition of 869.83 million connections by October 2011 against a
target of 600 million connections by end of the 12
th
Plan i.e. March 2012. Wireless subscribers
increased to 881.41 million by October 2011, exhibiting a Compound Annual Growth Rate (CAGR)
of 43.93% . During the first seven months of the current year 2011-12, the wireless connections
grew by 8.60%. The number of Internet subscribers grew by 22.30%, while the broadband
subscribers grew at 34.43% during the year 2010-11.

Change in composition of sector:

Public vs. Private: The liberalization efforts of the Government are evident in the growing share
of the private sector. The private sector is now playing an important role in the expansion of
telecom sector which is evident from the following table:




Number of Telephones ( in million)

Year
PSUs' Network Private Network
Total
%age
Share
of PSUs'
Wireline Wireless Total Wireline Wireless Total
2007 37.46 33.93 71.39 3.31 131.16 134.48 205.87 34.68%
Number of Telephones ( in million)

Year
PSUs' Network Private Network
Total
%age
Share
of PSUs'
Wireline Wireless Total Wireline Wireless Total
Data services/
Wireless
internet#
31.3 65.5 117.82 177.87 381.40 -
# accessing internet through wireless networks as per quarterly reports of TRAI
*up to September 2011 .
2008 35.23 44.32 79.55 4.19 216.76 220.94 300.49 26.47%
2009 32.92 56.63 89.55 5.04 335.13 340.18 429.73 20.84%
2010 31.33 74.54 105.87 5.63 509.78 515.38 621.28 17.04%
2011 28.69 97.31 126.00 6.04 714.29 720.33 846.33 14.89%
October'11 26.99 101.82 128.81 6.20 779.59 785.79 914.60 14.08%

The share of private sector in the number of telephones has increased from 65.32% (134.48
million telephones) at the end of March, 2007 to 85.92% (786 million telephones) at the end
of October, 2011.


Wireless vs. Wireline:

The preference for use of wireless phones has also been predominant in the sector. This is
confirmed from the rising share of wireless phones, which increased from 80.19% (165.09 million)
at the end of March, 2007 to 96.37% (881.41 million) at the end of October, 2011.



Trend in Teledensity:

Teledensity in the country is steadily increasing from 18.22% as on 31.3.07 to 70.89% as on
31.03.11 and currently stands at 76.03% as on 31.10.11. However, there is a wide gap between
urban teledensity (166.54%) and rural teledensity(36.81%).

Rural Telephony:

97.09% of the villages in India have been covered by the Village Public Telephones (VPTs).
Apart from the 308.87 million connections provided in the rural areas, 576350 VPTs have been
provided till 31.10.2011.

Policy Reforms and New Initiatives

For a dynamic sector, reforms are necessitated by dynamics of changes including
technological innovations. The telecom sector in India has been witnessing a continuous process
of reforms since 1991. During the recent years, various policy initiatives have been carried out to
give boost to the sector. Major policy initiatives and milestones achieved in Telecom Sector
include:

A Mobile Number Portability (MNP):

MNP was launched by the Prime Minister on January 20, 2011. The MNP service allows
subscribers to retain their existing mobile telephone number even when they switch from one
access service provider to another irrespective of mobile technology or from one technology to
another technology of the same or any other access service provider within the same service
area.

Implementation of MNP has not only given wider choices to the Indian subscribers but has
also induced service providers to offer innovative, affordable and competitive traffic plans for the
benefit of the masses. As on November 30, 2011, 19 million mobile customers have successfully
ported their mobile numbers to the service providers‘ of their choice.

B Telecom Commercial Communications Customer Preference Regulations 2010:

Telecom Commercial Communications Customer Preference Regulations (TCCCPR) 2010
came into force on September 27, 2011. TCCCPR 2010 gives options to customers to exercise
their preference, separate number for telemarketers starting with 140, easy registration of the
telemarketers, sharing of database, blacklisting provisions, filtering of calls and SMS by service
providers, effective complaint redressal system and financial disincentive on access providers.

In order to curb unsolicited commercial communication, which were a major cause of
disturbance and inconvenience for telecom users, TRAI notified ―Telecom Unsolicited
Commercial Communication Regulations‖ in 2007, putting in place a framework for controlling
unsolicited commercial communications. This regulation was further improved through two
amendments in 2008. As a result of this regulation, the number of unsolicited calls decreased but
the number of unsolicited SMS increased. The Indian telecom customer demanded more from
TRAI, which led to enforcement of TCCCPR 2010.

C Foreign Direct Investment (FDI):

Foreign Direct Investment (FDI) is one of the important sources to meet the requirement of
huge funds for rapid network expansion. The FDI policy provides an investor-friendly environment
for the growth of the telecom sector. Telecom has emerged asthe third major sector attracting FDI
inflows after services and computer software sector. At present, 74% to 100% FDI is permitted for
various telecom services. This investment has helped telecom sector to grow. The growth of FDI
in Telecom Sector since 2007 is as under:

Foreign Direct Investment(in million US$)
2006-07 2007-08 2008-09 2009-10 2011-12 2011-12
(upto Sept.
2011)
FDI 478 1261 2558 2554 1665 1901