FICCI- Deloitte report - ‘Media & Entertainment in South India - the Digital March’

The Digital March
Media & Entertainment
in South India

India
Media & Entertainment Business Conclave – Bengaluru
For private circulation only
October 2013
www.deloitte.com/in

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Contents

Message from FICCI 4
Message from Deloitte Touche Tohmatsu India Pvt Ltd

5

Executive summary 6
Film 10
Television 19
Print 31
Radio 39
New Media 46
Analytics in Media companies

51

Accounting challenges 54
Overview of Domestic Tax

56

Indirect Tax implications 60
Transfer pricing issues 62
M&A in Media – Key opportunities and challenges

65

About Deloitte 68
About Deloitte’s Media Practice

69

Acknowledgements 70
Contacts 71

The Digital March Media & Entertainment in South India 3

Message from FICCI

Mr. A. Didar Singh
Secretary General
FICCI

Dr. Kamal Haasan
Chairman
FICCI Media & Entertainment Business Conclave - South

As we present to you the 2013 edition of our South
India Media and Entertainment (M&E) industry, FICCI
would like to thank Deloitte Touche Tohmatsu India
Private Limited, our knowledge partner, for their
continued support through the years and their efforts
towards developing this year’s report.

to embrace technology across the value chain with
increasing number of filmmakers as well as exhibitors
going the digital way. The TV industry is also adopting
high-definition technology while enabling multi-screen
viewership of content so as to cater to its consumers.
Print and Radio are not far behind in their quest to
entertain consumers through the digital medium.

The South India M&E industry continues to grow and
innovate, owing to the demands of its consumers.
All media platforms viz. films, TV, print and radio
are pushing content on the digital medium so as to
enhance reach. The Government’s digitization mandate
for the TV industry and the upcoming Phase III of radio
frequency auctions will aid further penetration of the
media along with an enhanced consumer experience.
The film industry in South India accounts for over 50%
of total films certified in India. The industry continues

4

Going forward, quality of content placed on the digital
medium as well as the players’ ability to monetize it can
prove to be a major revenue earner for the industry.
FICCI acknowledges the valuable inputs provided by all
industry players and those who have graciously devoted
time to share their views in helping Deloitte put this
report together.

Message from Deloitte
Touche Tohmatsu India
Pvt Ltd (DTTIPL)
The Indian Media & Entertainment industry is rapidly
evolving to reflect the sheer diversity of India. South
Indian media industry remains the “poster boy” of
the thriving regional Media & Entertainment industry,
with people in South India demonstrating a penchant
for local content. Marketers are paying heed to the
rising disposable incomes and purchasing power in
South India. National brands have realized the need
to localize campaigns, leverage regional stars as brand
ambassadors and use local media to effectively reach
target consumers in the South. Our objective through
this report is to present a picture of the vibrant Media
& Entertainment industry in South India encompassing
Films, Television, Print, Radio and New Media segments.
The Media & Entertainment industry in South India was
estimated at INR 23,900 Crore in FY 2013. The industry
is poised to grow at a CAGR of 16% till FY 2017, driven
by demands of its ever-discerning consumers and
endeavors by media vehicles to expand their presence.
While enabling regional media players to reach their
target audience, the industry continues to attract
national players to explore this growing South market.
The market is dominated by Television (~56%), followed
by Print (~ 28%) and Films (~11%). Sectors such as New
Media and Radio, though smaller than other mediums,
are expected to grow at rates higher than the industry
average, given their increasing power of engagement.
Films rule the hearts and minds of the people in South
India. The region churns out more films than Bollywood.
South Indian films are also getting bigger by the day,
both in terms of gross revenues and budgets. Film
stars are idolized by the masses, with superstars like
Rajnikant enjoying a cult fan-following not just in
South India but in pockets all over the world. Players
in South India continue to be pioneers of technology
usage in film-making, surpassing even mainstream
Bollywood films. The trend of remaking popular South
Indian blockbusters continues as producers realize the
entertainment value of these films, which transcend

regional boundaries. Furthermore, an increasing number
of Tamil and Telugu films are being dubbed for satellite
broadcasting on national channels.
The TV industry in South, as at the national level, is
undergoing a metamorphosis with digitization underway
in various cities. It is changing the way consumers view
television, with broadcasters also seeing an opportunity
in creating and showcasing digital content.
South continues to be the stronghold of print industry
especially due to the reach and engagement abilities of
vernacular papers. The regional print industry, having
recognized the importance of digital medium and its
ability to connect with the youth along with rest of the
population, continues to invest in offering customized
news/videos through online portals and mobile
applications.
The Radio industry continues to focus on localized
content and differentiated programming in South India.
With Phase III of radio frequency auctions expected in
FY 2014, players are gearing up to further their reach
and strengthen engagement with the consumers.
The success of New Media not only depends on
accessibility and devices, but also on the development of
a viable online eco-system. South Indian media industry
holds great potential in leveraging the availability of
quality vernacular content to create this eco-system. As
the penetration of internet expands beyond key cities in
the region, it will be interesting to see how the players
in other media take advantage of the New Media
platform.
We would like to take this opportunity to thank all
the industry players for actively participating in this
endeavor. We would also like to thank FICCI for
partnering with Deloitte to present this report at MEBC
2013 in Bengaluru.


Executive summary

The South Indian Media and Entertainment (M&E)
industry is growing in size, driven by the popularity of
vernacular content among the region’s populace.
While the popularity of film stars remains the most
powerful trigger for films, digitization in the television
sector is providing consumers access to a higher number
of TV channels, a better viewing experience, and other
value added services. Print, both in its English and
vernacular forms, is widening its portfolio and markets
to capitalize on the readership base in South India.
As listeners become more selective, the radio industry
in the South is tuning its programming towards local
preferences, thus becoming a more integral part of life
in South India. In fact, listeners in South India spend
more time on radio as compared to those in other parts
of the country.
With a rich M&E industry driven by strong local
demand, South India is poised to attain a greater
position of strength in the coming years. Converting
this potential into reality depends on the industry’s
ability to continue to develop quality content as well as
to deliver it through best-in-class platforms, both within
India and abroad.
Overview of the South Indian market
In FY 2013, the overall South India M&E industry was
pegged at INR 23,900 Crore. Owing to the evolving
ecosystem and demand, the market is expected to
grow at a CAGR of 16% to reach INR 43,600 Crore by
FY 2017.

Television constitutes the largest segment of the South
Indian M&E industry and is currently estimated at INR
13,470 Crore accounting for the largest share of the
overall market at 56%. The medium is expected to
grow at a CAGR of 20% over the next four years due to
benefits of digitization being realized. Print is the second
largest segment accounting for 28% of the overall
market in FY 2013 at INR 6,680 Crore. With players
identifying innovative ways to reach out to their readers,
Print industry is also expected to see steady growth
going forward. Film, buoyed by an ardent fan following
in the South, is the third largest segment at INR 2,680
Crore. Radio, with the upcoming Phase III auction and
New Media, propelled by the consumer’s demand to
access content ‘anytime, anywhere’, are expected to
grow at a CAGR of 19% and 23% respectively, over the
next four years.
Figure 1.1: Overall South India Media and
entertainment market 2013-17; E - Estimated
(INR Crore)

R–

CAG

16%

43,600
23,900

2013*

2017E

* 2013 is an estimate of the current size
Source: Industry discussions and Deloitte analysis

Table 1.1: South India Media and Entertainment market 2013-2017 – Media wise; E: Estimated (INR Crore)
2013*

2014E

2015E

2016E

2017E

CAGR
(2013–2017)

Film

2,680

3,010

3,370

3,780

4,220

12%

Television

13,470

16,540

20,180

24,090

27,960

20%

Print

6,680

6,950

7,540

8,260

9,020

8%

Radio

420

460

560

690

830

19%

New Media

690

850

1,050

1,290

1,600

23%

Total

23,900

27,800

32,700

38,100

43,600

16%

Source: Industry discussions and Deloitte analysis. The market size numbers have been rounded off, which might lead to some rounding
off error

6

Tamil Nadu and Andhra Pradesh constitute 70% of
the South Indian M&E industry. The M&E industry in
Tamil Nadu is expected to grow at a slightly higher rate

than the other states of the region, with all four media
platforms expected to grow faster in the state.

Figure 1.2: South India Media and Entertainment
market 2013 – Media wise split

Figure 1.3: South India Media and Entertainment
market 2013 – State wise split

2%

3%

14%
28%
36%
19%

56%

11%

Television

31%

Film

Print

Radio

New Media


Tamil Nadu

Andhra Pradesh

Karnataka

Kerala

Note: New Media has not been included in the state level market
size calculations
Source: Industry discussion and Deloitte analysis

Table 1.2: South India Media and Entertainment market 2013-2017 – State wise split; E: Estimated
(INR Crore)
2013*

2014E

2015E

2016E

2017E

CAGR
(2013–2017)

Tamil Nadu

8,420

9,970

11,800

13,810

15,850

17%

Andhra
Pradesh

7,140

8,210

9,620

11,180

12,740

16%

Karnataka

4,340

4,980

5,850

6,780

7,710

15%

Kerala

3,350

3,800

4,380

5,050

5,730

14%

Total

23,300

27,000

31,700

36,800

42,000

16%

Note: New Media has not been included in the state level market size calculations
Source: Industry discussion and Deloitte analysis


Key emerging trends
Film
The South Indian film industry with 831 films,
accounted for over 50% of total films certified across
India1. The number of films certified increased by 36%
over 2011, primarily driven by a spike in Cable &
Satellite (C&S) rights’ prices. However, the number of
films released increased by only 8%2 during the same
period as some producers chose not to release their
films due to the high marketing costs associated, and as
a result of a correction in the C&S rights’ prices in some
of the markets.
With over 90% of exhibitors using digital projection,
filmmakers are more inclined to shoot their films
digitally3. The industry continues to embrace
technology in other parts of the ecosystem as well, be
it experimenting with scouting talent through social
media, adopting newer film making technologies in
terms of sound and filming, distributing films digitally
or embracing e-ticketing platforms. Furthermore, with
the onset of digital prints, increase in C&S and remake
rights’ revenue, the producers are getting opportunities
to recoup their costs in a shorter duration.
Television
The Television industry in South India is on a
transformation path, driven by the Government’s
digitization mandate. It is one of the most flourishing
regional media segment in terms of availability of
content, reach and distribution. Over the years, it has
seen increased action from regional as well as national
advertisers. In fact, regional advertisers now contribute
almost 40% of the TV industry’s advertisement revenues
in states such as Tamil Nadu and Kerala4.
The industry is also leveraging technology to enable
multi-screen viewership of television content for
viewers who are constantly on the move. Producers and
broadcasters are looking to shoot as well as telecast
content in high definition (HD) formats. Going forward,
developing innovative programming content, identifying
niche genres and expanding markets through new
content delivery platforms, is expected to drive the
South India TV industry.

Print
South India, driven by a high literacy rate and a sizable
vernacular readership base (30% of total readership
in India) is one of the strongholds of the Indian print
industry. Amongst the four regional states, Tamil
Nadu and Andhra Pradesh account for ~58% of the
total revenue. Most of the markets in the region are
dominated by English print in terms of revenue except
Kerala, where vernacular prints accounts for nearly 90%
of the revenue. However, the advertising revenue from
vernacular print in the region is estimated to grow at
twice the pace of that of English, largely driven by local
advertisers and increasing focus of national advertiser’s
beyond Tier 1 cities. Hence, some of the English
players are now launching vernacular dailies to not
only consolidate their presence in South India but also
partake in vernacular growth.
The industry is testing various business models to
identify the right monetization opportunities in online
space by developing mobile applications and mobile
optimized websites. However, the future depends on
how well the industry deals with the weak economic
environment as well as the key issues of sustaining
subscription revenues, monetizing online content and
giving advertisers innovative ways to reach out to
the readers.
1
2
3
4

8

Film Federation of India
Industry discussions

Radio
The radio industry enjoys greater acceptance in the
South than in the rest of the country and thus stands out
amongst its peers. This is indicated by relatively higher
average radio listenership in cities like Bengaluru where
people spend about 20 hours / week on radio while
those in Delhi and Mumbai spend 13-14 hours / week5.
The cultural diversity of cities in the South has fueled
demand for localized content on radio. This has led to
innovations in the type of content as well as the way
in which content is being offered, so as to attract and
retain audiences in a marketplace which is increasingly
becoming crowded. Increasing presence of radio on
the digital medium is also enabling it to reach listeners
across the globe.
With Phase III auction expected in FY 2014, the
industry’s horizon will continue to expand. 229 of the
839 frequencies being auctioned are in 83 cities of the
four Southern states. Phase III is expected to result in
294 frequencies (existing plus planned) in South
India alone6.

New Media
The internet continues to have a profound effect on
consumers’ viewing habits and the proliferation of
devices is altering their media consumption behavior.
With the increasing popularity of mobile broadband
(3G) and the impending launch of 4G LTE services,
mobile phones are expected to emerge as the preferred
platform for consuming content. India already has over
65 Million smartphone users currently7.
Utilization of existing bank of vernacular content,
development of vernacular apps and improvement in
connectivity infrastructure would define the growth
trajectory of New media in South. The shift of users to
web and mobile platforms for media consumption is
expected to have a direct impact on growth of digital
advertising as well. This is expected to grow at a CAGR
of about 23% over the next four years.
It would be exciting to see how players across M&E
sectors experiment and innovate to effectively utilize
and monetize new media platforms.

5 Industry discussions
6 Policy document on ‘Policy
guidelines on expansion
of FM radio broadcasting
services through private
agencies (Phase-III)’
7 Report on internet trends,
KPCB, May 2013

Film

South India’s large and active film industry caters
not only to the masses but also to niche segments.
While big budget films continue to account for a large
chunk of revenues (~40%)8, smaller budget films with
innovative subjects have been gaining popularity as well.
The Hindi film industry has taken cognizance of the high
entertainment value of South Indian films and has been
remaking several successful Tamil and Telugu films.
Further, increasing popularity of the digital medium
has enabled producers to reach out to the overseas
diaspora. Smaller budget films that are often unable
to find theatres abroad are exploring web-enabled
platforms to have a day-and-date release across the
globe. However, the industry continues to face its share
of challenges in digital piracy, rising marketing costs,
shortage of quality theatres as well as skilled labor.
Market size and overview
Total revenues of the South Indian film industry were
estimated at INR 2,680 Crore in FY 2013 (12% over FY
2012). The market is expected to grow at a CAGR of

~12% to reach INR 4,220 Crore by FY 2017, driven by
a fervent fan base and growing revenue opportunities
from satellite broadcasters and new media platforms.
In 2013, Tamil and Telugu films together accounted for
almost 90% of the revenue, with the rest being equally
contributed by Kerala and Karnataka.
While it is difficult to pick a genre of content that
succeeds year-on-year at the box office, FY 2013 has
seen reasonable success in comedy films, big star
cast family entertainers and large budget action films.
Just like Hindi films, South Indian films are witnessing
a shorter theatrical window and rely on the initial
weekend collections. While wholesome entertainers
such as ‘Bulbul’ (Tamil) continue their dependable streak,
smaller budget offbeat films such as ‘Attakathi’ (Tamil),
‘Pizza’ (Tamil) and 'Soodhu Kavvum' (Tamil) have also
found a sizable audience.

Figure 2.1: Film Market Revenues in South India; E – Estimated (INR Crore)
CAGR
(2013 – 2017)
4,220

3,370
260
200

3,010
2,680
190
150

220
170

300

350

18%

250

12%

1,750

3,780

12%

11%

1,870

12%

220

1,580
1,420
1,280

1,150

1,190

1,340

1,490

FY2013*

FY2014E

FY2015E

* 2013 is an estimate of the current size Karnataka
Tamil Nadu
Andhra Pradesh

1,680

FY2016E

FY2017E

Kerala

8 Industry discussions and
Deloitte analysis
10

Number of films certified
The South Indian film industry with 831 films, accounted
for over 50% of total films certified across India. The
number of films certified increased by 36% over 2011,
primarily driven by a spike in C&S rights prices. However,
the number of films released increased by only 8%
during the same period, as some producers chose not
to release their films due to the high marketing costs
associated, and as a result of a correction in the C&S
rights’ prices in some of the markets.
Increasing prominence of C&S rights
Over FY 2013, Malayalam and Kannada markets have
seen an increase in the value of C&S rights due to the
demand from regional broadcasters. As per industry
sources, with 4-5 regional GECs in each of these
markets, smaller budget films increasingly rely on
C&S revenues for breaking even. However, since the
beginning of the current year, the broadcasters have
reportedly become more selective in acquiring rights.
Industry players believe that this could be due to the
use of low-quality digital cameras by small budget films
resulting in poor visual appeal on TV and rationalization
of rights’ budget by broadcasters.
Increase in production, marketing and
exhibition costs
As per industry sources, non-cast related production
costs, comprising technician’s salaries, location rentals,
travel expenses etc. have risen by almost 50% over
the past year. Although post-production expenses
have remained relatively stable, marketing costs and
theatrical rentals have also seen a surge.
New technology in filmmaking
Taking a cue from global trends, South Indian
filmmakers continue to adopt digital solutions to reduce
costs, enhance quality, condense production time
and streamline the overall production process. Film
audiences in South India have traditionally been open
to diverse genres, thereby encouraging filmmakers to
explore themes that require advanced visual effects,
such as action or adventure based films. Furthermore,
the popularity of historical and mythological films in the
past has aided South Indian filmmakers in becoming
adept at using latest technologies.

Table 2.1: Number of films certified in South India
Category

2008

2009

2010

2011

2012

Tamil

175

190

202

185

262

Telugu

286

218

181

192

256

Kannada

162

177

143

138

128

Malayalam

88

94

105

95

185

South India

711

679

631

610

831

Source: Film Federation of India

The South Indian film industry has
certainly been at the forefront of cinema
technology adoption having been first
with digital cinema sound, non-linear
editing and digital projection. The
South has also wholeheartedly embraced
digital cameras for film shoots in
the last few years. Together, these
innovations have truly democratized
film making resulting in a significant
growth in the number of small films,
many of which have gone on to record
runs! Consumers everywhere notice
good product and technology helps
achieve good quality at a lower price.
Senthil Kumar
Co-founder,
Real Image Media Technologies


While talent for visual effects and digital colorization in
South India matches global standards, skillsets in the
special effects domain are still developing. Increased
appetite for action films is inspiring producers to hire
younger filmmakers with a formal education in postproduction. Exhibitors and filmmakers expect similar
enhancements in audio, with AURO 3 and Dolby Atmos
being more widely used over the next 2-3 years.

The following table provides a snapshot of the impact
that digitization has (or could have) on the various
stages of the film making process in terms of time, cost
and quality9.

Figure 2.11: Impact of Digitisation on Film production, distribution and exhibition stages
Pre
Production
Proportion of
production costs

0.25 - 0.5%
Production

Production

Post-Production

80-85%

~5-7%

Marketing
~5-7%

Distribution
-

Exhibition
-

Qualitative*
degree of
Digitisation
Typical time

Conventional Film
process

Digital Process

Impact of
Digitisation on
Timelines

Cost impact of
digitization

Quality/ Creativity
considerations

1 - 6 months

3 - 8 months

2 - 3 months

1 - 3 months

1 - 2 months

1 - 3 months

• Paper based
scripting
• Film based
location selection,
screen tests and
costumes

• Production
using film based
cameras
• Recording content
in film prints

• The negative must
be processed
and scanned to
digital for digital
intermediate (DI)
• Sound sync with
picture during
post production

• Trailers are made
in films and
distributed

• Physical
distribution of
films

• Exhibition using
conventional film
based projectors

• Scripting and
storyboarding
software
• Digital capture,
storage and
transfer of
screen tests and
costumes

• Capture is done
using digital
cameras
• Recording and
storage in digital
memory

• Footage can go
directly into the
DI pipeline
• Sound in sync
with picture
during post
production

• Trailers are
distributed in
digital prints
• Promotion on
digital platforms
(i.e. YouTube,
Facebook etc)

• Digital
distribution over
the satellite
links or physical
delivery of disks

• Exhibition using
digital 1K and 2K
based projectors

• Reduction in
time for films
with exhaustive
location searches

• Immediate access
to final frame

• Reduction in
workflow in
Sound and DI

• Digital
distribution
of trailers
over different
medium

• Large number
of releases
simultaneously
reduces piracy

• Allows producers
a wider release
possibility

• Reduces cost of
prints in screen
tests

• Reduction in raw
stock, running
expenses ,crew
size leads to ~5 %
savings

• ~50% of
consumables
cost in postproduction comes
down

• Savings of about
Rs.10-15 lakhs
of trailer print
for 500 prints

• Digital print is
only about 1/5th
of the cost of
film print

• Single screen
theatres must be
viable to recover
cost of projector

• Increase in choice
and improved
creativity in
costume designs

• Accuracy in
bringing concept
to screen

• Makes non-linear
editing simpler
and boosts
creativity
• The process is
green

• None

• No major loss in
quality from film
print

• Hollywood films
are best viewed in
d-cinema which
is expensive than
e-cinema

*Maximum adoption of digitisation

*Minimum adoption of digitisation

12

Filming in digital formats and 3D: a leap to the
next level
As per industry sources, about 70-80% of South Indian
films use digital cameras10. The larger budget Telugu
and Tamil films are adopting advanced digital cameras,
motion control systems and high quality sound and
visual effects to match standards set forth by their
Hollywood counterparts. Such attempts, although
few in number, are raising industry standards. As per
industry sources, the Kannada and Malayalam markets
have limited number of trained cinematographers with
knowledge of digital cameras11.
Sound effects: Slow adoption of surround
sound innovations
With the onset of 3D visuals in films, some filmmakers
are looking to adopt 3D sound technology as well. For
instance, Kamal Hassan’s ‘Vishwaroopam' is the first
Indian film and second film in the world to adopt the
Auro 3D format12. However, filmmakers have been slow
in adopting this technology due to the presence of only
1-2 studios across South India which offer mixing in
Atmos 7.1 surround sound or AURO 3D13. Exhibitors
are also less motivated to adopt these technologies
due to high upgrading costs of about INR 25-40 lakhs14
associated with it.

South India is dominated by three main digital
distribution companies, namely Qube systems, UFO
Moviez and Prasad PXD. As per industry sources, Qube
holds about 65% of the screens in Tamil Nadu while
UFO and PXD hold the remaining 25% and
10% respectively16.
Way forward
As the South Indian film industry continues to adopt
digital cameras, advanced surround sound technology
and digital prints, there seems to be a need for
exhibitors to keep-up with the changing technology,
in order to enable an enhanced viewing experience for
consumers. However in the scenario where content
plays a very important role in attracting audiences,
it remains to be seen whether exhibitors would be
motivated enough to invest in upgrades and recoup
their costs through increased footfalls and/ or by raising
ticket prices or will this need go unmet.

Despite adopting the latest technology, many South
Indian films do not match global sound quality
standards. This is primarily due to the lack of skilled
audiographers in the region.
Digital prints and digital exhibition gains ground
Single screens account for 90-95% of the theatres
in South India of which almost 90% have upgraded
to digital projection. However, some exhibitors in
smaller towns of Kerala and Karnataka still use low
quality digital projectors which lead to a poor viewing
experience15.
The increase in digital theatres has also encouraged
filmmakers to shoot their films on digital cameras. While
Tamil, Telugu and Malayalam have been quick to adopt
digital filming technology, the Kannada industry lags
behind primarily due to lack of skilled professionals with
knowledge about filming in the digital format. However,
the onset of digital prints has led to a narrower release
window for smaller producers because the big-budget
films book almost all the theatres during festive months
and long weekends.

12 Kamal Haasan’s
‘Vishwaroopam’ is the first
film to use Auro 3D in India,
ibnlive.in.com, September
2012
14 SPI Cinemas to install
Dolby’s new Atmos
tech across 37 screens,
thehindubusinessline.com,
June 2013

As film makers continue to enhance
their presence on YouTube and
Facebook to engage the youth audience,
some of the players in South India
have taken initiatives to monetize
content through the ad supported as
well as subscription based platforms.
As connectivity in India improves,
producers should see a larger portion of
revenues from these digital platforms.
The greatest advantage of new media
is the ability to cater to the widespread
South Indian diaspora across the globe.
Suresh Babu
Director,
Suresh Productions Private Limited

Use of digital media for funding, marketing and
distribution
Social media aiding crowd funding
Social media platforms like Facebook, with over 82
Million monthly users in India17, allow producers to
showcase snapshots of their films to a sizable populace.
In addition, filmmakers are using the platform to drive
engaged users to their blogs to seek investments.
Crowd-funding has the potential to drive the production
of more independent films; however it is unlikely to
account for a significant share of the industry.
Some directors who attempted, or are attempting
crowd-funding in South India18
• Pavan Kumar, a Kannada film director created a
Facebook page and ran a blog on crowdsourcing.org
to fund his film titled 'Lucia'. The director was able to
raise INR 51 lakhs in 10 days from over 100 investors.
According to the director, his film’s unconventional
script dissuaded him from approaching regular film
financiers.
• Karthik Ravi, a Tamil film director, also sourced INR
1.7 lakhs from about 20 people through a crowdfunding website Indigogo.com.
14

• V G Baburaj, a Malayalam film director is looking
to raise INR 1.2 Crore through social media for his
under-production film 'Chedam'. Academy Award
winning sound designer, Resul Pookutty is also part of
this project.
Drivers for using crowd-funding in South Indian films:
• Fragmented financers/producers: The regional film
industry is fragmented thus making it difficult for new
filmmakers to get funding.
• Difficulty for non-star cast films: Popular South Indian
film actors are often reluctant to experiment beyond
conventional film themes making it more difficult for
film-makers with niche subjects and a relatively less
popular star cast, to approach financiers.
• Ability to reach the global South Indian diaspora:
Crowd-funding platforms, such as Kickstarter, can
be accessed globally and hence allow film makers
to approach the South Indian communities
staying abroad.

Film marketing on ad-supported platforms and
social media
The success of 'Kolaveri-di' on digital media has led
South Indian film-makers to lay greater emphasis
on digital advertising and social media promotion.
Promotion on digital platforms particularly helps in
reaching the next-generation audience. Digital film
aggregators have created online channels on YouTube
and Dailymotion which showcase their library of
content. These channels have transformed into some
of the most subscribed YouTube channels across the
country, serving as prime areas to advertise
upcoming films.
• You Tube channels like ‘Telugu Film Nagar’ and
‘Telugu One’ are amongst the most subscribed
channels across India19. These channels showcase full
length films, songs, promos and trailers.
In addition to digital advertising, social media promotion
has gained enormous traction among filmmakers and
celebrities. Today, celebrities have their own Facebook
and Twitter accounts which are often managed by
professional agencies. These platforms are used to keep
fans engaged. Furthermore, the high engagement levels
on these platforms make them effective tools for
film promotion.
• Blockbuster Telugu film,'Seethamma Vaakitlo Sirimalle
Chettu' used contests on its Facebook page to keep
audiences engaged20.

17 FB releases regional data of
users: India has 82 Million
users, radioandmusic.com,
August 2013
18 Crowd-funding show gains
pace with Kannada movie
Lucia, over 100 people
invest through Facebook
& blog, Biswarup Gooptu,
Sangeetha Kandavel,
economictimes.indiatimes.
com, April 2013
19 Youtube top 100 most
subscribed India channels
list, vidstatsx.com, 2013
20 SVSC uses social media
for promotion, AW Phani,
andhrawishesh.com,
January 2013

• Tamil film, 'Vishwaroopam' posted updates about
the film and the experiences of crew members on its
Facebook page. The page also ran contests and
gave fans an opportunity to win exclusive
Vishwaroopam prizes21.
While marketing on digital and traditional platforms is
critical to engage younger audiences, industry sources
state that word of mouth publicity will continue to be
an important factor that makes a film succeed.
New-media models for film distribution
Film aggregators have seen the proportion of overseas
views shift from 90% a couple of years ago, to around
60% today. With the existing 3G and impending 4G
rollout, the portion of revenues driven by domestic
viewers is expected to increase further22.
In addition to web based platforms, film aggregators are
also developing mobile applications to enhance content
consumption. These mobile applications essentially
provide a bouquet of YouTube channels and are often
embedded in smartphones and tablets. According to
aggregators, about 50% of the online consumption
originates from mobile devices.
An innovation in digital distribution
The difficulty in releasing smaller budget films, led
Kannada film director Pavan Kumar to develop his own
web based, pay-per-view platform - hometalkies.com.
The platform allows overseas consumers to view some
of the latest Kannada films including his crowd-funded
film 'Lucia'. The portal also serves as a marketing and
distribution tool by providing viewers with a share of
the revenue earned from links that they post. Viewers
buying a film are given a link to the film, which they can
share and earn a portion of the revenue generated by
any purchase made through it. Mr. Kumar has been able
to gather more than 800 distributors across the world
through this innovation23.
An initiative to curb online piracy
Piracy is threatening both home video and digital
revenues. To combat online piracy, the Anti-Video Piracy
Cell (AVPC) of the Andhra Pradesh Film Chamber of
Commerce (APFCC) has designed a free web application
that helps users report cases of piracy to the AVPC
instantly. The app is compatible with all smartphones
and enables the APFCC to discover the source of piracy
(either online or CD). The informants are rewarded for

sharing valuable information about the pirates. However,
it is too early to see the impact of this initiative24 25.
e-Ticketing platforms
In order to make purchasing of tickets more convenient,
exhibitors in South India offer online ticketing. Some
state governments are taking initiatives to expedite this
trend:
• On November 2012, the Kerala government decided
to introduce e-ticketing in cinema houses across the
state26.
• The Andhra Pradesh Film Chamber of Commerce
(APFCC) has partnered with theatre owners and
producers to set up an online ticketing portal for
about 1,500 single-screen theatres (representing
~50% of total screens27) across the state28.
Online ticketing company BookMyShow has also
extended its footprint in South India with its acquisition
of Chennai-based Ticketgreen. The move has given
BookMyShow access to partnerships with over 100
cinemas in southern states. BookMyShow is expected to
further expand its footprint in South India29.

"Digital distribution platforms and
billions of connected digital devices
are not only enabling film makers to
reach global audience, but are also
creating unique content monetization
opportunities for the media industry
beyond their traditional distribution
platforms. Industry associations, film
makers and service providers need to
embrace digital distribution platforms
to monetize on consumer’s evolving
media consumption patterns.”
Ravi Velhal
Global Content Policy and
Standards Strategist,
Intel Corporation

21 Vishwaroopam creates buzz
on social media, Prasant
Naidu, lighthouseinsights.in,
January 2013
23 Lucia | By the people, Pavitra
Jayaraman, livemint.com,
August 2013
24 A new app to curb online
piracy, Karthik Pasupulate,
timesofindia.indiatimes.com,
March 2012
25 Anti-piracy mobile app
launched, timesofindia.
indiatimes.com, April 2013
26 Kerala to introduce
e-ticketing in movie
halls, PTI, firstpost.com,
November 2012
27 Film Federation of India,
Industry Discussions,
Deloitte Analysis
28 A portal to kill the black
ticket, deccanchronicle.com,
May 2012
29 Bigtree Entertainment
acquires Ticketgreen.com,
Peerzada Abrar, Radhika
P Nair, economictimes.
indiatimes.com, March
2013, Bookmyshow
readies for Southern sortie,
Bharani Vaitheeswaran,
September 2013


Regional media on digital platforms
Driven by an increase in mobile and internet penetration
across India, OTT players, production houses and
content aggregators are aggressively pursuing new
digital distribution models. In addition to ensuring that
their content can be viewed on mobile phones and PCs,
these players realize the importance of regional content
and thus have been forming alliances to license and
acquire content.

• Production Houses
- Eros: Eros uses Ayangaran Studio’s Tamil film library
on its internet subscription platform ‘Eros Now’32.
• Content aggregators
- Hungama: Hungama.com launched a digital store,
Hungama Movies, in partnership with Intel Insider
which offers viewers Hindi and regional content
in various languages such as Bengali, Malayalam,
Gujarati, Marathi, Telugu and Tamil33.

Some examples include:
• OTT players
- BigFlix: BigFlix has partnered with Unisys
Infosolutions, a VAS and enterprise messaging
solutions provider, to offer over 200 full-length
feature films in various regional languages
including Tamil, Telugu, Kannada and Malayalam30.
- Spuul: Film streaming service Spuul.com has
strengthened its Tamil film library with the
acquisition of over 50 Tamil classic titles from
Rajshri Media31.

Way forward
The film ecosystem is showing an inclination towards
new media platforms to not only market, distribute
and monetize their content but also to source funding
for it. However, it remains to be seen how these trends
develop over time as the new media infrastructure
becomes more widespread.

30 BigFlix partners Unisys
Infosolutions for content,
Saptarishi Dutta,
medianama.com, March
2012
31 Spuul.com bolsters its Tamil
film library with Rajshri
deal, indiantelevision.com,
February 2013
32 Eros Now launches
Tamil movie section,
indiantelevision.com,
January 2013
33 Hungama launches movie
offering in the Middle East,
exchange4media.com,
October 2012
16

Regional content on national media
Introduction
Over the past three years, the Hindi film industry has
witnessed numerous successful remakes of South
Indian films such as Ghajini, Pokiri and Singham, to
name a few. Today, South Indian films match, and
are often considered to be ahead of Hindi films in
terms of production value, story-telling and the use of
technology. These improvements in the overall quality of
South Indian cinema have brought about an increase in
interest to showcase dubbed versions of regional films
on national broadcasting channels.
Broadcasters: An attempt to reduce costs while
maintaining ratings
The escalating costs of acquiring C&S rights of Hindi
films have led national broadcasters to look for
alternative sources of content. South Indian films,
especially those in Telugu and Tamil, have a high dose
of action and drama coupled with good production
values. This makes the content appealing to masses
across the country.
On an average, a Hindi film that has a production cost
of about INR 10-15 Crore expects about INR 3-5 Crore
for its C&S rights. In contrast, Hindi dubbed versions of
South Indian films are available to the broadcasters for
INR 1-2 Crore34.
Appeal of the South Indian film content along with
availability at relatively lower price, has led to an
increase in interest among national broadcasters over
the past 4-5 years. While the first six months of 2010
saw 25 telecasts of dubbed films on GECs, the number
rose to 117 during the same period in 201235. This has
also led to an increase in the cost of dubbing rights of
about 15-20% over 201136.
Remakes: The trend continues
South Indian films have been a source of inspiration
for mainstream cinema in Hindi for a long time. The
entertainment value of the content is not limited to
regional audiences. A successful film in South is likely to
be a source for making successful content, for producers
in other parts of India. Last few years have witnessed,
leading Bollywood stars like Aamir Khan, Akshay Kumar,
Salman Khan, Ajay Devgan enacting lead roles in Hindi

remakes, which has further augmented the trend. This
demand for remakes has opened another source of
revenue for the producers in the South. Some of the
popular remakes that have released in 2013 or are
currently under production include37:
Film

Hindi Remake

Stalin (Telugu)

Mental

Thuppakki (Tamil)

Untitled film starring Akshay Kumar & Sonakshi Sinha

Ramanna (Tamil)

Untitled film starring Akshay Kumar

Nuvvostanante
Nenoddantana (Telugu)

Ramaiya Vastavaiya

Saamy (Tamil)

Policegiri

Thiruttu Payale (Tamil)

Shortcut Romeo

Kick (Telugu)

Kick

Pizza (Tamil)

Bijoy Nambiar's untitled film

Kandireega (Telugu)

David Dhawan's untitled film

Tamizh Padam (Tamil)

Filmy Picture

Films across South India have
tremendous entertainment value which
makes them particularly appealing to
the audience not only in the South but
across India. Therefore we are seeing
an increase in demand from national
broadcasters for dubbing rights and
Hindi film producers for remake rights.
K Vijayakumar
Executive Producer,
Ayngaran International Films
(Pvt) Ltd.
34 Hindi channels dub to
dip in the southern flavor,
Meenakshi Verma Ambwani,
July 2013
36 Top 10 upcoming South
remakes in Bollywood:
Salman Khan’s ‘Mental’,
‘Kick’, Prabhu Deva’s
‘Ramaiya Vastavaiya’ and
More, Sangeetha Seshagiri,
ibtimes.co.in, April 2013
37 Media reports and industry
discussions

Human capital challenges in the Film industry
Workforce priorities in the film industry
Given the large number of films produced across South
India, South Indian cities like Chennai, Hyderabad,
Bengaluru and Thiruvananthapuram are hotbeds of
skilled and unskilled workforce. However, the industry
faces challenges in certain skills/roles; some of which are
stated below38 39:
• The quality of candidates and their technical skills,
among those who are recruited from media schools,
are often not up to the mark. Often they possess
theoretical/ conceptual knowledge but lack practical
training and an understanding of how to apply these
concepts to their work.
• Technicians are not trained well enough to use the
latest equipment. Also, due to budget constraints,
the quality of equipment being used by the industry
is usually not as per international standards. This
further reduces the quantum and quality of output
per person.
• Project Management: There is a need for thorough
planning and efficient execution of the entire
film-making process in order to eliminate wasteful
expenditure and keep a tight control on costs
and timelines.
• Need for skilled talent in subtitling: South Indian films
can be made palatable for non-Indian viewers by
using cosmopolitan themes and English subtitles.
• Need for talented workforce in Marketing:
− Create an international distribution network
for South Indian films which is well-organized
and robust.
− Create an awareness about the South Indian
Film Industry on the international platform.
− Identify and explore non-theatrical revenue
streams.
− Market films, especially for medium and small
budget films.
Potential solutions40
• Expansion of talent pool: The industry can consider
setting up more film institutes or collaborating with
existing ones, to expand the pool of acting and

18

technical talent. This would also reduce the overall
talent cost for the industry, in the longer term.
• Performance-based remuneration for key talent:
According to sources, a significant portion of
the remuneration for key talent, such as the
screenwriters and directors, can be linked to the
actual performance of the film at the box office. This
would reduce the fixed cost burden on the film and
incentivize good performance of these professionals.
Producers currently implement such measures for
major stars/actors.
Conclusion
The rich content and sheer entertainment value of films
continues to draw audiences in theatres in South India.
Filmmakers have been adopting technology across the
value chain for various reasons including cost reduction,
time saving and quality improvements. Going forward,
the South film industry is expected to further leverage
digital media for film marketing and distribution.
The large consumer base and ever growing demand
for regional films along with technology maturity
is expected to attract more interest from national
filmmakers and broadcasters. As the industry continues
to grow, it may see the evolution of certain trends
stated below.
• Partnerships with national broadcasters, producers
and aggregators to reach more South Indian film
lovers across the globe.
• An increase in the adoption of crowd funding and
crowd distribution to allow niche films to flourish.
• A push to use technology to enhance the audio and
video quality of the films; not just by the producers
but also by the exhibitors.
• More multiplexes to bring in an untapped segment
of consumers willing to pay premiums for a better
viewing experience.

38 Single screen theatres hold
their ground, Manish Raj,
timesofindia.indiatimes.com,
July 2012, Film industry in
India: New horizons, Ernst &
Young, 2012
39 South Indian film industry
up against high costs,
slack marketing, inability
to maximize revenues,
indiainteracts.in,
November 2009
indiainteracts.in, November
2009

Television

Overview
The South Indian television (TV) industry is continuously
evolving and innovating in response to its environment,
be it the Government’s digitization drive, the impending
ad-cap regulation or the demands of its viewers. It
is attracting national advertisers, while helping local
players to reach their target audience. Broadcasters are
creating in-house non-fiction formats to counter the
increasing production costs across the industry. They are
also investing in niche content to cater to specific needs
of the viewers. Players are investing in high definition
(HD) technology as well as digital content viewing
platforms, in order to meet the demands of today’s
discerning consumers. While industry participants agree
that on-demand ‘anytime anywhere’ content is a key
growth area, and even as the ecosystem to deliver such
content is rapidly developing, effective monetization of
such content remains a challenge. HD may present a
more immediate revenue enhancement opportunity.

In the last few years, South regional
channels have taken a major leap in
quality and nature of programming.
From offering international format
shows to creating innovative fiction
stories, all efforts are being made to pull
in new audiences to sample the regional
space. Content that is more vibrant,
contemporary and fresh is being offered
to lure the youth.
Anup Chandrasekharan
Business Head,
Asianet and Suvarna

The South Indian TV industry was valued at INR 13,470
Crore in FY 2013. Against the backdrop of sluggish
economic growth, the industry grew at a lower-thanexpected rate of 11% during FY 2013 (14% in FY
2012). The South Indian TV industry is estimated to
grow at a CAGR of about 20% over the next 4 years,
driven by subscription revenue growth; as consumers
shift from analog to digital TV, and ARPU levels rise
correspondingly.
Figure 3.1: Overall market size of TV industry in South India; E: Estimated (INR Crore)
CAGR
(2013 – 2017)

880

20%
14%

6,780

14%

20,310

23%

27,970

24,090
770
20,180
680

13,470
520

16,540
590

5,990

5,250

4,600

4,000
17,320
8,950
FY2013*

11,330

FY2014E

14,240

FY2015E

FY2016E

FY2017E

* 2013 is an estimate of the current size Content
Subscription
Advertisement

Figure 3.2: Share of various constituents of South TV industry in FY 2013* and FY 2017E
South TV Industry – FY 2013*

South TV Industry – FY 2017E

4%

3%
24%

30%

66%

Subscription

Advertisement

73%

Content

Subscription

Advertisement

Content

* 2013 is an estimate of the current size, E: Estimated
Source: Industry data and estimates, industry discussions, Deloitte analysis

Subscription revenues currently represent 66% of the
total industry, and advertisement revenues represent
about 30%. With digitization of cable and the resulting
shift from analog to digital ARPU levels, the share of
subscription revenues in overall industry revenue is
expected to rise to 73% in FY 2017.

Subscription
Market size
TV subscription market in the South was valued at INR
8,960 Crore in FY 2013, and is expected to grow at a
CAGR of about 23% to reach INR 20,310 Crore in 2017.
Subscription revenues grew at a rate of 11% during FY
2013 driven by a rise in the subscriber base, as well as an
increase in ARPU levels, partly owing to digitization.

Digitization is also expected to bring about a shift in
the way subscription revenues are shared across the
value chain, bringing in transparency and increasing
the revenue share of MSOs and broadcasters. Thus, the
dependence of broadcasters on advertising revenues is
expected to reduce. This would be particularly useful
with the 12-minute ad cap per clock hour regulation
that may get implemented in the coming months.

Tamil Nadu and Andhra Pradesh represent around 70%
of the total South TV subscription market. Although
Andhra Pradesh is the most populous state in South
India, Tamil Nadu contributes the largest portion of
subscription revenues owing to the high C&S penetration
of about 90% in the state. This is much higher than
Andhra Pradesh’s C&S penetration of about 70%.

Figure 3.3: TV subscription market in South India; E: Estimated (INR Crore)

CAGR (2013 –2017)
20,310

1,790
14,250
1,480
11,340
1,190

8,960
960
1,830

22%

4,010

22%

6,510

17,320

23%

2,100

22%

3,430

2,840
5,580

2,280
4,610
3,700

2,970

25%

3,200

4,170

FY 2013*
Tamil Nadu

Karnataka

Kerala

6,520

7,690

FY 2015E

FY 2014E
Andhra Pradesh

20

5,320

FY 2016E

FY 2017E

Table 3.1: % share of states in South India’s population vs subscription revenues
State

% Share of South Indian
population

% Share South Indian
subscription revenues

Tamil Nadu

29%

36%

Andhra Pradesh

34%

33%

Karnataka

24%

20%

Kerala

13%

11%

South India

100%

100%



Digitization
India’s large analog cable market is in the process of
getting digitized in four Phases, driven by a government
mandate. While Phase 1 (four metro cities) have largely
been digitized (except for Chennai), Phase 2 cities (38
cities with >1 Million population) are in focus currently.
Cable TV digitization level has reportedly touched 90%
across 38 cities41. 5 out of these 38 cities are in South
India. Months after the Union Government’s deadline
for Phase II (March 31st 2013) has passed, cities of
Bengaluru and Hyderabad in South India are said to
have achieved 100%42 digitization, while others are in
various stages of completion. The city of Mysore had
achieved 80%43 digitization by the end of May 2013,
while Coimbatore and Vishakhapatnam appear to be
lagging, with only 30%44 digitization achieved by the
end of March and April 2013 respectively. Even as DTH
operators and MSOs continue to convert subscribers, as
well as gradually increase ARPU levels, the industry faces
challenges in achieving the deadlines set for digitization.
A key issue being faced by players is the shortage of Set
Top Boxes (STBs). Most cable operators were not well
prepared and did not seem to have created the required
inventory of STBs for Phase II. As many cable operators
are importing STBs, depreciation of the Indian Rupee
has resulted in an increase in prices, almost by INR
~15045 per STB. The price increase has reportedly been
passed on to consumers. However, passing on such
price increases may be more challenging in Phase 3 and
Phase 4 towns.
The challenge of “digitized, but not addressable”
also persists. Addressability and the ability to deploy
packages will become possible as MSOs obtain filled
in Customer Acquisition Forms (CAFs) and are able to
capture end-consumer information in their systems.
Obtaining CAFs has been a longer drawn process than
seeding STBs, thereby causing delays in addressability.
Addressability and package deployment is key to raising
ARPU levels.
Impact of digitization
Consumers
Digitization has led to an enhanced TV viewing
experience for consumers. They can watch a greater
variety of channels in digital quality and have the option

22

of choosing and paying only for their favorite channels.
It has also led to niche channels being launched by
broadcasters in order to woo their consumers.
Distributors
Due to strong regulatory push for digitization,
distributors are experiencing increasing traction with
viewers for conversion to digital TV. MSOs are seeing
assured monetary benefits with the help of revenue
sharing agreements being entered into with LCOs.
For example, Siti Cable Network Limited has signed a
DAS interconnect agreement with 55% of its LCOs,
working on a revenue-sharing basis of the carriage
fee46. The cable TV distribution space in India is getting
increasingly structured with monitoring mechanisms
like KYC, CAF being put in place, as well as with
consolidation into fewer and more efficient players.
With increased transparency due to digitization, the
revenue share is shifting from smaller cable operators to
MSOs and broadcasters. Small cable operators appear
to be selling their consumer connections to the big
networks as a result of decreasing profits47.
Broadcasters
Broadcasters stand to gain an increased share of
subscription revenues with all subscribers being
accounted for. Digitization has also led to a reduction
in the carriage fee to be paid by broadcasters to
distributors. Regional as well as national broadcasters
have seen a decline of about 30-40% in carriage fee
post digitization (in digitized areas).
Way forward
The third Phase of digitization, including all urban areas
not covered in Phase 1 or 2 is to be implemented by
30th September 2014, while the last Phase covering
rest of India is to be implemented by 31st December
2014. Digitization of cable will bring in several benefits
to the ecosystem, as described earlier, and successful
execution of digitization is key for the industry. At the
same time, addressability needs to go hand-in-hand
with digitization (i.e. seeding of STBs).
MSOs are currently focusing on Phases 1 and 2 of
digitization. As digitization moves into Phase 3 and 4,
where subscriber density is typically low (weakening the
business case for the setup of a head-end and other

41 I&B Minister Manish
Tewari’s Update on
Phase II Digitization data,
cablequest.org, April 2013
42 Bangalore’s cable TV
network is fully digitized,
claims Government,
thehindu.com, May 2013,
Baffling 194 percent
cable digitization in
city!, Rahul V Pisharody,
newindianexpress.com, May
2013
43 Bangalore’s cable TV
network is fully digitized,
claims Government,
thehindu.com, May 2013
44 TV Digitisation: Consumers
can utilize transition
period of 10 to 15, PTI,
ibnlive.in.com, April 2013,
Baffling 194 percent
cable digitization in
city!, Rahul V Pisharody,
newindianexpress.com,
May 2013
45 TV Distribution: Green
Signals!, IDFC Securities,
June 2013
46 SitiCable inks rev-share
agreements with cable
operators for digitization,
Vikas SN, medianama.com,
October 2012
47 The Big Digital Dividend,
Gurbir Singh, Business
World, August 2013

infrastructure for an MSO), other models for delivering
cable may emerge, such as Head-end In The Sky (HITS).
A HITS model would allow local cable operators to
directly downlink content from a satellite, rather than
source content through fibre, thus bypassing the need
for a head-end on the ground. Various models of
digitization are thus available, and the ingredients
seem to be in place to convert India into a fully digital
C&S country.

With the country on the path to
digitization, the time is right for
deployment of HITS. HITS will help
India in going digital, by providing
a medium for local cable operators to
digitize, while continuing to own the
end-subscriber, grow their business and
monetize the same.

Advertisement
Market size
TV advertising market in South India was valued at
INR 4,000 Crore during FY 2013, a growth of about
11% over FY 2012. Over 60% of TV ad revenues were
garnered from the States of Tamil Nadu and Andhra
Pradesh, with the rest being equally contributed by
Karnataka and Kerala. Even though the South market
is said to have grown at a rate higher than the national
average in FY 2013, it is lesser than the growth rate
attained during FY 2012 (15%). Reasons for this muted
growth vary by State. For example, there were power
cuts in Tamil Nadu which is estimated to have decreased
TV consumption in the State.
Going forward, TV ad revenues are estimated to grow
at a CAGR of 14% to reach INR 6,780 Crore in 2017.
Growth is expected to be driven by both volume (new
channel launches) and inflation in ad rates, against the
backdrop of the 12 minute ad cap per clock hour being
implemented.

Tony D’ Silva
President,
Hinduja Ventures Ltd.

Figure 3.4: TV advertisement market in South India; E: Estimated (INR Crore)
CAGR
(2013 – 2017)
6,780
5,990
5,250
4,600
4,000
730
710
1,030

840

950

1,330

1,200

14%

1,160

13%

1,700

13%

15%

1,040

920

810
1,170

1,070

14%

1,510

1,780

2,050

2,370

2,720

1,530
FY 2013*

FY 2014E

FY 2015E

FY 2016E

FY 2017E

Tamil an estimate of the Pradeshsize Karnataka
Andhra current
Kerala
* 2013 isNadu
Note:
1. Estimates above are estimates for the channels in the home state language. For e.g. Tamil for Tamil Nadu
2. Karnataka is to a large extent, a multi-lingual state, with a strong presence of Hindi, Konkani / Marathi and Tamil speaking population.
Hence the share of viewership of Kannada channels in Karnataka is lower than the share of, say, Malayalam channels in Kerala, depressing
the ad market size vis-à-vis size of the home state

In South India, in fact, players have already started
hiking ad rates. Sun TV network successfully raised
ad rates for weekday prime time slots on its flagship
channel Sun TV by an average of 19%, while Star Vijay,
owned by Star TV and Fox International Channels, also
hiked ad rates by almost 25-30%48. These developments
suggest that leading broadcasters in South India have
some degree of pricing power.
Changing advertiser mix
Advertisers and genres
Traditionally, FMCG players preferred advertising on
fiction shows due to their reach and sustenance.
However, firms are now adopting a multi-pronged
strategy rather than a uni-directional approach. Firms
have now started advertising with fiction as well as
non-fiction (reality) shows; fiction for sustenance and
non-fiction for say, a brand launch. Players across
other industries are also casting a wider net as
opposed to focusing on a particular genre of content
while advertising.
National vs local advertising
Although national advertisers have always had a larger
share of advertising, there is an increasing trend of
local players advertising on Southern regional channels.
Industry participants believe that local advertisers are
becoming aware about the reach of television and it
being a relatively cheaper medium of advertising. Local
retail comprises 30-40% of advertising on channels
in Tamil Nadu (primarily textile) and Kerala (primarily
jewelry). Retail advertisers are not as dominant in
Karnataka, and represent about 5% of the overall
advertising on Kannada channels49.
Impact of ad-cap regulation
The regulation
Recently, there has been increased spotlight around a
TRAI regulation for TV channels. As per the regulation,
a channel is allowed 10 minutes of commercials along
with an additional 2 minutes for in-house ads per clock
hour50. The regulation requires time gap between an
ad break and programming to be at least 15 minutes,
except in the case of a live sports event. This time gap
needs to be a minimum of 30 minutes while telecasting
films. Popups, part screen, or drop-down advertisements
are not allowed. The regulation also requires
broadcasters to ensure that advertisement audio levels
do not exceed the regular audio levels of the channel.

24

Response of broadcasters
The upcoming regulation, while being beneficial for
viewers, will cause broadcasters and advertisers alike
to re-think their strategies. Currently, news channels
sometimes have 30 minutes of advertising per clock
hour, and Hindi film channels have around 20-22
minutes. Hindi GECs have about 14-16 minutes of ad
breaks per clock hour50. As the supply of ad inventory
reduces, broadcasters expect ad rates to rise, though
it may not fully compensate for the loss of revenue.
Broadcasters may also launch new channels to
compensate for the lost inventory – which entails some
cost, and brings in some element of risk in terms of
garnering viewership.
The Government however recognizes that
implementation of the ad-cap regulation must be in
sync with the digitization process taking place, so that
potential loss of ad revenue may be compensated for
by an increase in subscription revenue and / or decrease
in carriage. The MIB has indicated that news channels
may get an extension on implementation of the 12
minute ad-cap, at least till the final Phase of digitization
is complete51. TDSAT has also stayed the implementation
of the ad-cap regulation till the next date of hearing on
October 21, 2013 and/ or November 11, 201352. This
is expected to give broadcasters time to decrease ad
inventory / increase ad rates in a gradual manner.

The reduction in the excessively
long advertising breaks will increase
programme ratings and subsequently
the TRPs. Social media will stand
to reap the benefits of the TRAI rule
with the internet becoming a mode of
delivery since no limits have been set so
far. It will mean more business for those
who integrate TV and the web.
Ashok Vidyasagar
Business Director -South,
Big Synergy Media Limited

48 Channels hike ad rates
to offset time limit, Vidhi
Choudhary, S. Bridget Leena,
livemint.com, August 2013
50 Movie channels ready script
to buck ad cap, afaqs.com,
August 2013
51 NBA welcomes Manish
Tewari statement on 12-min
ad cap, mxmindia.com,
September 2013
52 A fractured ad cap
mandate dawns, Seema
Singh, Meghna Sharma,
indiantelevision.com,
September 2013

Content
Market size
Content revenues in the South Indian TV industry were
valued at INR 510 Crore during FY 2013, a growth of
11% over the last fiscal. Content revenues are
estimated to grow at a CAGR of 14% to reach INR 879
Crore in 2017.

Even though content composition in
the Tamil Nadu market is gradually
changing with more reality/non-fiction
shows coming up, it still continues to
be a fiction dominated market. This
is due to the fact that the state's TV
audience primarily comprises 25+
female population who prefer fiction
and films.

Changing genre mix
Although the South Indian TV industry continues to be
a fiction dominated market, the share of non-fiction
shows has been increasing over the last few years. Each
State has its own mix of fiction, non-fiction and film
content. The share of non-fiction content varies from
20% to 50% across the four States53.

N. S. Easwaran
Business Head,
Zee Tamizh

Industry participants believe that even though
non-fiction shows are meant to increase the equity of
a channel and are a favorite format among advertisers
who want top-of-the-mind recall, it cannot help sustain
a channel’s growth. The costs for non-fiction shows
(excluding in-house formats and shows like Neengalum
Vellalam Oru Kodi i.e. the Tamil version of Kaun
Banega Crorepati) could be 5-10 times that for fiction
shows54. Regional broadcasters are also investing in
in-house non-fiction formats which cost much lesser
than the large budget formats.

Figure 3.5: TV content market revenues in South India; E: Estimated (INR Crore)
CAGR (2013 – 2017)
870
780
680
600
510

120

110

90

180

160

140

150

14%

150

14%

140

120

110

90

140

14%

200

230
13%

220

260

300

340

190
FY 2013*

FY 2014E

FY 2015E

FY 2016E

FY 2017E

16%

Tamil Nadu

Andhra Pradesh

Karnataka

Kerala

Figure 3.5: TV content market revenues in South India; E: Estimated (INR Crore)


The era of niche channels
With digitization providing a platform for a large
number of channels, and consumers being able to
exercise their choice about what kind of content they
want to watch, broadcasters are investing in niche
content. Higher channel carrying capacity, and the
(expected) resulting lower carriage would make it
cheaper for broadcasters to launch new channels in a
digitized world.

but “upgraded” to HD either during the postproduction
process or even at the broadcast stage.

Post August 2012, various new channels have been
launched in the South TV market. These launches
primarily targeted specific audiences through niche
channels, and a majority of these were targeted at the
Malayalam speaking population. Various other launches,
across categories, such as Captain Music, Pudhu Yugam
(GEC) are also planned during the forthcoming year.
Following is a list of notable launches post August 2012.

Current scenario
Even though consumers in India have had access
to HDTVs for a few years now, there has been little
motivation for the industry to provide content in HD.
This is due to high capital investment required across
the production, post-production, broadcasting, and
distribution stages. However, with increasing consumer
awareness and their willingness to pay for a better
TV viewing experience, and with HD even acting as
a differentiator, the industry has begun to showcase
HD channels. About 35 HD channels are available for
viewing in India and many more are in the process of
being rolled out55.

Table 3.2: TV channels launched post August 2012
Name

Genre

Language

10TV

News

Telugu

Captain News

News

Tamil

Mathrubhumi
News

News

Malayalam

Raj News

News

Kannada

Media One

Infotainment

Malayalam

Kappa TV

Music

Malayalam, Tamil,
Hindi, English

Surya Music

Music

Malayalam

Suvarna Plus

GEC

Kannada

Source: Media articles

Technology
The high definition era
HD – What is it?
HD or High Definition is a video content format with a
resolution typically of 1920 X 1080 and an aspect ratio
of 16:9, versus the conventional 720 X 480 or 720 X
576 4:3 TV format. HD pictures are much sharper and
clearer, with 1080 rows of pixels available as compared
to SD pictures which display only 480 rows of pixels.
For optimal picture quality, content needs to be shot
and edited in HD and then broadcast to HDTVs via
HD-enabled STBs. This may also be termed as ‘true HD
content’ as opposed to ‘HD content’ that is broadcast in
HD but is shot in SD. In this case, content is shot in SD

26

Interestingly, the next generation of HD is already
rolling out to consumers. Described as 4K UHD or 'Ultra
High Definition', the video format offers a minimum
resolution of 3840 pixels × 2160 lines; nearly twice the
horizontal and vertical resolution of the 1080p HDTV
format, with four times as many pixels overall.

Interestingly, SUN Direct was the first DTH services
provider to showcase HD channels. SUN network also
provides HD channels such as Sun TV HD, Gemini
TV HD, Sun Music HD, KTV HD as part of its offering
bouquet56. Channels in other South Indian languages
have also been made available in HD. However, only
a few shows are available in True HD. As per industry
sources, broadcasters like SUN network are trying to
convert all shows being currently shot in SD and telecast
in HD format to ‘true HD’ format57.
Impact of HD
In addition to providing consumers with a superior
TV viewing experience, deployment of HD will also be
beneficial for others in the value chain. Higher rates for
HD channel packages will help increase ARPU levels,
in turn boosting subscription revenues for distributors
and broadcasters alike. Although ad rates on HD
channels are currently lower than those on SD channels,
broadcasters may start charging higher ad rates for HD
channels with increased penetration. Lower number of
ads on HD channels is one of the key value propositions
of HD in India. Broadcasters, however, will need to
maintain a balance, to derive benefit from increasing
ad rates, while keeping ad volume below a certain
threshold to retain their premium HD subscribers.

55 Growing IT opportunities
in the Media sector, Amit
Singh, crn.in, July 2013,
56 Research report on SUN
network, Emkay, August,
2013

However, distribution platforms see HD providing a
strong push for acquiring subscribers. Videocon d2h
for instance reports that nearly 15% of new subscribers
in Q1 & Q2 of CY’2013 have opted for HD58 services
on the back of a sustained marketing effort. With
the recent digitization of cable networks, large MultiSystem Operators like Hathway are also pushing the HD
experience to subscribers59. Even so, the off take of HD
STBs is currently only around 2-3mn60, well below 5% of
the total digital universe in India.
Challenges in adoption
The large file size and complexity of HD content
requires complex and expensive equipment to be used
in the entire chain, from HD cameras and HD editing
equipment to broadcasting in HD. HD content also
requires over twice the transponder space on the
satellite as compared to SD formats61. Benefits from HD
investments may be “slow burn”, and take time to reap
returns. Even if content is shot in HD, it may need to be
converted to SD in order to cater to the large population
with SD set top boxes.

A deterrent towards successful
implementation of HD content,
specifically in the South Indian TV
industry may be the unpreparedness of
the entire value chain.
Suresh Narayanan
Chief Operating Officer,
Insight Media City (India)
Private Limited

Way forward
As the penetration of HD-enabled TV sets increases, and
as income levels increase, the ecosystem is expected
to move gradually towards greater HD penetration.
Industry discussions suggest that broadcasters and
distributors view HD as a key driver to raise subscription
revenue, and most industry participants appear to have
plans to expand their portfolio of HD channels.

Like the US, which saw HDTV
penetration increase dramatically post
digitization around 2006, India too
will experience a transition. But the
current production-to-delivery costs
associated with “True HD” means it
will be a slow process and restricted
initially to the larger and betterfunded broadcasters. The benefit of HD
though is currently being optimized by
distribution platforms. With ARPUs
for HD subscribers pegged at nearly
twice those of SD subscribers; DTH &
digital terrestrial platforms like cable
are pushing the ‘HD experience’ to new
and existing subscribers - offering HD
channels as a product differentiator.
Vynsley Fernandes
Director,
Castle Media Pvt Ltd

58 Indiantelevision.com report,
September 2013
59 Hathway selects
STMicroelectronics to
power its high-definition
set top boxes, Thomson
Reuters, finance.yahoo.com,
September 2013
60 Indiantelevision.com report,
September 2013


Current Scenario
With more and more users wanting to consume
content ‘on the move’, broadcasters are creating
a digital universe parallel to the traditional TV
watching experience. As per industry sources, national
broadcasters like Zee, Colors, Sony are expanding across
various digital platforms i.e. online and mobile portals/
applications. Regional broadcasters are not too far
behind in this race to innovate and grab digital eyeballs.
Regional content has been made available on
platforms like Apalya, Ditto TV, NexGTV etc. These
platforms showcase content either by partnering
with broadcasters directly or indirectly (via content
aggregators like IndiaCast, MediaPro etc.). Regional
broadcasters are also making inroads in the in-house
digital platform space. PeppersTV, a Tamil entertainment
channel launched its offerings on mobile platforms
last year, making it the first regional channel in India to
do so62.
Content monetization on digital media

The technology to deliver the enterprise
with digital at its core is here now. The
main challenges are around leading and
marshaling the talent and innovative
culture needed to make it a reality.
Whilst we might be at the end of
the digital beginning we are a long
way from the beginning of the end of
digital.
Sanjay Reddy
Managing Director,
Dream Boat Entertainment Pvt Ltd

Regional broadcasters are also exploring other digital
platforms like WAP pages, voice services. WAP video
content is usually placed on WAP pages of telecom
operators while voice services provide the audience with
an option to listen to 3-4 minute summaries of their
favorite TV shows. For example, the voice service of
Asianet TV was launched last year. WAP pages and voice
services of more Star network channels are scheduled to
be launched this year63.
Content monetization
Revenues for regional broadcasters from monetizing TV
content are still low, as a majority share is retained by
the telecom operator or the OTT platform. However,
these revenues have risen over the last one year and
are expected to continue to follow an upward trend
in future. Tamil content seems to be most popular
among the four South Indian languages and sees a lot
of traction with the international audiences. Revenues
from Kannada content are lower vis-a-vis Tamil and
Malayalam content.

62 PEPPERS becomes India’s
first regional TV channel on
mobile, afaqs.com, March
2012
28

shows among households. However, there are several
challenges faced by the industry today, some of which
are outlined below64 65.

We are seeing good traction in the
content consumption of our regional
channels. Regional is our third largest
content segment after Hindi GECs and
films. We have been seeing a 15-20%
growth in the consumption of regional
content on Ditto TV every month.
Manoj Padmanabhan
Business Head,
Ditto TV

Challenges
Even with existing technology and the innovations being
made by players to reach consumers via the digital
medium, actual usage may still be low. This may be due
to infrastructural issues like low internet speed in India.
Further, effective monetization on new media continues
to be a challenge.
Way forward
The end-user ecosystem appears strong, with the
availability of large-screen smartphones, and low-end
tablets. The rising disposable income of the population
may result in a greater willingness to pay. Deployment
of 4G and stronger uptake of 3G may represent
accelerated solutions to the infrastructure problem.
Industry participants all agree that new media is a key
area of growth, and this will continue to be a focus area
for them, resulting in a greater number of innovations
around offerings as well as monetization models.
Human capital challenges in the TV industry
Workforce priorities in the television Industry
There has been a vast change in terms of content
offered by the television industry; be it fiction to
non-fiction shows or introducing a new genre of
entertainment focused on target age groups such as
kids, elderly (spiritual) etc. This offers a wide variety
of roles for people in the television industry, thus
accommodating talent of many kinds. These factors
have contributed to the popularity of television

It is a challenge to identify the areas of improvement
in terms of skill gaps in the industry as there are
no available databases that accurately document
employment in this sector. Also, there are no
comprehensive listings of all employers/ companies
operating in the sector.
Following are some of the areas of concern typically
seen for talent in the industry.
• Most of the institutes do not have media degrees/
specializations for media and the quality of
candidates and their technical skills are often not up
to the mark.
• Keeping people commensurate with the changing
technologies is a challenge, as often they possess
theoretical/ conceptual knowledge but lack practical
training and an understanding of how to apply these
concepts to their work.
• The Television industry employs a large number of
freelancers, such as journalists. To determine the
quality of work done by such individuals may prove to
be a challenge.
• Wages and employment for stage-hands are
governed by trade unions that do not have any
minimum certification or criteria required
for enrollment.
• The roles and processes are not standardized
across the industry e.g. a Director at a small TV
channel would work on a very different scale and
perform a very different role as compared to a
Director for a big budget event. There is a need for
project management for thorough planning and
efficient execution66.
• Many of the channels are managed by promoters and
succession planning becomes a key issue.
Potential solutions
• Professional set-up: Attracting professional talent
from outside the promoter group to manage the
business, with a profit share and pay for performance.
• Expansion of talent pool: Industry-academia tie-ups
or collaborating with existing educational institutions
to participate in curricula development and adopting
campuses to create a sustainable talent pool for
technical talent67.

64 Broadcasting industry in
‘cost-rationalization’ Phase,
retrenchment fears loom,
Prashant Jha, thehindu.com,
July 2013
65 TV offers opportunities
to every talent: Javed
Jaffrey, IANS, timesofindia.
indiatimes.com, August
2013
66 Production Manager – TV,
creativeskillset.org
indiainteracts.in, November
2009


Conclusion
The South Indian TV industry is expected to continue
on its growth trajectory, with technology aiding the
process. With digitization of cable as well as new
subscriber additions, subscription revenues are expected
to more than double over the next 4-5 years. With
greater transparency, broadcasters’ share of subscription
revenues are expected to rise significantly, reducing
the industry’s dependence on advertisement revenues.

30

Although GECs are expected to remain the mainstay of
the industry, several new and niche channel launches
are expected, as the cost of carriage decreases with
digitization. These channel launches may also help
compensate the industry for decrease in inventory due
to a cap on ad minutes. The TV industry has begun
its journey towards a more robust ecosystem, and
successful execution of digitization of cable is key to
taking it there.

Print

South India is one of the strongholds of the Indian print
industry with four states representing about 30% of the
Indian market in terms of readership. From providing
the latest news and insights to exploring digital media
through modern channels, South Indian publishers are
trying various means to attract and engage the highly
literate readers in the region. The opportunity lies in
tapping the growth potential of the market through
expansion and deeper penetration while simultaneously
building additional capabilities to explore alternate
sources of revenues. As in other parts of the country,
the South Indian print industry is facing issues of
maintaining circulation revenues and monetizing
online content.
Market size
The overall print industry in South India was estimated
to be INR 6,680 Crore in FY 2013 (~7% growth over FY
2012). The industry is expected to grow at a CAGR of
approximately 8% to reach INR 9,020 Crore by FY 2017,
driven by an increase in subscription prices
and readership.

Low levels of print penetration coupled
with growing literacy levels point
to clear headroom for growth in the
print sector in India. To tap this
growth, we have put in a dual strategy
of using English brands to tap all
urban readers and language brands to
address non-metro markets. Critical to
implementing this strategy successfully
is a relentless focus on innovation across product formats, in our consumer
offers and the advertising solutions we
offer.
Shrijeet Mishra
Chief Operating Officer,
Bennett Coleman & Co. Ltd.

Figure 4.1: Print Industry Revenues in South India; E: Estimated (INR Crore)
CAGR
(2013 – 2017)
9,020
8,260
7,540
6,680

6,950

1,330
1,430

1,470

1,770

1,970

1,810

2,150

1,600

2,280

FY 2013*
Tamil Nadu

9%

1,740

1,890

7%

2,180

2,390

8%

8%

2,460

FY 2014E
Andhra Pradesh

1,840

1,670

1,510

1,390

9%

Karnataka

2,670

2,900

FY 2015E

FY 2016E

FY 2017E

Kerala



Figure 4.2: Print readership split across languages in India and South India – FY 2013

English*
10%
Vernacular
non-South
26%

Hindi
35%

South Vernacular
29%
Kerala
30%

Karnataka
17%

Tamil
Nadu
28%

Andhra Pradesh
25%

*This includes English language papers in South India

Figure 4.3: Vernacular Print Industry Revenues in South India; E: Estimated (INR Crore)
CAGR
(2013 –2017)
4,870

11%

1,650

9%

720

11%

1,240

11%

12%

4,320
3,800
3,240
1,170

3,420

1,490
1,340

1,220

470
810

840

790

550

490

870

FY 2013*

FY 2014E

Tamil Nadu
Andhra Pradesh
Karnataka

940

1,090

970

1,110

1,260

FY 2015E

FY 2016E

FY 2017E

Kerala

Vernacular market
The vernacular print industry in South India was
estimated to be INR 3,240 Crore in FY 2013. Kerala
contributed 36% to the overall market in terms of

32

630

revenue, while Andhra Pradesh and Tamil Nadu
contributed about 25% each. The industry is expected
to grow at a CAGR of 11% to reach INR 4,870 Crore by
FY 2017.

Figure 4.4: English Print Industry Revenues in South India; E: Estimated (INR Crore)
CAGR
(2013 –2017)

3,440

3,740

3,530

160

3,940

170

180

170

1,110

1,050

4,150

5%

190

4%

1,170

5%

1,150

5%

5%

960

980

960

970

1,360

1,410

1,490

1,560

1,640

FY2013*

FY2014E

FY2015E

FY2016E

FY2017E

Tamil Nadu

Andhra Pradesh

Karnataka

1,090

1,030

Kerala


English market
South India has a large English speaking population and
this is reflected in the fact that the English print market
in South India accounts for over 50% of the total
South Indian print market in terms of revenue, while
the corresponding figure for all India is approximately
40%. The English print industry in South India was
estimated to be INR 3,440 Crore in FY 2013. Tamil Nadu
contributed 39% of the total market share while Andhra
Pradesh and Karnataka contributed about 28% each.
Kerala forms a very minor share of the English print
industry in South India.

The English market is expected to grow at a CAGR of
approximately 5% to reach INR 4,150 Crore by FY 2017.
Mirroring the all-India trend, the English print industry
in South India is expected to grow at a lower rate than
the vernacular industry, as a majority of newly literate
readers enter the vernacular readership pool. While the
English speaking population is expected to increase, the
language demographic is such that it may experience
the maximum adoption of new media.


Figure 4.5: Split of subscription and advertising revenues for each market in FY 2013 (INR Crore)
Tamil Nadu

Andhra Pradesh
1,460
1,190
520

36%

45%
530

690

580

270

39%

940

280

64%

48%
660

61%

420

300
Advertising

Subscription

52%

Subscription

Karnataka

Advertising

Kerala

880

970
310

32%

450

460
160

35%

660

68%

770

Advertising

Vernacular


34

11%

88%

110

12%

89%

65%

Subscription
English

400

50

300

55%

Subscription

Advertising

Advertising revenues contributed between 65% - 70%
of total revenues of South Indian Print industry in FY
2013. Local advertisers remain the key category to drive
print advertising revenues68.
Overall, as per industry sources, advertising from health,
retail and real estate sectors has shown robust growth.
Education sector advertising has remained stagnant
while growth in the auto sector advertising has been
marginal. Further, the industry is expecting increase in
Government ad spends (Department of advertising and
visual publicity) especially in vernacular papers in the
run-up to the 2014 general elections.
Overview
Introduction
While vernacular and Hindi dailies dominate the
readership figures across India, advertising revenues are
tilted towards English dailies. This trend is also exhibited
in South India, primarily due to the urban, higher
socio-economic clusters that typically form the target
market for English newspapers. In order to lure national
advertisers, South Indian publications have established
offices in key metros and have been aggressively
pitching to media agencies. These national advertisers
form a sizable portion of the total advertising revenue.
In order to increase penetration, these print houses
are not only expanding into other languages but also
venturing into other cities. However, economic and
business pressures are forcing publishers to increase
their subscription rates.
Exploring new horizons to broaden reach
Print houses are exploring opportunities in the
vernacular as well as English market. Some examples
include:
• The Hindu’s Tamil newspaper: The Hindu is planning
to launch a Tamil newspaper in major cities including
Chennai, Coimbatore, Madurai and Tiruchy69. In
order to expand the publication’s reach, the Group is
expected to distribute its Tamil offering as a separate
publication and not bundled with its English daily70.
• The Times of India’s expected regional entry: The
Times of India is contemplating entry into regional
languages including Tamil71.

• Indian Express enters the South market: The Indian
Express group has entered the English print market
in South India with the launch of ‘National Standard’
in Bangalore, to target the youth72. It plans to
subsequently expand into Chennai and Hyderabad as
well73.

The long term growth story for regional
print remains strong despite the recent
slowdown in the macro-economic
scenario. Local and national advertisers
continue to prefer vernacular papers to
reach consumers in the Tier II and Tier
III cities. To enhance our offering in the
vernacular landscape, we have launched
a Tamil language daily with editions
across Tamil Nadu as well as a Tamil
language news-website.
Bharath Ganapathi
General Manager - Corporate,
The Hindu

Upgrading printing technology
• Publishers have been upgrading their machinery
periodically to enhance the printing quality and
increase the capacity of their units. For instance,
The Hindu has upgraded to the new Mitsubishi
Diamond Spirit printing machine which will enable
the company to produce 24-page colour (from the
previous 16-page colour)74 in broadsheet, at the
rate of 75,000 copies an hour. This new press also
has a closed loop ink density control which helps
maintain consistency of print across the run, reduces
dependence on skilled labor and minimizes startup waste75.

69 Publisher of The Hindu
to launch Tamil daily
before season time, T E
Narasimhan, businessstandard.com, July 2013
70 SKBKS Media
&Entertainment report 2013
71 After Kolkata, Chennai
to be next newspaper
battleground, S. Bridget
Leena, livemint.com, July
2013
72 Indian Express
launches as National
Standard in Bangalore,
exchange4media.com,
August 2013
73 Indian Express Group to
launch National Standard in
the South, T E Narasimhan,
business-standard.com, July
2013
74 The Hindu in 24-page colour
soon, The Hindu, February
15, 2013
75 Automatic closed-loop
inking using Diamond
Eye, Rushikesh Aravkar,
prinweek.in, December
2012


Concerns in the print industry
The print industry in South India has been able to
maintain its vigor through tough times, driven by strong
growth in semi-urban and rural areas. However the
industry continues to face macro-economic pressures.
• Weakening Indian rupee: Indian publishers import
over 50% of their newsprint76 as local newsprint
does not often meet the quality requirements. The
Indian rupee has lost about 17% of its value in 2012
- 2013 vis-à-vis the US dollar77, thus increasing the
cost of imported newsprint. This is severely impacting
publishers’ margins as newsprint constitutes roughly
40% of operating costs78.
• Economic slowdown impacting advertising revenues:
English newspapers rely on advertising for over
70% of their revenues79. The weakening domestic
economic scenario, indicated by the GDP growth
rate of 4.4% (lowest in the last 4 years80), has led to
softening of advertising revenues in Q2, 2013 for
English language papers. However, as per industry
sources, vernacular dailies have not experienced any
significant dip in advertising revenues due to their
reach beyond metros and Tier I cities.
Print industry embracing digital media

Unlike the West, it might be another
10 years before a majority of readers
prefer accessing content on digital
devices. However, we have invested
in building a presence on web and
mobile platforms to brace ourselves for
the next wave in news consumption.
Malaya Manorama has refined its mobile
applications for iOS, Android and
Windows platforms and customized
its web portal for desktop and mobile
viewing.
Jayant Mammen Mathew
Deputy Editor and Director,
Malayala Manorama

36

Industry outlook
Both English and vernacular players have established
their presence on web and mobile platforms. Although
internet based advertising revenues are still miniscule
in comparison to revenues from the traditional print
medium, newspaper companies want to be ready with
their applications, web platforms and mobile customized
WAP pages, specifically targeted at the youth. To
promote their online offerings amongst the younger
generation, these news companies have established
their presence on social media platforms such as
Facebook and Twitter and have made arrangements
with leading web portals to drive more traffic to their
webpages. However, players need to chalk out a clear
path to monetization from these new platforms.
Cross platform integration with content
management systems
With publishers increasingly making their newspapers,
magazines and video content available on multiple
digital platforms, content management and sharing has
become increasingly important. These systems provide
flexibility to editors to quickly re-purpose content not
just on multiple platforms but also on multiple portals.
For instance, a publisher can make a video available on
its TV news channel, web platform and mobile platform
simultaneously. Similarly, news articles can be instantly
tweeted and listed on a web-portal.
Some examples of Content Management Systems (CMS)
currently being used:
• Mathrubhumi has gone live on the Atex Editorial
CMS. This collaboration is expected to help
Matrubhumi’s multi-channel newsrooms in creating,
managing and delivering content to any print or
digital platform81.
• Malaya Manorama has acquired Adobe’s CMS
to streamline content dissemination on different
platforms82.
Publishers have launched various mobile applications
with multiple functions incorporated, in order to better
engage with readers.
• Mathrubhumi’s mobile application contains the latest
national and regional news, cartoons, videos and
photos being streamed live 24/7.
• Dinakaran’s mobile application provides users with
the latest news, in-depth analysis and speed news

76 Indian print industry
hit by depreciating INR
& increasing newsprint
cost, Maneka Tanwani,
exchange4media.com, July
2013
77 Rupee hits life low below
66, posts biggest fall in 18
years, Swati Bhat, Manoj
Kumar, in.reuters.com,
August 2013
78 Capitaline corporate
database – Media, Printing
and Stationary
79 Capitaline corporate
database – Media, Printing
and Stationary
80 GDP growth at 4.4% in Q1,
slowest in four years, Asit
Ranjan Mishra, livemint.
com, August 2013

scroll with minute-by-minute updates. It also enables
sharing of articles, photos and videos via email,
Facebook and/ or Twitter.
Web-presence and customization for mobile phones
Most publishers have dedicated websites that are
constantly updated to provide consumers with the
most recent news updates, pictures and videos. These
websites also have links to the electronic version of the
printed paper (e-paper), enabling users to catch up with
the morning news.
However, only a few of these publishers have optimized
their webpages for mobile viewing. This entails resizing
of the webpage for mobile screens and including
navigation aids. Malayala Manorama has been
among the pioneers in releasing its mobile website
m.manoramaonline.com.

• Malayalam News Live: Aggregates news from One
India, Mathrubhumi, Mangalam, India Vision TV, Web
Dunia and a few other publishers.
Way forward
As publishers continue to strengthen their presence on
digital platforms, the quality, functionality and overall
user experience of the applications would be critical
to ensure consumer stickiness. The onset of news
aggregators brings in new challenges for the publishers
by further fragmenting the digital advertising pie.
Thus, publishers need to look at other ways to increase
penetration of their online applications and possible
methods of extracting subscription revenues.

81 Mathrubhumi goes live
on Atex editorial content
management system, atex.
com, August 2013
82 Industry discussions,
Malayala manorama
partners with Adobe for
its digital transformation,
indiadigitalreview.com, May
2013

Geographic targeting for advertisers
News publishers provide marketers with online
geographic targeting options which give an advertiser
freedom to reach out to readers in a specific geographic
area. This is particularly helpful in South Indian markets
where a majority of the advertisers are often local
retailers. Furthermore, the publishers are able to
approach overseas advertisers to reach the South Indian
diaspora abroad, many of whom form an affluent
consumer base. While the cost per impression from
India could be anywhere between INR 90 - 150 per
impression, overseas rates often range between INR 200
- 300 per impression83.
Third party news applications
As per industry sources, while leading publishers such as
Malayala Manorama, Eenadu etc have been constantly
upgrading their news applications (apps), third party
developers have launched news aggregation apps.
These apps have been gaining popularity as they provide
consumers with news from multiple sources and allow
them to browse vernacular as well as English papers.
These third party apps currently do not share revenues
with publishers.
Some third party news aggregator mobile apps include:
• Telugu Newspapers: Aggregates news from Eenadu,
Sakshi, Andhra Jyoti and many more Telugu
publications in addition to business news from Money
Control and Economic Times.


FICCI- Deloitte report - ‘Media & Entertainment in South India - the Digital March’

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