1. Indian Media Industry By Prof. IndraniSen SIMC 18.7.2011

2. At a Glance One of the largest media market globally Total size valued at $ 10 Bn Advertising revenue accounts for 41% Growing at 23.4% Top 10 media companies accounting for 44 % of advertising revenue Advertising remains underinvested as a % of GDP At 0.4% compared to the global average of 1%

3. Enjoying Steady Growth Till 2008 As per FICCI Reports M&E industry was enjoying steady growth till 2008 Like many other Indian industries, its growth rate surpassed the performance of Indian economy The global M&E industry recorded single digit growth rate (6% to 7.5%) during 2006-2008 Indian M&E industry enjoyed much higher growth rate (12% to 14%) during the same period In 2009 the industry growth rate slowed down clocked at only 1.4%

4. The Slowdown in 2009 The recessionary pressure was the main reason for the slowdown Highest share of revenue comes from advertising Higher in case of Print and TV Film, radio and OOH registered a negative growth during 20o9 Aggravated by several internal factors Delay in auctions of phase 3 FM radio and 3G mobile telecom The multiplex strike Lack of quality content on TV Renewed focus on innovations, creativity and managing costs

5. Comparative Growth in Ad Spends 2008-2009 Source Group M

6. Source of Revenue for Media Industries In India Based on various industry sources, courtesy: VanitaKohli-Khandekar *Worldspace subscribers

7. Estimated Share of Advertising Revenue (%) Source Industry Estimates

8. Media Spend As % of GDP World average is 0.80% Source Worldwide Media & Marketing Forecasts Group M Summer 2009

9. India Lags Behind India is second only to China with 22% share of world population China’s media spend as percentage of GDP 0.75% is close to the world average 0.80% India is lagging far behind with only 0.41%

10. Under-Penetrated Market India US China TV Penetration 47.6% 98.2% 92.0% Cable & Satellite 67.8% 85.8% 37.0% DTH 6mn 319mn 539mn Broadband 0.3% 39.3% 4.0% Internet Users 60mn 215mn 162mn Literacy Rate 68% 99% 90.9%

11. Potential for Growth As penetration of media increases and more audiences come into its fold, the gap between India and China will reduce China’s current media spend per capita is almost 8 times that of India Higher penetration of media channels may not result in higher spend on media from the lower socio-economic strata and rural population Infrastructural development in China is far ahead of India

12. Media Spend Per capita US D 491 343 4 Source Worldwide Media & Marketing Forecasts Group M Summer 2009

13. Penetration of Mass Media Growing at a slower rate compared to The growth of spends on media The investment on media industries Focus on the great Indian middle class and the elite upper class Would that approach provide a long term result in terms of overall development which would get reflected in the macro economic statistics?

14. Mass Media Reach (U + R): 2006 to 2008 Source IRS 2008 R2

15. The Potential of Press Some of the largest print titles in the world Mostly concentrated in top 15% of the population in urban India Currently Press Reach is 221 mn adults The literates( education of class V onwards) constitute 495 mn adults A potential of 274 mn readers to be added! Expecting a 5% circulation growth y-o-y in next 3 years

16. Need for Focus on Rural Area As per IRS 2007 to 2009 Literacy rates growing steadily Working female population increasing steadily Movement towards smaller household sizes Rapid urbanization escalated The total working population Growth in the extreme ends of the strata SEC A and SEC E Rural India is emerging as potential market for many product categories In 2009 advertisers pulled back on their ad spends but continued with their rural initiatives

17. Urban & Rural Population 5% 4% 7% Source IRS 2008 R2

18. Mass Media Reach by Urban/ Rural Source IRS 2008 R2

19. Uneven Media Penetration & Reach An analysis of media reach by urban and rural highlights the inadequacy of media reach in villages The gap between urban and rural reach is lowest for radio and highest for satellite TV Technically footprint of TV covers the entire country but in reality 20% of urban and 60% of rural population are still outside its reach On an average a person in urban area spends almost 90 minutes per day on different media related activities while a person in rural area spends almost 60 minutes

20. Share Of Media - Urban All figs. Minutes / Day 89.5 min / day Source: IRS 2008 R2

21. Share Of Media - Rural All figs. Minutes / Day 61 min / day Source: IRS 2008

22. A closer Look at Media Reach in Urban Sector

23. Urban Media Reach by SEC

24. Urban Population Distribution by SEC

25. The Great Indian Paradox M&E industry targeting only 50% of the urban audience in upper socio economic strata The penetration of media goes down significantly as we go down the population strata Left to the mechanism of the market driven industry, it may take decades before this anomaly is corrected

26. Pop-strata wise Media Reach

27. Mass Media & Marketing Stage I : Marketing led expansion of mass media Stage II : Media led growth of mass marketing Stage III : Consumer led media segmentation In India , all three stages are existing at different socio-economic and demographic segments

28. Uneven Media Penetration & Reach An analysis of media reach by urban and rural highlights the inadequacy of media reach in villages The gap between urban and rural reach is lowest for radio and highest for satellite TV Technically footprint of TV covers the entire country but in reality 20% of urban and 60% of rural population are still outside its reach On an average a person in urban area spends almost 90 minutes per day on different media related activities while a person in rural area spends almost 60 minutes

29. Infrastructure: A Major Issue Electricity is one of the main issue which is slowing down the rate of broadcast media consumption Serious issues exist in the production and distribution of electricity across the country Accessibility is another issue which has improved a lot over the last two decades Road and train links have opened up new markets Villages have come closer to towns On Highways and railroads Connected by regular transport

30. TV is The Opium Sweeping across social clusters Almost 82 million TV homes with a viewing population of more than 400 million TV penetration higher than cooking gas Access to about 175 channels with 90% of TV sets accessing 12-16 channels only 3 hours of daily escape on TV 170+ channels available in India today Yet, top 6 channels account for 70 % of the TV advertising revenues Dominating emphasis on media buying

31. Top TV Networks Channel TVR Share SUN NETWORK 2.6 18 STAR NETWORK FINAL 2.3 17 ZEE NETWORK 2.1 15 CABLE 1.4 10 SONY NETWORK 1.1 8 DD NETWORK 0.5 4 ETV NETWORK (EENADU) 0.5 4 INDIA TODAY NETWORK 0.3 2 TV 18 NETWORK 0.1 1 NDTV NETWORK 0.1 1 INX NETWORK 0.0 0 Others 3.0 21 Any Channel + 14.2 100

32. Emerging Trends in TV Glut of TV channels leading to slowing down in the growth of revenue A gradual opening up of the Pay TV market Unregulated growth of cable and satellite homes Ku-band DTH TV stalled by vested interest Regional TV is growing across the country Accelerated growth of C&S penetration Penetration up from 33% to 63% in 7 years Proliferation of mass, niche and regional satellite channels

33. Size of Key Regional TV Markets 2009 Source Industry Estimates

34. Looking at Future Will internet be the medium of delivery? A lot of hype has been created around the broadband internet delivery of television to Indian TV or computer homes It appears that TV will continue to be delivered via terrestrial and satellite transmission What will be the role of Doordarshan as a Public Broadcaster as against the private channels ? Indian Government review the existing policy

35. Cinema: the great Equalizer Industry estimates Rs.6800 cr ( USD 136 mn) in 2008 Estimated to be Rs15300 (USD 306 mn) by 2012 Bollywoodgoing global Global investment by Indian players in film industry Global film studios eyeing Indian market

36. Emerging Trends in Cinema Associative marketing Integrating content along with brand communication is a growing trend Advertiser Funded Programmes/ Entertainment In Serial placements of brands In film placements of brands Celebrity endorsements dominate advertising content More and more brands trying to identify with famous personalities In-film advertising opportunity Including meet & greet by stars Activations at multiplexes

37. Radio Realities A single broadcaster market till 2002 Three channels / 203 stations AIR covers 89.8% of the geographical area and 90.3% of the population of the country through AM broadcast AIR’s ‘Home Service’ programmes are beamed from 203 transmitters for over 5lakh hours every year AIR caters to all the important cultural and linguistic regions Radio covers 40% of the population in 25% of the geographical area through FM broadcast Privatization has given radio a second life Localization of content and advertising accelerated the growth of FM radio in India

38. Global Media Participation in FM Radio A Canadian Financial Institute picked up 20% stake in Radio Mirchi GW capital picked up 75% stake in radio City in 2005 Astro Asia joined hands with NDTV and value Labs to buy India Today’s Red FM in 3 cities in 2006 BBC along with a private investor picked up an undisclosed stake in Mid day West

39. Bright Future for Radio Radio advertising has been growing steadily touching Rs 10 million in 2009 More licenses are expected to be given Multiple frequencies ? News broadcast? Distribution platforms hold huge scope Mobile Internet or streaming radio Satellite radio Radio over broadband (offered by DTH operators) New trends Hybrid digital radio (expensive) Podcasting (through i-pods) Scope of cross media buys (BCCL etc) Educational institutes and NGOs in India encouraged to come up with their own stations

40. The Magic of OOH Largely fragmented, unorganized – many opportunities unauthorized! Monitoring and maintenance an issue Entry of large media houses : Reliance, Star Network and Bennett & Coleman & Co to increasing professionalism Technology coming in : 3M, LED, Interactive, store TV Coexistence of high end opportunities to rural wall paintings

41. Emerging Trends: Mobile Mobile phones becoming ubiquitous: most dynamic mobile market in the world 90 %penetration by 2014 Mobile ownership growing @ 12%

42. The New Media for New generation Rising penetration of internet Current online penetration stands at: 55 Million Current Broadband penetration stands at: 6.22 million Net users growing at the rate of 30% y-o-y Increased use of search engines Social networking and life streaming Jobs, marriage uniquely Indian Naukri.com 12 mn users Shaadi.com 10 mn users Live/micro Blogging Facebook /Twitter Video viewing on the web: U Tube Significant access in upscale youth- however media optimality is still a challenge

43. Emerging Trends: Regionalization Regionalization is likely to be one of the significant factor driving the growth in television National broadcasters are looking at the scope of adding regional channels to their portfolio Demand for regional content is increasing OOH spends are increasing in tier 2 and 3 towns Newspapers are publishing editions from smaller towns Regionalization will help to increase media penetration in small towns and villages

44. Extending The Media Platform Prosperity of smaller towns are drawing in media UFO Movies, the country’s largest digital theatre chain has 80% of its 1080 screens in tier 2 and 3 cities NDTVKhabar.com was launched to cash in on the traffic from small towns Big spending in retail is visible in smaller towns adding to the crush for action in retail outlets Playing commercials on LCD screens in malls is a prominent trend coupled with physical space

45. English & Metro Bias Advertisers and agencies have an English and Metro bias for many years 30% of the Rs 20,000 odd crores of ad spend in 2008 was blown up on Mumbai-centric media 60% of the ad spend is concentrated on six top metros Marketers have started focusing on small towns and beyond which will impact the media value chain

46. Other Emerging Trends Sports & Gaming are emerging as strong Entertainment platforms providing scope for cross media deals Engaging in consumer’s ecosystem Brand experience along with a shopping experience opening new opportunities in retail sector Activation and ambient advertising Music & Home Entertainment are growing rapidly Branding DVD or CD covers Placing ads in between the films Innovations across product/ process/ marketing/ distribution model Investment in talent and focus on HR within the industry

47. Hot Destination for World Media

48. Emergence of Media Conglomerates This trend has started from the turn of the century Home grown media conglomerates Network 18 (television, Internet, filmed entertainment, mobile content and allied business) Pyramid Saimira (filmed entertainment with focus on animation & gaming segment) UTV Group (film production, film distribution, television production and broadcasting, animation and allied business …. Disney has 32% investment in the company) NDTV Group (television, news and entertainment, media software, labs, emerging markets business and media process outsourcing) Star Group (television, national and regional, filmed entertainment with sister company Fox, new media and internet

49. Network 18: A Full Play Media Conglomerate Network 18 TV18 – CNBC TV18 & CNBC Awaaz Web 18 Newswire 18 Through Global Broadcast News CNN-IBN & IBN7 Homeshop18 Online and on-air retail venture Studio 18 Viacom 18 Channels managed by MTV Strategic alliance with Jagaran Prakashan for foray into print

50. Growing in Size In six years since 2003, almost every one of the top 10 media companies has grown twice if not three to four times in size The Times Group, Zee Group, Star India Group, Network 18 Group, Reliance(ADAG), Ht Media, Living Media Group, Sony Group, PrasarBharati Corporation, Sun Network, Deccan Herald Holdings, JagaranPrakashan, Kasturi & Sons Most of these media houses have multi media presence

51. Investment in Media & Entertainment Courtesy: VanitaKohliKhandekar

52. Trends for Next Five Years The M&E industry is expected to recover in 2010 and increase @ 11.2% The CAGR from 2006 to 2009 has remained at 10% The expected growth rate for the industry for next five years is 13% TV and Print will continue to dominate the industry with 70% share of the revenue TV is expected to grow @ 15% Subscription revenue of both Print and TV will continue to grow @ 12% to 13% Internet and gaming will show very high growth due to small revenue base

53. After one year, it is going to be an exciting time for all of you in the M&E industry…..