Indian media and entertainment 2010

Indian Entertainment Industry 2010 By: Kumar Gaurav

1

INDIAN

ENTERTAINMENT

INDUSTRY 2010

REPORT

.

By: Kumar Gaurav


2

TABLE OF CONTENT Page No.

1. Overview………………………………………………………………………. 3

2. Industry growth over next five years…………………………………….. 4

3. Events of 2009 and their impact going forward………………………... 6

4. Growth rate of the industry (In Billion)…………………………………... 7

5. Share of domestic theatrical revenues……………………………….….. 8

6. Comparison of the revenues………………………………………………. 8

7. Revenue Contribution from Domestic Film Territories………………. 8

8. Revenue Contribution from International Film Territories…………… 9

9. The first day collection of top five Movie………………………………... 9

10. Top first week box office collection……………………………………… 9

11. Distribution of multiplexes and single screens in India……………… 10

12. Certified films by Indian languages……………………………………… 10

13. Certified films by regional languages …………………………………… 11


3

1. Overview

Amidst the uncertain economic environment that was prevalent last year, the Indian M&E industry has weathered the storm and is showing signs of accelerating its growth. The industry performance in 2009 was a consequence of not only the slowdown, but also several internal factors that lowered the pace of growth for the otherwise flourishing media and entertainment business in India. The multiplex strike, lack of quality content, delay in auctions for phase 3 FM radio and 3G mobile telecom licenses were some of the unexpected events that further impeded the development of this industry. However, there were a several positives that brought in some cheer to the industry. While “3 Idiots” and “Avatar” created history in India through record breaking box office collections. On the whole, the year 2010 has been welcomed with a renewed sense of hope and a fresh perspective replete with the learnings of 2009. The GDP forecast at is 6.75 percent and 8 percent for the years 2009-10 and 2011-12 respectively looks promising. On the back of several factors, the overall M&E market in India is expected to grow

at a compounded annual growth rate of 13 percent per annum through 2014 to

reach INR 1.1 trillion. The untapped potential for growth in media reach, impact of digitisation and convergence, better consumer understanding, sustained efforts in innovation, and enhanced penetration of regional markets all augur well for the industry.

“Media spend in India as a percent of GDP is 0.41 percent. This ratio is almost

half of the world’s average of 0.80 percent and is much lower compared to developed countries like US and Japan. This indicates the potential for growth

in spends as the industry in India matures.”


4

2. Estimates for the industry indicate robust growth over next

five years

The overall M&E industry size reached INR 587 billion in 2009. The growth rate is expected to increase to 11.2 percent in 2010, as the industry witnesses a recovery. The CAGR from 2006 to 2009 has remained at 10 percent and the industry is expected to grow at a rate of 13 percent in next five years. TV and Print are the largest sectors of the industry contributing to greater than 70 percent of the revenues. Their dominance is expected to continue going forward. Sectors like Gaming and Internet have shown the highest growth rates due to the small base effect and the trend is expected to continue.

M&E Industry

(INR billion)*

2006 2007 2008 2009 CAGR (2006-

09)

2010P 2011P 2012P 2013P 2014P CAGR (2009-

14)

Films 78 93 104 89 5% 96 105 115 125 137 9%

Television 183 211 241 257 12% 289 337 382 448 521 15%

Print 139 160 172 175 8% 190 206 225 246 269 9%

Radio 6 7 8 8 9% 9 10 12 14 16 16%

Music 8 7 7 8 2% 9 10 12 14 17 16%

Animation & VFX

12 14 17 20 18% 23 28 33 39 47 19%

Gaming 3 4 7 8 38% 10 14 20 26 32 32%

Internet 2 4 6 8 56% 11 15 18 23 29 30%

Outdoor 12 14 16 14 5% 15 17 19 21 24 12%

Total Size 443 516 579 587 10% 652 742 835 956 1091 13%

3. Events of 2009 and their impact going forward:

3.1 Poor performance at the box office There were 242 Hindi films (nearly 140 mainstream Hindi movies) released in 2009 as against 229 released in the previous year. Although the number of films released in India in 2009 was higher than the previous year, the number of films that were successful at the box office has been far less. The year 2009 had only four

0.41%

0.78%

1.08%

0.75%

0.90%0.80%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

India UK US China Japan World

Media Spend as a percentage of GDP


5

blockbusters as compared to the seven blockbusters in 2008 and six in 2007. Industry sources estimate that the percentage of successful films that were profitable to many of the stakeholders in 2009 was nearly half of that in 2008.

3.2 Multiplex strike and its after effects

The strike launched by Hindi film producers and backed by United Producers Forum lasted for two months and stalled several movie releases in multiplexes. As collections from multiplexes contribute a considerable percentage of a film’s gross domestic theatrical collections, the lack of major films released during this period resulted in significant losses for the industry. After the strike a number of films were released together, leading to the cannibalisation of revenues. The other significant fallout of this strike was the subsequent paucity of funds available to producers for their in-production films. A majority of the film producers were banking on post release revenues to fund their under-production projects, or market completed films. However this cash flow was delayed on account of the strike, forcing producers to postpone their planned releases. 3.3 New piracy laws in Maharashtra & Karnataka The Maharashtra Prevention of Dangerous Activities (MPDA) act was amended and enforced from in 2009. Similarly in Karnataka, the Karnataka Prevention of Dangerous Activities of Bootleggers, Drug- Offenders, Gamblers, Goondas, Immoral Traffic Offenders and Slum-Grabbers (Amendment) Bill, popularly known as the Goonda act bought film and video piracy under its purview in July 2009. The industry expects the legislations to help curb revenue losses due to audio and video piracy in the two states. Maharashtra and Karnataka are not the first states to pass such an act to tackle piracy; a similar law termed as the ‘Goonda’ act, was passed in Tamil Nadu in 2005, which has met with some success in curbing piracy in the state 3.4 Expected fall in the number of Hindi film productions While the overall number of Hindi films released did not fall, the number of new movie productions has been impacted. Since an average Bollywood movie typically takes between 10-16 months to produce, the number of movies released in 2010 end and early 2011 is likely to be impacted. 3.5 Cable and satellite rights - Closely linked to performance of television

channels Television broadcasters saw a revival in their advertisement revenues and utilisation levels leading to higher realisations for Cable and Satellite (C&S) rights in the later part of 2009. Many producers are finding it difficult to pre-sell the rights of their film, as broadcasters are increasingly acquiring the rights of a film post its theatrical release. As a result, the value of a film’s C&S rights is now even more closely linked to its domestic box office performance. Many of these rights are not sold outright to a single broadcaster, but are syndicated to a number of TV channels. An example is of ‘Ajab Prem Ki Ghazab Kahani’ getting INR 4.5 crores for its premier sale to Colors and then being syndicated at an additional value to NDTV Imagine for second airing rights. A number of film producers are also doing bulk deals where a film portfolio rather than a single movie is sold to the broadcasters. For instance, in December 2009 UTV entered into a deal based on which Colors would air the first show of a selective library of their films after which NDTV Imagine would air the second showing.


6

3.6 Release on DTH – A new revenue stream

Bollywood has so far followed a very traditional distribution model, with limited focus on alternative platforms. The DTH platform offers a new revenue stream for producers to monetise their filmed content. Progressive producers view the direct-to-home (DTH) platform as a means of supplementing their overall revenues, rather than as a threat to theatrical revenues, as the perception is that the big screen viewing experience cannot be compared with that of the small screen9. A number of films such as Slumdog Millionaire, Aa Dekhen Zara, Main Aur Mrs.Khanna and Ajab Prem Ki Ghazab Kahani were released on DTH this year within weeks of their domestic theatrical release. Although revenues from DTH releases currently comprise a small portion of overall revenues, the industry is optimistic about its futurepotential. 3.7 Rationalising of talent costs and emerging business model In 2009, producers reported a 20-40 percent reduction in talent costs as compared to 2007-2008. A new trend that has emerged is that of a profit-sharing model between actors and production companies, wherein top actors take a small upfront fee and a share of profits in lieu of the larger portion of their fee. This model allows the economics of a film to work better by improving the risk bearing capacity of producers13 and linking actors’ remuneration to a films commercial success. 3.8 Efficiency in production The high cost base without a corresponding increase in revenue for films green lit in 2007/08 forced producers to look for innovative ways to cut costs and improve production efficiency. For example, producers chose to shoot in outdoor locations closer to home rather than in far off exotic locations and initiated active budget monitoring and cost control processes. Producers also made use of subsidies and co-production treaties in place to arrive at a cost effective and quality conscious model. These lessons learnt are likely to hold the industry in good stead in the future. 3.9 Innovative marketing and promotions With decreasing theatrical windows, the importance of progressive marketing and promotions is growing. An integrated marketing campaign by the producers, distributors and exhibitors to attract audiences and drive better monetisation within the limited theatrical windows available today is critical for the industry.


7

4. Growth rate of the industry (In Billion)

Indian Film Industry

Film industry (INR bn)

2006 2007 2008 2009 CAGR (2006-

09) 2010P 2011P 2012P 2013P 2014P

CAGR (2009-

14)

Domestic Theatrical

62.1 71.5 80.2 68.5 3.3% 73.3 79.3 85.8 93 100.8 8.0%

Overseas Theatrical

5.7 8.7 9.8 6.8 6.2% 7.3 7.9 8.6 9.3 10.1 8.0%

Home Video*

2.9 3.3 3.8 4.3 13.1% 4.7 5.2 5.9 6.6 7.4 11.8%

Cable & Satellite Rights

5 6.2 7.1 6.3 7.9% 7 7.9 9 10.1 11.4 12.8%

Ancillary Revenue Streams

2.5 2.9 3.5 3.5 12.9% 4.1 4.7 5.4 6.2 7.1 15.0%

Total Industry Size

78.2 92.7 104 89.3 4.6% 96.5 105.1 114.6 125.2 136.7 8.9%

0

20

40

60

80

100

120

140

20062007

20082009

2010P2011P

2012P2013P

2014P

62.1 71.5 80.2

68.5 73.3 79.3 85.8 93 100.8

5.7

8.7

9.8

6.87.3

7.98.6

9.310.1

2.9

3.3

3.8

4.34.7

5.25.9

6.6

7.4

5

6.2

7.1

6.67

7.9

9

10.1

11.4

2.5

2.9

3.5

3.54.1

4.7

5.4

6.2

7.1

Domestic Theatrical Overseas Theatrical Home Video Cable & Satellite Rights Ancillary Revenue Streams


8

5. Share of domestic theatrical revenues

2009 2014E

6. Comparison of the revenues

7. Revenue Contribution from Domestic Film Territories evenue

contribution from domestic film territories for Hindi films Territory Percent

Indicative revenue contribution from domestic film territories for Hindi films

Territory Percent

Bombay (Mumbai, Thane, Western Maharashtra, Gujarat) 40%

Delhi and UP (Delhi City and UP) 20 - 22%

Punjab (Punjab, Haryana, J&K, Himmachal) 7.5 - 9%

Rajasthan 5 - 5.5%

C.I. (parts of Madhya Pardesh) 3.50%

CP Berar (majority of MP, all Chittisgarh, East Maharahstra) 5 - 5.5%

Bihar and Jharkhand 1 - 2%

Bengal 4.5 - 5%

Assam 0.50%

Orissa 0.50%

Nizam and Andhra (South East Maharahstra and all AP) 5 - 5.5%

Mysore (all Karnataka) 3.5 - 4.5%

Tamil Nadu and Kerala 1 - 1.5%

Nepal 0.25%

Estimated Net Collections for 1st

Week in Mumbai circuit: INR 27.25 Cr.

Number of Cinema in Mumbai Circut:

70

Dabangg

(2010)


9

8. Revenue Contribution from International Film Territories ev

enue

Indicative revenue contribution from international film territories for Hindi films

Territory Percent

USA and Canada 30 - 33%

UK and Europe 30 - 33%

UAE 15 - 20%

Australia and New Zealand

20 - 25% Pakistan

South East Asia (Fiji, Singapore, Malaysia, Indonesia)

Africa (South Africa, Kenya)

10. Top first week box office collection

Top First Week Earners

Film Date Cinemas Nett Gross Cinema

Average

Ghajini (8 Days) 25 Dec 2008 1125 64,41,00,000 5,72,533

Rab Ne Bana Di Jodi 12 Dec 2008 956 42,19,00,000 4,41,318

Singh Is Kinng 8 Aug 2008 969 39,72,00,000 4,09,907

Golmaal Returns (9 Days) 29 Oct 2008 847 38,69,00,000 4,56,789

Om Shanti Om 9 Nov 2007 896 36,97,00,000 4,12,612

Welcome 21 Dec 2007 873 33,46,00,000 3,83,276

Race 21 Mar 2008 908 33,37,00,000 3,67,511

Dhoom 2 24 Nov 2006 744 32,36,00,000 4,34,946

Krrish 23 Jun 2006 705 29,87,00,000 4,23,688

Kabhi Alvida Na Kehna 11 Aug 2006 665 28,49,00,000 4,27,970

Partner 20 Jul 2007 736 28,31,00,000 3,84,647

13

8.1

10.19.3

10.25

0

2

4

6

8

10

12

14

Three Idiots My Name Is Khan

Kites Housefull Raajneeti

Ru

pe

es

in C

rore

9.The first day collection of top five Movie


10

New York 26 Jun 2009 741 27,47,00,000 3,70,715

Dostana 14 Nov 2008 686 26,90,00,000 3,92,128

Don 20 Oct 2006 677 26,05,00,000 3,82,422

Chandni Chowk To China 16 Jan 2009 1032 25,88,00,000 2,50,775

Heyy Babyy 31 Aug 2007 681 24,60,00,000 3,61,233

Bhool Bhulaiyaa 12 Oct 2007 699 23,59,00,000 3,37,482

Sarkar Raj 06 Jun 2008 792 23,54,00,000 2,97,222

Delhi 6 20 Feb 2009 843 22,58,00,000 2,67,853

Jodhaa Akbar 15 Feb 2008 767 22,34,00,000 2,91,265

Fanaa 20 Oct 2006 563 22,27,00,000 3,95,560

Chak De India 10 Aug 2007 422 22,01,00,000 5,21,564

11. Distribution of multiplexes and single screens in India

Multiplexes Single Screens

12. Certified films by Indian languages

20 22 19 19

80 78 81 81

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009

Others

Hindi


11

Bengali7%

Malayalam8%

Kannada17%

Tamil17%

Telugu24%

Others6%

Bhojpuri6%

Marathi10%

Gujarat5%

13. Certified films by regional languages

Indian media and entertainment 2010

Entertainment & Humor

Transcript of Indian media and entertainment 2010