PROJECT REPORT

Media & Entertainment

MENTOR : Prof. Laxman

Submitted By:

Batch:

2009-11

Mr.

Satish Suryawanshi

Mr. Vijay

prakash

Evolution

Mass media helps in connecting people and

"brings the globe into our glance". Let us take a look into the

history as well as origin of mass media, which is also

popularly known as public media. Mass media includes print

media like newspaper and magazines, electronic media like

radio, television and video and new age digital media like

internet, blogs and mobile phones. To know the origin and

history of media, we should know the growth and evolution of

mass media.

History and Origin of Media & Entertainment

History of mass media can be traced back to

the early days of dramas that were performed in various

cultures. However, the term Mass Media originated with the

print media that was also its first example. The first

newspaper was printed in China 868 A.D, but due to the high

cost of paper and illiteracy amongst people, it didn’t prosper.

Regarding the origin of the Mass Media, Europe can boast to

be the primary source. It was Johannes Gutenberg, who for

the first time printed a book in a printing press in 1453.

Gradually, during the period post-Second World War, radio,

television and video were introduced. The audio-visual

facilities became very popular as they provided information

and entertainment. Of late, it is the Internet which has

become the latest and most popular of the mass media.

Here, information is been generated through various websites

and search engines. One can play games, listen to radio while

working and chat with friends and relatives, irrespective of

location. It also gives information on various topics such as

literature, politics, science, sports, fashion, movies,

education, career, jobs etc. similar to other types of mass

media.

Thus, due to the progress of science and technology,

history of media has evolved and reached the present-day

world of internet, cellular phones, blogs, podcast

Key Drivers

Economic growth of the country in general and rising

disposable income levels in particular.

Gradually liberalizing attitude of the government.

Greater interface with international companies.

Privatization and growth of the radio industry.

Advancement in Technology.

Favorable regulatory initiatives.

Liberalized foreign investment regime.

The size of E&M in India is currently estimated

at Rs. 437 billion and is expected to grow at a compounded

annual

growth rate of 18 percent over the next five years. In the last

year, the Industry has grown by 20 percent.

The Indian Entertainment and Media industry is

projected to grow from an estimated Rs. 437 billion to Rs. 1

trillion in 2011, translating into a cumulative growth of 18

percent over the next five years. One of the key reasons for

this high projected growth is the fact that the Entertainment

and Media industry is a cyclical industry that grows faster

when the economy is expanding.

The Indian economy continues to perform

strongly and one of the key sectors that benefits from this

fast economic growth is the E&M industry. It also grows faster

than the nominal GDP during all phases of economic activity

due to its income elasticity wherein when incomes rise, more

resources get spent on leisure and entertainment and less on

necessities. Further, consumption spending itself is

increasing due to rising disposable incomes on account of

sustained growth in income levels, and this also builds the

case for a strong bullish growth in the sector.

Television

Subscription revenues are projected to be the

key growth driver for the Indian television industry over the

next five years. Subscription revenues will increase both from

the number of pay TV homes as well as increased

subscription rates. The buoyancy of the Indian economy will

drive the homes, both in rural and urban (second TV set

homes) areas to buy televisions and subscribe for the pay

services. New distribution platforms like DTH and IPTV will

only increase the subscriber base and push up the

subscription revenues

Growth of TV Channels in India

The number of private satellite TV channels has

grown astronomically over the years, from 1 TV channel in

2000 to 273 TV channels in 2007 (till 31.12.2007). The

number of non-news & current affairs TV channels has grown

from 0 to 115 and that of news & current affairs TV channels

has grown from 1 to 158.

DTH Service

Direct-To-Home (DTH) Service refers to distribution

of multi-channel TV programmes in Ku Band by using a

satellite system for providing TV signals direct to subscribers'

premises.

DTH provides subscribers the advantage of

geographical mobility meaning thereby that once a customer

purchases DTH hardware, he/she can continue to use the

same unit anywhere in India. DD DIRECT+ is India's first and

only Free To Air (FTA) Direct-To-Home Service being provided

by Prasar Bharati. Apart from Prasar Bharati - a public service

broadcaster, M/s Dish TV India Ltd. M/s Tata Sky Ltd, and M/s

Sun Direct TV Pvt. Ltd. M/s Reliance Big TV Pvt. Ltd., M/s

Bharti Telemedia Ltd.and M/s. Bharat Business Channel Ltd.

have also been granted license for operating DTH service.

The eligibility conditions provide for total foreign

equity holding, including FDI/ NRI/ OCB/ FII, in the applicant

company not to exceed 49%, and within the foreign equity,

the FDI component not to exceed 20%. It also provides that

applicant company must have Indian management control

with the majority representatives on the Board as well as

Chief Executive of the Company being resident Indians.

Filmed entertainment

Indians love to watch movies. And advancements

in technology are helping the Indian film industry in all the

spheres – film production, film exhibition and marketing. The

industry is increasingly getting more corporatised. Several

film production, distribution and exhibition companies are

coming out with public issues. More theatres across the

country are getting upgraded to multiplexes and initiatives to

set up more digital cinema halls in the country are already

underway. This will not only improve the quality of prints and

thereby make film viewing a more pleasurable experience,

but also reduce piracy of prints.

Print media

A booming Indian economy, growing need for

content and government initiatives that have opened up the

sector to foreign investment are driving growth in the print

media. With the literate population on the rise, more people

in rural and urban areas are reading newspapers and

magazines today. Also, there is more interest in India

amongst the global investor community. This leads to

demand for more Indian content from India. Foreign media

too is evincing interest in investing in Indian publications. And

the internet today offers a new avenue to generate more

advertising revenues

Radio

The cheapest and oldest form of entertainment

in the country, which was hitherto dominated by the AIR, is

going to witness a sea-change very shortly. In 2005, the

government opened up the sector to foreign investment –

and this is the key factor that will drive growth in this sector.

As many as 338 licences are being given out by the Indian

government for FM radio channels in 91 big and small towns

and cities. This deluge of radio stations will result in rising

need for content and professionals. New concepts like

satellite, internet and community radio have also begun to hit

the market. Increasingly, radio is making a comeback in the

lifestyles of Indians.

FM radio

During the year, the Cabinet approved the grant of

permission to the FM broadcasting companies for creation of

subsidiaries, and merger/demerger/amalgamations of

companies by way of transfer of shares in partial modification

of the policy on expansion of FM Radio Broadcasting services

through Private Agencies (Phase-II). Total 241 private FM

Channels are operational in 83 cities of the country. A total

amount of Rs.1609 crores received by way of licence fees

from private FM Channels, including Rs.40.5 crores during the

current year. The Government has also conveyed its views on

FM Phase III policy to TRAI and sought for its

recommendation.

FM Policy Phase-II has been well accepted by

all stakeholders, which resulted in huge growth not only in FM

radio industry but also in employment opportunity and has

also created a demand for FM radio in other cities. Keeping

this in mind and to accelerate further growth of FM industry,

the Government intends to further expand FM radio to other

cities through private agencies under Phase-III.

Satellite Radio

At present M/s Worldspace India Private Ltd, a

wholly owned subsidiary of M/s Worldspace Asia Pvt. Ltd.

Singapore is providing these services under an FIPB approval

dated 7.12.1998. World Space has been permitted to

undertake the following activities -

(i) For setting up of a 100% wholly owned subsidiary for

carrying out software programming activities in India in the

fields of educational, sports and entertainment software

programs as under:

(a)Sourcing/commissioning/production of digital audio and

multimedia software programs for international and domestic

market.

(b)Setting up state-of-art studios using latest equipment.

(c)Providing research, consultancy & other service in related

areas.

(ii) To import digital satellite receivers, data adaptors, PC-

add-on cards and accessories and sell the same to the

distributors/ dealers either as customs bonded warehouse

sale or on a cash and carry basis for introducing international

standard, state-of-the-art audio receivers in India to meet the

growing requirement for use of World space systems for

different application including education, disaster

management and development communications.

(iii) To set up customer care centre in all the major centers.

(iv) To carry out various services to its parent/associates

companies in realizing the revenue opportunities arising out

of education, information and entertainment and other

services of World space Systems like collection of revenue.

Usage of revenue collected for activities specified by World

space in India.

(v) To establish a call centre and services.

Community Radio

Radio as a communication medium plays an

important role in the nation's sociocultural, political and

economic development. Community radio, as distinct from

public service broadcasting, serves to bring small

communities together, focuses on the common man's day-to-

day concerns and helps in realising local aspirations. In a

number of countries, community radio has played an

important role in informing and empowering people,

especially the poor and vulnerable groups and gives a voice

to the voiceless.

The Policy on Community Radio was liberalized during the

year 2008 to bring in the civil society and voluntary

organizations working not for profit also under its ambit. Only

educational institutions were earlier permitted to set a

community radio. The policy has been liberalized by the

government with a view to allow greater participation by the

civil society on issues of development and social change.

Presently, 29 Community Radio Stations are operational. Out

of this, 28 institutions were granted permission under the old

guidelines and one Institution viz. Delhi University was given

permission.

Music

The industry has been plagued by piracy and had been

showing very sluggish growth over the last few years, both in

India and globally. However, ‘mobile music’ and ‘licensed

digital distribution’ services are projected to fuel the recovery

of the music industry the world-over. The pace of growth in

mobile music reflects the fact that consumers increasingly

view their wireless device as an entertainment medium,

using those devices to play games and listen to music, while

carriers are actively promoting ancillary services such as

ringtones to boost average revenue per user. Ringtones

currently constitute the dominant component of the mobile

music market. Licensed digital distribution services are also

contributing significantly to growth in all regions.

Live entertainment

This segment of the entertainment industry,

also known as event management, is growing at a fast and

steady rate. While this industry is still evolving, Indian event

managers have clearly demonstrated their capabilities in

successfully managing several mega national and

international events over the past few years. In fact, event

managers are also developing properties around events. The

growing number of corporate awards, television and sports

events are helping this sector. With rising incomes, people

are also spending more on wedding, parties and other

personal functions. However, issues like high entertainment

taxes in certain states, lack of world-class infrastructure and

the unorganized nature of most event management

companies, continue to somewhat check the potential growth

in this segment of the industry.

Out-of-home advertising

Outdoor media sites in India are predominantly

owned or operated by small, local players and are typically,

directly marketed by them to advertisers and advertising

agencies. However, this segment too is witnessing a sea-

change with technological innovations. Growing billboard

advertising is fuelled by technologies such as light-emitting

diode (LED) video billboard. This is a segment that is seeing

interesting technological innovations across the world and is

likely to evolve in India too in the short-term.

Internet advertising

An estimated 28 million Indians are currently

hooked on to the internet. And this rising number is leading

to the growth of internet advertising, which today stands at

approximately INR 1 billion. The internet is being used for a

variety of reasons, besides work, such as chatting, leisure,

doing transactions, writing blogs etc. This offers a huge

opportunity to marketers to sell their products. And with

broadband becoming increasingly popular, this segment is

expected to grow by leaps and bounds.

Recent Developments

During the year 2008-09, 15 proposals for

FDI in Indian entities in the news and current affairs sector

have been approved. Further, permission has been given for

publication of 189 Indian editions of foreign speciality,

technical and scientific magazines. Permission has also been

given for publication of 106 specialties, technical and

scientific magazines by Indian entities, who have taken FDI.

Availability of Indian editions of foreign scientific, technical

and specialty periodicals at an affordable cost has benefited

the students, professionals and the scientific and technical

community greatly.

As a further measure of policy

liberalization, Government has allowed Indian edition of

foreign news magazines for facilitating wider readership at

affordable prices. Also, Government has recently announced

facsimile edition of international news papers to be brought

to be India. Government has reviewed the print

advertisement policy and brought about changes to support

small and medium newspapers.

As per that policy, advertisement support

has been increased from 10% to 15% for Small newspapers

and from 30 to 35% for Medium newspapers, in money terms.

Minimum publication period requirement drastically reduced

from 36 months to 6 months for regional languages

newspapers.

Investment Opportunities

Theatre/ Multiplex Infrastructure

Television Segment

Film Entertainment

Animation Segment

Print Media

Mobile Entertainment

Television Software Content

Advertising

Policy Framework

a. FDI Policy

The government of India has put in place a

liberal and transparent investment policy. FDI up to 100 per

cent is allowed under the automatic route in most

sectors/activities. FDI policy in India is reckoned to be among

the most liberal in emerging economies.

The entertainment and media industry has also benefitted

considerably from the initiatives taken by the government

over the years. The FDI limits in the various segments of the

entertainment and media industry are highlighted below:

b. Film Industry

Under automatic route upto 100 per cent FDI is permitted in

film industry (i.e. film financing, production, distribution,

exhibition, and marketing and associated activities relating to

film industry) subject to the following:

Companies with an established track record in films, TV,

music, finance, and insurance would be permitted

The company should have a minimum paid up capital of

US$ 10 million if it is the single largest equity

shareholder and at least US$ 5 million in other cases

Minimum level of foreign equity investment would be

US$ 2.5 million for the single largest equity shareholder

and US$ 1 million in other cases

Debt equity ratio of not more than 1:1, i.e., domestic

borrowings shall not exceed equity.

c . Radio Industry

Up to 20 per cent FDI is allowed in Radio Industry subject to

an approval from Foreign Investment Promotion Board (FIPB)

in addition to the guidelines notified by Ministry of

Information and Broadcasting.

d. Print Media

The regime of Foreign Investment in Indian

entities publishing newspapers and periodical is as follows: -

I. Foreign investment (including FDI) upto 74% in Indian

entities publishing scientific/technical and speciality

magazines/ periodicals/journals.

Where only Indian editions of foreign

scientific/technical/ speciality journals etc. are being

published with no foreign investment (including FDI) being

made, the Ministry of Information and Broadcasting will give

approvals on a case by case basis subject to prescribed

conditions.

II. FDI upto 26% in Indian entities publishing newspapers

and periodicals dealing in news and current affairs with

suitable safeguards like verification of antecedents of foreign

investor, keeping editorial and management control in the

hands of resident Indians and ensuring against dispersal of

Indian equity.

Industry size and Growth Potential

The Indian Entertainment and Media industry, yet

again, continues to out-perform the Indian economy and, yet

again, is one of the fastest growing sectors in India.

Entertainment and Media industry generally tends to grow

faster when the economy is expanding. The Indian economy

has been growing at a fast clip over the last few years, and

the income levels too have been experiencing a high growth

rate.

Above that, consumer spending is

also on the rise, due to a sustained increase in disposable

incomes, brought about by reduction in personal income tax

over the last decade. All these factors have given an impetus

to the E&M industry and are likely to contribute to the growth

of this industry in the future. Besides these economic and

personal income-linked factors, there are other factors that

are contributing to this high growth rate. Some of these are

enumerated below:

Issues facing the industry (key challenges)

Though the Entertainment and Media industry

is growing in leaps and bounds, the full potential is yet to be

tapped. One of the ways of realizing the potential is not only

the removal of certain obstacles in the industry but also the

provision of certain incentives to key segments of the

industry in order to fuel the industry growth drivers further

and thereby realize its full potential. Some of the

recommendations as provided by FICCI are as below:-

Lack of a uniform media policy for foreign investment

The sector currently lacks a consistent and uniform

media policy for foreign investment. Some of the

inconsistencies include different caps in foreign direct

investment in various segments. This is enumerated below:

• Television distribution: DTH 49% (strategic FDI only 20%);

cable 49% (ownership can only be with India citizens).

• Content (news): Television and print - 26%; radio - nil

• Content (non-news): Television and print - 100%; radio 20%

(only portfolio)

Digitalization of Television Networks

India, today, does not have a national digital policy or

plan. Though the regulator TRAI came out with

recommendations for digitalization of cable networks, there

are several more measures that are required to be taken in

order for the industry to truly benefit from Digitalisation:

Conversion to digitalization should be mandatory and not left

on a completely voluntary basis

A clear time frame needs to be defined for transition to digital

including a launch date and a sunset date Licensing process

for allocation of spectrum should be made stringent to filter

out non-serious players e.g. net worth, proper declaration of

subscriber base, area of operation etc. Fiscal incentives such

as waiver of service and entertainment tax, income tax

holiday, etc. to be provided to operators for transition to

digital.

Uniform Entertainment Tax across all states

Since levy of entertainment tax and regulation of

cinemas is a State subject, the Centre presently has a limited

role to play. The long-standing demand of the film industry is

to shift ‘Entertainment and Media’ from the State List to the

Concurrent List through a constitutional amendments. This

will enable uniform policies for Cinema Construction Bye-laws

and Entertainment tax. There is a need to implement uniform

tax policies across the country, to enable standardized

growth. The recommendation is to have a uniform

Entertainment tax so as to stop reportage of short box office

collections resulting in a loss to the ex-chequer.

Customs Duty

Customs duty is levied on import of equipment and

other hardware used in the production and post production of

filmed entertainment programs. At a time when India is trying

to position itself as a hub for production of entertainment

and competing in the International market on an equal

footing, the necessary infrastructure and equipment is of vital

importance. To provide impetus to the technological

upgradation of facilities and infrastructure, the necessary

equipment and hardware must be allowed to be imported

without the additional burden of customs duty.

Multiplexes

An Income Tax Concession under Sec. 80 –1B of

the income tax act was introduced, with effect from 1st April

2002, allowing Multiplexes commissioning before 31st March

2005, an income tax rebate to the extent of 50% on book

profits. It is requested that this concession be reintroduced so

as to enable growth of exhibition sector in the country.

Piracy

As India moves into knowledge based economy,

a strong Intellectual Property regime which provides

adequate safeguards to the holder of copyright becomes

increasingly important. The menace of piracy is rapidly eating

away into the foundations of the entertainment industry. The

piracy issue should be handled at three levels; Policy,

Enforcement and Prosecution. The Industry recommends

allocation of specific funds to fight piracy of entertainment

content. This fund should be utilised in Advocacy and

awareness of the piracy issue and also enforcement & legal

matters.

Export Promotion

To promote Brand India, it is important that

Indian companies and producers participate in global festivals

and markets such as the Cannes & Berlin Film Festivals,

MIPCOM, MIDEM, MIPTV, IBC, NATPE, NAB, Interbee, AFM and

CASBAA under a common India umbrella. The Ministry of

Information and Broadcasting has taken initiative by deciding

to set up the task force with the specific aim of export

promotion. This council supported by adequate funding will

act as a catalyst for

exponential growth in exports of Indian Entertainment and

Media Industry.

Co- Production Treaties

Signing of Co-production Treaty with Canada, UK

is already being looked at by the Information and

Broadcasting Ministry. The Industry recommends that the

Government takes on further initiatives to enter into more

such treaties with many more countries so as to provide a

further boost to the Indian Film industry.

Education & Training

The Entertainment and Media industry today faces

an acute shortage of professionals. It is recommended that

suitable incentives should be provided by the Government for

setting up polytechnics, institutes and film schools. It is

recommended that existing universities should include Film,

Broadcast, Event Management and Digital technology in their

curriculum. Similarly, institutes of

Higher Learning like the IITs and the IIMs should be

encouraged to offer specialization in Media & Entertainment

Rationalisation of Customs Tariffs for Gaming Industry

Though the Global Gaming industry has been

growing in leaps and bounds across the world, advanced

gaming consoles are yet to penetrate the Indian market. One

of the primary reasons for the slow adoption is the high rate

of customs tariff applicable on the gaming consoles. The

customs tariff of approximately 36.74% translates to high

prices for such consoles, which affect affordability and

therefore access. These high tariffs are also leading to the

growth of a grey market in such products. Rationalization of

the tariff structures will therefore mean a more affordable

pricing structure that will enable greater

market access for such consoles.

Localization of Animation Content

Presently most of the animated content

shown in the networks are sourced from outside of India and

generally from the existing library at a discounted price. This

is one of the serious impediments on the growth of Indian

Animation Industry.

Many countries like Canada, China, Korea,

France, UK etc have made varying levels of mandatory

localization of content. Hence, FICCI has proposed 10%

mandatory local content on the networks to begin with and to

reach 30% over next three years as more indigenous

animation content gets prepared and

available for domestic / export markets.

Future prospects of industry

With the rapid advancement, in the next 5

to 10 years, it is probable that today’s leading media,

distribution, and advertising companies will continue to be

significant purveyors of branded content, services, and

commercial messages.

The future of Media and Entertainment industry depends

largely on the growth of Indian economy. The Indian economy

is growing at a fast rate; thus, there is also a bright future in

store for all the segments of the media and the

entertainment industry. With the incomes of the people rising

at a fast rate, people are spending more on their

entertainment and leisure activities. India is poised to enter

the period of immense growth in this sector.

The global entertainment industry is projected to

reach US$ 1.8 trillion by 2015. The Indian Media and

Entertainment industry is expected to grow at an annual

growth rate of 19% to reach Rs 83,740 crore by 2010.

The expected CAGR of various segments of the

Media And Entertainment industry in India till the year 2010

is as follows:

The expected CAGR of various segments of the Media And

Entertainment industry in India till the year 2010 is as

follows:

Radio - 32%

Music - 1%

Television - 24%

Film Industry - 18%

Print Media - 12%

The projected size of the various segments of the Media And

Entertainment industry in India till the year 2010 is as

follows:

Radio - Rs 1,200 crore

Music - Rs 740 crore

Television - Rs 42,700 crore

Film Industry - Rs 15,300 crore

Print Media - Rs 19,500 crore

Exciting new developments in the technologies

used in Media and Entertainment industry are taking place.

Animations, multiplexes, new distribution channels, the use

of Internet, are redefining the entertainment industry. All

these factors will favour the growth of Media and

Entertainment industry in India.

It is certain, however, that their business

models, revenue streams, competitive dynamics, and core

partnerships will evolve in radically new ways. The path

ahead is fraught with risk as well as rewards. On the supply

side, media providers, network operators, advertisers, and

measurement companies must contend with the challenges

and opportunities that stem from new ways of working with

one another. The demand side faces a similar set of

challenges and opportunities for consumer interaction.

In both cases, video content and delivery

companies must fully grasp that theirs is not a production

challenge of porting media content onto various devices, but

rather an orchestration challenge for delivering a quality

media experience that has lifestyle-enhancing qualities.

As content owners, network operators,

advertisers, and measurement companies begin to deliver

their goods and services through broadband, they become

more reliant on relatively immature technologies and on

partnerships and business relationships considered

unthinkable just a few years ago. These are early days for IP-

based video services, and marketplace participants must

understand how convergence affects current business

processes. During this evolutionary period, many different

paths towards a converged media environment will be tried.

There is likely to be increased complexity, as well as

economic inefficiencies, early on. However, as the different

industry participants collaborate on changing consumer

activity and business models, the refinement of the media

marketplace approach will become possible.

After the buzz of convergence deal-making

and new product launches has subsided, general business

principles rather than novel features will start to differentiate

companies. The payment process for on-demand video

content provides an example. From an operational point of

view, this payment for a single piece of content could include

one or more of the following: direct payment to the content

originator from a consumer; a portion of revenue to the

content originator, passed back by a distribution partner such

as a network provider; or payment by an advertiser for

placing a commercial message.

As we believe that convergence will play a very

crucial role in the development of the Indian entertainment

and media industry where consumers will increasingly be

calling the shots in a converged media world.

The term convergence describes two trends:

the ability of different network platforms (broadcast, satellite,

cable, telecommunications) to carry similar kinds of services;

and the merging of consumer devices such as telephones,

televisions or PCs. From a technology perspective, the twin

forces accelerating convergence are increased broadband

penetration and increased standardisation of networks and

devices to use the Internet Protocol (IP).Convergence

collapses previously distinct media distribution channels (for

example, broadcast/cable television, radio, print, online) into

a single delivery chain. A converged infrastructure supports a

range of interaction modes between users and content.

Convergence will thus require increased

collaboration between value chain partners to drive new

products and services to consumers. For content owners,

conducting researches to understand the needs of the

Lifestyle Media consumers will become crucial. They will need

to develop strategies for owning social networks and

capturing consumer activity information and will need to

develop convergence-native content rather than concentrate

solely on re-packaging existing content for multiple

platforms.

The Indian entertainment and media industry

today has everything going for it - be it regulations that allow

foreign investment, the impetus from the economy, the

digital lifestyle and spending habits of the consumers and the

opportunities thrown open by the advancements in

technology. All it has to do is to cash in on the growth

potential and the opportunities. The government, on its part,

needs to play a more active role in sorting out policy-related

impediments to growth. The industry needs to fight all

roadblocks- such as piracy- in a concerted manner, while

churning out high-quality, world class end products. The

entertainment and media industry has all that it takes to be a

star performer of the Indian economy.

BIBLIOGRAPHY:-

JOURNAL: - The Brand Reporter

WEBSITE: - www.imf.org

www.ibef.org

www.ficci.com

www.indiainbusiness.nic.in