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Business News/ Industry / Companies explore new revenue models on the back of growth in digital media
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Companies explore new revenue models on the back of growth in digital media

Jehil Thakkar on the growth in advertising and how increasing spend by e-commerce firms will boost India's media and entertainment industry

Jehil Thakkar, Leader, Entertainment Practice KPMG, speaks during the inaugural session of Ficci Frames 2015 event in Mumbai. Photo:Aniruddha Chowhdury/MintPremium
Jehil Thakkar, Leader, Entertainment Practice KPMG, speaks during the inaugural session of Ficci Frames 2015 event in Mumbai. Photo:Aniruddha Chowhdury/Mint

Mumbai: Growth in advertising and healthy spending by e-commerce and telecom companies will boost India’s media and entertainment industry, said Jehil Thakkar, head of media and entertainment at consulting firm KPMG. Speaking on the sidelines of the Ficci Frames conference in Mumbai, Thakkar comments on growth in subscription revenue, increase in deal activities and why companies will look at exploring new revenue models. Edited excerpts:

What is the sort of growth we can expect from the Indian media and entertainment sector this year?

The growth forecast is certainly better compared to the previous year. For one, overall economic prospects are looking better, which is great given that we are an advertising-dependent country and ad spends are expected to remain robust. We’ve seen the emergence of 2-3 new categories of advertisers over the past year, including e-commerce which was massive as an industry in 2014 and is only going to grow bigger this year.

There has been plenty of deal activity in this space and if we do see an IPO (initial public offer) take place, funding in this sector will be exponential. What’s interesting to note is that efforts behind phase 1 and 2 of digitization is finally coming to fruition, whether it’s ARPU’s (average revenue per user) moving upwards or even the uptake in HD (high definition). If new pricing structures take hold within the industry then it will help benefit the entire TV value chain.

Can we expect more consolidation in the sector?

We’re continuing to see larger deals occur in the entertainment and film segment. For instance, tie-ups for digital distribution platforms and the like. I expect to see a lot more action in the DTH (direct to home) and cable space as the ecosystem starts to show promise and foreign investors also look at investing in this space. We have already seen plenty of deal activity in the radio space and it may pick up a few years after phase 3 of FM radio licenses. The TV and broadcasting industry is more or less done with consolidation, with 4-5 big broadcasters in the industry.

A number of traditional firms are shifting focus towards new media and building exclusive content. Can we expect to see a bigger shift?

Absolutely, and this isn’t just from a broadcasters perspective. The boundaries are increasingly blurring. Going forward, you might see a film company launch a platform to showcase TV shows, and vice versa with a new media company. Earlier, broadcasters launched platforms that showcased only their content. That doesn’t really work. People will watch content that’s appealing to them and not because it belongs to a certain broadcaster.

What about the focus on regional markets and regional content?

Regional was big the previous year and continues to grow at a robust pace this year as well. The whole ecosystem is expected to go from strength to strength. Towards the end of the year, as radio moves towards higher frequencies across the country and more markets, we will see regional print players become more active and acquire radio networks. You can also expect print media companies to look at broadcasting and radio with renewed interest, as they realize over a period of time that long-term business models need to be tweaked. While print as a segment continues to remain big, companies will look to de-risk and go across media. That’s where you can expect to see a lot more deal activity as well.

Will the government’s Digital India initiative give a push to reforms in this sector?

The industry is quite optimistic about this. However. as with anything, the key really lies in execution. We will have to wait to and see how it pans out. However, it will certainly transform the industry, if implemented well.

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Published: 26 Mar 2015, 03:23 PM IST
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