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Home >Industry >Media >Media sector may touch `1.75 trillion in five years

New Delhi: India’s entertainment and media (E&M) sector is expected to grow at a compounded annual growth rate of 17% between 2012 and 2016 to touch 1.75 trillion, according to a report by Confederation of Indian Industry (CII) and PricewaterhouseCoopers (PwC).

The projections take into account the advertising and subscription revenue growth rate in the sector. The report will be released at a CII media summit in New Delhi on Monday.

Print and television will continue to be the dominant players in the advertising industry even though the share of print is expected to decline. The report projects television to have a 43% share of total advertising in India in 2016, compared with print’s 41%. In 2011, print’s share was higher at 44% versus television at 41%.

Still, the print media in India will grow at a healthy rate of about 9%, said Smita Jha, leader, entertainment and media practice at PwC. “The beauty of India is we are still 10 to 15 years away from what we are seeing happen elsewhere. The companies must use this time to build a sustainable digital model considering that globally there is still no such model. The Indian media industry could set its own benchmarks in this field," she said.

The growth projections for the entertainment and media industry are driven largely by the growth in Internet and online medium. “If you remove that, the E&M industry is expected to clock a 12.8% growth rate in the next five years," Jha said.

At current spends, India is the 14th largest entertainment and media market in the world, with advertising expenditure of 0.3% or 0.4% of gross domestic product (GDP). The developed markets spend between 1.2% and 1.45% of their GDP in advertising.

For India to be counted among the top five markets in the world, it will have to increase advertising and consumer spending on the media and entertainment sector, as well as focus on policy and improving infrastructure. Currently, companies in India spend between 3% and 4% of their revenue on advertising. “This needs to go up to 5% to 6%," Jha said.

Even on the consumer side, the expenditure on media and entertainment, including film tickets, newspaper and television subscriptions, must go up for India to feature among the top markets. Indian consumers spend approximately $7 a year on consuming media and entertainment. The comparative figure for China is $22, while it is much higher for developed markets. For instance, the average revenue per user for television in the US is $58 a month and in the UK it is $46. The corresponding figure for India is $3.7.

To touch $100 billion, the industry will require higher broadband penetration, improved audience measurement mechanisms and stronger regulatory framework. According to Chandrajit Banerjee, director general, CII, “Working to attain the target in the coming years will not only benefit the industry but also create large-scale employment and help achieve India’s goal of being a knowledge-driven economy through effective media."

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