Digital delivery to rejig media industry

Digital delivery to rejig media industry

The use of new technology, digitization of content and new distribution platforms will see India’s media and entertainment industry grow at twice the rate of the country’s economy for the next three years, according to a joint study by audit and consultancy firm Ernst and Young (E&Y) and industry lobby group Associated Chambers of Commerce and Industry (Assocham).

The study, released on Wednesday, said digitization would cause a significant change in the industry, currently worth Rs44,000 crore in revenues.

“Film and television account for over 50% of the entire media and entertainment industry and, with digitization, which is largely driven by change in media consumption habits of consumers and regulatory pressures, half the business will completely change over the next three years," predicted Farokh Balsara of E&Y.

The study, India’s Digital Revolution: Impact on Film and Television Sectors, predicted that by 2010, 28% of an estimated 100 million pay-television households will be on digital pay-television platforms with direct-to-home (DTH) emerging as the most popular delivery mechanism compared to digital cable service and IPTV (Internet protocol television).

The study was conducted over the past three months by interviewing industry executives and related groupsin Mumbai, New Delhi and Chennai.

With around 70 million households, India is the third largest cable and satellite market in the world and has seen a 38% compounded annual gro-wth rate over the past 17 years.

Balsara said: “The pay-TV market in India has not been able to maximize its revenues due to restrictive regulations, an unorganized value chain and lack of addressability in the analogue platform.

“However, with digitization of the platforms, more value will be created for each player across the value chain."

Currently, local cable operators account for 78% of the market in terms of reach; this will come down to 54% by 2010, Balsara added.

The study said changes in the consumption habits of consumers will have implications on advertising revenues of different media platforms as well.

According to the study, online advertising spends currently stand at around Rs350 crore compared to overall media spending of around Rs22,000 crore.

In the next three years, the share of online advertising will increase, said the study.

It, however, added that this will not happen at the cost of television advertising, which currently accounts for 43%of all advertising spends by revenue.

“For broadcasters, most revenues come from advertising (around 70-80%, according to the study), but with digitization, there will be a greater transparency in terms of subscription numbers and advertising’s contribution will likely change to around 50%," said Vikram Kaushik, chief executive, Tata Sky Ltd, a DTH service provider.

In films, “Over the next three years, we expect the home entertainment segment to constitute about 25% of a film’s (total) revenues as against the current share of 5%," said Balsara.

“Digitization will aid the emergence of more integrated media companies operating across different platforms," said Ronnie Screwvala, chairman, UTV Motion Pictures Ltd.