There are two key generators of revenue for the E&M industry i.e. the Advertisement-spend and the second being the Consumer-spend. The Advertisement-spend is approximately 35% of the total revenue of E&M Industry, which accrues to sectors like print, radio, TV, out-of-home media and internet to some extent. On the other hand Consumer-spend comes mainly in the form of cable subscription, internet subscription as well as ticketing revenues for films.
For India to get extraordinary growth one will have to think of expanding both of the key elements substantially. The assumption of 17-18% growth in the next seven years already takes into account most of the growth drivers like expansion on categories, better targeting, new channels, new screens, all are part of the strategy which has been considered. Where then are we likely to get growth, which presently is not envisioned?
In addition to this, the question is also of falling GDP growth, which is negatively impacting Advertisement growth in the country. Advertisement growth which was till last year envisioned to grow at around 12% on an average has taken a downturn and would perhaps grow lower than the GDP if the trends remain negative. Consumer spend too is affected though the silver lining in the current period is that the subscription fee will be better largely due to the success of the ongoing digitization process on the distribution side. This would be largely revenue which will come under the accountable fold and hence be available for sharing to content providers & broadcasters. However, this may not mean an expansion of the market in real terms.
Then where do we look for the forecasted growth as well as the extra growth that the industry is looking for?
The macro factors will play their part and it may not be within industry’s capability to control them. Thus, what the industry can do is to do better with the elements it has in-hand. There is a widely held belief in the E&M Industry worldwide, which is relevant for India, that ‘Content’ is King and ‘Distribution’ is God. I believe that there is merit in looking at both of these concepts very closely for a likely solution not only to get growth but also for sustainable growth.
If we look at the content in India today, whatever is produced is produced for Indian audiences in India or abroad. There definitely needs to be a disruptive thought process to improve content that will appeal to worldwide audiences. Larger reach with different delivery formats will bring larger budgets as well as significantly disproportionate increase in revenue. What will also be significant will be the measure that will improve the monetization of that content across markets over a period of time. This can happen through rational IPR policies and their strict application.
Lets stay with ‘Content’ for the time being and explore ways where we can produce and monetize content to achieve the abovementioned.
More on that in the next installment…