Category Archives: Media

Content, yes but economics?

Content is no doubt the key to hold the audience attention. The demand for video content with the proliferation of TV, OTT and other platforms vying for consumer connect is set to boom. Therefore and rightly so access to content is key to any successful venture in the Entertainment and Media space.

The expansion in the content marketplace has not only led to new content producers but also significantly added to the quality of content that would be availiable. Platform players while they would be happy with more productions will also have to contend with higher cost. Producing content both for web series, short movies and movies for OTT is vastly different from the massy advertisement led content produced for TV at least in India. Therefore the content costs have risen or are set to rise exponentially over the next few years. Without the comfort of advertisement and the level of subscriptions low and not growing in tandem, is the industry in danger of outspending itself into oblivion?? Problem is very real with only a likelihood of a few winners and many losers.

The Producers on the other side are likely to multiply as they sense a lucrative opportunity over the next few years. With platforms like Netflix , Apple,Amazon, Hotstar , MX2, budgeting huge amounts for acquisition of content it’s clearly boom time.

However Indian content houses have typically done TV content on a cost plus basis and that too massy as well as not of particularly high quality. To improve and deliver in the new world will require origination skills besides pure production not to mention the ability to sell. Much of the value for content lies in their IPR’s which presently are not retained by the content producers. They will need to keep that in mind if they are to create wealth for their stakeholders.

Will be interesting to observe how the business models develop. However both the platforms and the content producers will have to work at the ‘Economics‘ to create value!

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Where is the growth going to come from?

growthThere 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… 

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Hi, Welcome to my blog!


Entertainment & Media industry with revenue of USD 17 billion has always been in the news, whether it is for the glamour quotient, myriad controversies, its growth in the past or the future potential of the same. Although, there are enough forums and tabloids that cover the glamour as well as the controversy part of this huge industry, not much has been written about the growth and the future aspects of the same.

Through this blog, my endeavour is to provide a two-way platform to discuss the future growth potential as well as the business model of an industry that is in the throes of a big change worldwide. The other reason for this blog is more personal as I want to remain connected with an industry sector where I have worked very closely with the constituents in the past seven years as head of the PwC Entertainment & Media team in India. After an early retirement from PwC earlier this year, I have started my firm Sapphire Professional Services. This blog will hopefully keep me connected and become a platform for discussion on the future of the Industry.

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Fortunately, with the kind of change taking place throughout the world with digital becoming the new normal, myriad of different businesses under the E&M umbrella growing differently, we probably will have no dearth of discussion topics in the short-term. However, to kick-start the conversation let us look at the future growth potential of the E&M Industry in India in general. This was also the subject of discussion at a recent industry event held in the capital with most of the industry captains and the Government in attendance.

We in India, for the past few years have got accustomed to seeing double-digit growth in most of the sectors and anything less is not exciting enough or lets say not news-worthy. Maybe this reaction is because it feels good to be on top of the table of the parameter that is most searched for at that moment even if you perform very poorly in most of the other parameters.  Therefore, despite having a growth of almost 17-18 % (we are the highest in the world), there is a thought process that India is not growing at its full potential in the E&M sector. USD 100 billion in 2020 is what many believe and estimate that the industry should grow to. Can this be achieved? Where is the growth going to come from? Do we know all the variables? Probably not. Can we add to the confusion? Yes, we can.
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To start the discussion, I would like to put forth my thought process on a macro level and share it with you. The India E&M Industry as per recently released PwC report is a USD 17 billion revenue industry.  In India this industry is largely driven by non-digital elements unlike elsewhere in the world where digital streams are showing the highest growth rate. Again, quoting from the PwC report, this sector is likely to grow at a CAGR of 17-18 % over the next five years making the industry more than double its present size at USD 38 billion in the year 2016. If one was to take the linear progression and assume that the industry will continue to grow at the same rate up to 2020, the industry size will be approx. USD 70 billion. Therefore, it seems that India will have to do a few things very differently to achieve an additional USD 30 billion. Few facts need to be kept in mind as we look to suggest solution for the extra growth: –

  • The current revenue of the industry is largely from non-digital platforms as TV, Print and Film account for almost 85% of the industry.

  • Shift from non-digital to digital could decrease the value in the short-term.

  • Advertising spend and Consumer spend are the two key contributors to the revenue with advertising contributing at over 35% of the total revenue pie.

Before I put forth my views on finding a way to the extra growth, I would like to welcome thoughts from you. Whether any other thoughts need to be kept in mind and what we should be doing differently?  Please log your comments below, as then hopefully a discussion can develop.

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