Media and Entertainment Sector in India Prime for Investment

LONDON, Dec. 6, 2011 /PRNewswire/ -- The Indian Media and Entertainment (M&E) industry registered revenues of US$16.3 billion in 2010 and is expected to be in excess of US$25 billion in the next four years, according to Ernst & Young's report – 'Spotlight on India's Entertainment Economy'. The study released today shows that India's growing digital media consumption and favorable demographics are key drivers for the media and entertainment industry's future growth.

Enticed by economic liberalization, near double-digit annual growth, a fast-growing middle class and a huge volume of demand for leisure and entertainment, there has been a surge in investment by global media companies in India. The Indian media and entertainment industry now finds itself at a new turning point – digital media. A surge in mass broadband adoption is expected, led by the launch of 3G and 4G services. By 2015, 90% of India's projected 187 million broadband subscribers will access the net through wireless devices. This presents global M&E companies with exciting opportunities to develop '"anytime, anywhere"' content that caters to a new generation of Indian digital consumers.

"The M&E industry in India has been, and will continue to be, one of the biggest beneficiaries of India's favorable demographics," said Farokh Balsara, Ernst & Young's media and entertainment leader for Europe, Middle East, India and Africa. "Having one of the world's youngest populations, high volumes of content consumption, a favorable regulatory framework and growing digital adoption, makes India an attractive investment destination for global media and entertainment companies."

Key findings from the report include:

• India's increasing per capita income, growing middle class and working population are generating huge domestic demand for leisure and entertainment. The country has more than 600 television channels, 100 million pay-television households, 70,000 newspapers and produces more than 1,000 films annually.
• India has diverse regional markets with distinct cultures, languages and content preferences. These markets provide global media and entertainment companies with a variety of opportunities to deliver localized content.
• India's favorable regulations and reforms are creating investment opportunities for global media and entertainment companies.
• The newspaper industry, which is facing declining readership in many international markets, continues to thrive in India, driven by increasing literacy rates, consumer spending and the growth of regional markets and specialty newspapers. Newspapers account for 42% of all advertising spend in India, the most of any medium.
• The mandatory digitization of India's television distribution infrastructure is driving growth of digital cable and DTH and creating a need for these companies to fund expansion.
• The third phase of radio license auctions, expected soon, will see radio networks expanding their reach to add around 700 radio stations across the country.

"The growth strategies in most companies in the US and Western Europe are linked to India and other emerging markets," said John Nendick, Global Media and Entertainment Leader at Ernst & Young. "However, to succeed in India, global media and entertainment companies need to navigate unique challenges in the areas of content localization, distribution and pricing, regulations and piracy."

According to the report, the two greatest challenges faced by media and entertainment companies doing business in India are low average revenues, with the Indian average revenue per user among the lowest in the world; and piracy, which is rampant in India and accounts for in excess of US$4 billion per year.

About Ernst & Young's Global Media & Entertainment Center

Whether it's the traditional press and broadcast media, or the multitude of digital media, audiences now have more choice than ever before. For media and entertainment companies, integration and adaptability are becoming critical success factors. Ernst & Young's Global Media & Entertainment Center brings together worldwide teams of professionals to help our clients achieve their potential – teams with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help our clients meet their goals and compete more effectively. It's how Ernst & Young makes a difference.

About Ernst & Young

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SOURCE Ernst & Young