Down a small, crowded dusty lane in south Mumbai, Sharen Madrai, 18, sits on the floor of her tiny one-room house, not more than 3 metres in width and length, made up of a few sheets of tin, topped with an asbestos roof.
The student is glued to the latest episode of one of her favourite Hindi soaps on television. Her humble home has no running water or toilet and Ms Madrai, her parents and younger sister sleep together on the limited space available on the concrete floor. But it is the 60-odd cable television channels they receive for a cost of about 250 rupees (Dh15) a month that Ms Madrai says she cannot imagine living without. The household relies on a monthly income of just Rs10,000 a month from Ms Madrai’s father’s work as a driver.
“Television’s about entertainment,” she says. “I watch about two to three hours a day. It’s also good for my studies because we get news about important information.”
The Indian television industry is growing and has enormous potential, experts say.
India’s television sector stood at an estimated 417 billion rupees last year, up 12.7 per cent over the previous year, according to projections by the Federation of Indian Chambers of Commerce and Industry (Ficci) and KPMG in a report released last week at a media entertainment conference in Mumbai. The industry is expected to grow at a compound annual growth rate of 16 per cent over the next five years to reach 885bn rupees in 2018.
“There is a big opportunity in the television media segment for all stakeholders,” says Atul Das, the chief corporate development officer at Zee Entertainment. “The consumer is willing to pay for quality content, which is distributed to them in a well-packaged manner. From a macro perspective, everything seems to be falling in place — expectation of strong economic growth, increasing penetration of television households, digitisation bringing in transparency, potential for average revenues per user to grow substantially and growing consumerism driving advertising revenue growth. In the next five years, India would perhaps be one of the fastest growing media markets in the world.”
Among television-owning households in India, 85 per cent are pay TV subscribers, a number that is expected to grow as more and more households own televisions, according to PWC.
“It is noteworthy that TV penetration in India is about 55 to 60 per cent compared with over 90 per cent in developed markets, and therefore there is a lot of potential for growth,” the company says.
There is also scope for even more channels in the market, which in turn increases advertising inventory.
“Immense potential still exists in the Indian market for the channel count to increase significantly,” says PWC.
It says that the number of licensed channels in India reached more than 820 at the end of 2012, a count that is expected to almost double to 1,600 by 2017.
“The television industry in India is at a great place,” says Rahul Johri, the senior vice-president and general manager, south Asia, for Discovery Networks.
“If you look at the Indian television landscape, all the global media are here. All the companies are not run by expats, but by Indians who are here and that is why there is tremendous faith in Indian management by the multinationals. Now what we need is backing to take this further. For every global investment India and China are competition. India is not the only destination. We have the infrastructure — present the right environment and all the money will come here.”
Bimal Julka, India’s ministry of information and broadcasting secretary, says that the digitisation process that is currently being implemented in India will help to transform the industry.
“The biggest gain of digitisation is going to be transparency in the broadcasting sector which will increase investments, including FDI inflow, encourage cleaner and innovative businesses and above all give consumers a choice of a-la-carte channels,” he says.
Mr Julka says the first two phases of digitisation had been successfully completed in 42 cities, with more than 30 million set-top boxes installed.
KPMG and Ficci in their report highlight some of the obstacles facing the industry. While advertising revenues are on the rise, their growth has been held back by recent weakness in the country’s economy.
“The television broadcasting industry faced a challenging operating environment in 2013,” they say. “While television advertising revenues continued to face the pressures of global and national economic slowdown, regulatory changes created an environment of uncertainty and added to the complexities of the operating environment,” the report states. “Advertisement spending continued to be affected by persistent low growth in private consumption. Most of the industries dependent on consumer spending saw subdued revenue growth. Prolonged economic slowdown and a high interest rate environment affected consumer demand and corporate profits came under further pressure due to sharp depreciation in rupee. Categories such as real estate, consumer durables, automobiles, financial services, travel and hospitality scaled down their ad spends.”
Consequently, the report said, television advertising in India grew just 9 per cent last year to 136bn rupees, below the 11 per cent projected earlier. Television advertising in the country is estimated to grow at a compound annual growth rate of 13 per cent over the coming years to reach 220bn rupees by 2018.
The Indian telecoms regulator last year implemented limits on the amount of time that broadcasters can air advertisements, which has presented another challenge to the industry, particularly for broadcasters that are highly dependent on advertising revenues.
The report says that subscription revenue is expected to be a driver of growth for broadcasters, increasing at a projected compound annual growth of 26 per cent between last year and 2018.
“Aided by digitisation and the consequent increase in average revenue per user, the share of subscription revenue to the total industry revenue is expected to increase from 67 per cent in 2013 to 71 per cent in 2018.”
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