M-E sector to touch USD 25 bn by 2015: E-Y

Mumbai: Growing digitisation, media consumption and improving demographics will drive up the revenue of the domestic media and entertainment (M&E) industry to over USD 25 billion by 2015 from USD 16.3 billion in 2010, says an Ernst & Young India report.

The E&Y report, `Spotlight on India`s entertainment economy` and released here Wednesday, says a surge in mass broadband adoption is expected (with the launch of 3G and 4G services) soon.

By 2015, 90 percent of the projected 187 million broadband subscribers will access the Net through wireless devices, giving global M&E companies with exciting opportunities to develop anytime, anywhere content, says the report.

"The domestic M&E industry has been, and will continue to be, one of the biggest beneficiaries of the favorable demographics," said Ernst & Young India media & entertainment leader for Europe, Middle East, India and Africa, Farokh Balsara.

"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," he notes.

The report is so gung-ho about the domestic M&E market that it says the growth of the US and Western European companies are linked to India and other emerging markets. "The growth strategies in most companies in the US and Western Europe are linked to India and other emerging markets," said Ernst & Young global media and entertainment leader John Nendick.

"However, to succeed in India, global M&E companies need to navigate unique challenges in the areas of content localisation, distribution and pricing, regulations and piracy," Nendick said.

The agency`s optimism rises from the increasing income, growing middle class and working population, generating huge domestic demand for leisure and entertainment.

The country has over 600 television channels, 100 million pay-television households, 70,000 newspapers and produces over 1,000 films annually, it notes.

The report also notes the favorable regulations and reforms which are creating investment opportunities for global media and entertainment companies.

The report is also optimistic about the continued growth of the newspaper industry, which is de-growing in most Western markets, as it is still clocking robust growth in ad revenues and readerships driven by increasing literacy, consumer spending and growth of regional markets and niche titles.

Newspapers account for 42 percent of all advertising spends in the country, making it the largest advertising medium in the country.

The recent government move to make digitisation mandatory from 2014 will drive growth of the television medium, says the report.

On the radio front, the report says the third phase of radio licence auctions, expected soon, will see radio networks expanding their reach to add around 700 FM stations.

According to the report, the two greatest challenges faced by M&E companies doing business here are low average revenue, with the domestic average revenue per user among the lowest in the world, and piracy, which is rampant and accounts for in excess of USD 4 billion per year.