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(Last updated: 4 Sept 2008)
Trends and opportunities
The market
The Indian entertainment sector can be divided into two broad areas: film and television; and the leisure industry.
The sectors of Indian film and television industry of interest to Australian exporters includes:
- software production
- post-production
- distribution
- exhibition
The Indian film industry has experienced significant growth over many years, evolving into a fully-fledged economic sector marked by large-scale commercialisation. Industry reforms and liberalisation has attracted foreign investment and allowed foreign companies to enter the market quickly, bringing innovative technologies.
India has the world’s largest film industry and the following information shows the scale and trends of the industry:
- India has produced more than 70,000 feature films and thousands of short documentary films in 52 different languages/dialects.
- The Indian film industry is expected to grow annually by at least 15 per cent for the next five years.
- There is a greater focus on state-of-the-art technologies in cinematographic equipment, post-production, and exhibition.
- Approximately 1000 films are produced annually with an average of $2.36 million spent on each film with a combined turnover of around $1.9 billion annually.
- Nationwide, more than 20 million people watch a film daily in over 13,000 theatres.
Changes in the preferences of the Indian viewing public have prompted a shift towards modern cinema houses with Dolby sound systems and facilities for 3-D animation effects. This has driven an increase in demand for capital equipment and infrastructure.
In the television and cable industry, broadcasters are investing in the latest technology and additional services driven by the growth in subscription rates, percentage of ad spend and the customer base for satellite and cable television.
Print media, the other large traditional media segment other than television and film entertainment, is recording good growth rates. In the last four years 2004-2007, the print media industry recorded an impressive growth of 15 per cent on an overall basis, significantly higher than any other country in the world.
The entertainment portion of the animation, gaming and VFX industry (now included in the overall size of the E&M industry) grew by 24 per cent over the previous year and is estimated at Rs13 billion in 2007, up from Rs10.5 billion in 2006.
Out-of-home advertising industry is growing at a steady pace. Since 2004 to 2007, the segment recorded a cumulative growth of 14 per cent on an overall basis.
With investment in over 78 new entertainment parks (amusement, theme, water parks) and 400 family entertainment centres, the Indian amusement industry is likely to become a multi-billion dollar industry in the 21st century.
The speciality park segment – which represents only a fraction of the fast growing leisure industry – has secured investments in the range of A$45–A$50 million and is set to grow almost 100 per cent annually in the next five years. Corporate players in the Indian leisure industry are developing facilities in key cities including Delhi, Chennai, Bangalore, Mumbai and Ahmedabad.
Many sports clubs, resorts, and games facilities, such as go-kart tracks, are well established in major cities and are gradually extending to larger towns. The number of indoor facilities for golf and cricket, bowling alleys, video games parlours, water parks, and other recreation centres are also on the rise.
Emerging trends: new revenue streams
Emergence of various revenue streams beyond traditional box office is changing the face of the Indian film/entertainment industry. This trend is not only de-risking the business of film-making but also making it attractive for Indian corporates and Hollywood studios.
Home video rights is becoming a sizeable chunk of revenue for film producers with the rise in disposable incomes, increased affordability of DVD players and home theatre systems and shorter release windows. Further, the entry of players, such as Moser Baer, have changed the entire model prevalent for last several years from rental to a sell through. Incumbent players such as Shemaroo and TSeries are following suit.
Television rights has emerged as a significant source of additional revenue for film producers in India. With the growing number of television channels in the country, the demand for quality content has risen significantly and films form an integral part. Further, with shorter release windows, the revenues earned from sale of television rights for single telecast has increased significantly, especially since in non-metros where quality theatres are not present and the pirated home videos available are not of good quality.
Home video players are also acquiring intellectual property rights for several films. Depending upon the performance of the film on the home video platform, they are then selling the rights to TV broadcasters. Television distributors are also planning tie-ups with film producers to obtain satellite rights for their upcoming films for their video-on-demand and pay-per-view services. The only challenge for the film producer remains whether to sell the rights before or after the release of the films
Re-make rights – with the recent trends of re-make films such as Don, Sholay, and Umraoo Jaan, the sale of re-make rights has also emerged as another revenue-earning opportunity for film-rights owners.
Movie merchandise is also significantly gaining importance such as accessories, apparel, stationery, toys books, crockery etc., though this trend has been seen more for animation films as against live action films in 2007.
Internet rights – with growing Internet penetration, few trends were seen for the Indian market as well. For instance, Yash Raj Films for its film Chak De India sold the online rights to Tata Indicom for full movie downloads for its broadband subscribers in India giving rise to a new revenue source in Internet rights.
Digital cinema – spearheading this digital revolution in India today are primarily two companies: UFO Moviez and Real Image. Most multiplex chains have started their digital cinema operations such as Essel Group’s ECity, PVR Talkies, Pyramid Saimira, Adlabs, Inox, Shringar and others. UFO Moviez has digitized over 1,000 screens to date and Real Image has done around 400 screens.
Opportunities
Opportunities exist for multiplex cinema design, construction and management, the provision of telecommunication and broadcasting equipment, film studio management, and post-production facilities.
Indian filmmakers are already working with Australian post-production companies (and vice versa) in film and television production, as well as television commercials and music video production.
The recreation and leisure industries are promising areas for investment with India’s rising incomes and living standards, and significant expansion of the middle class, creating a large potential market. The existing facilities are inadequate to service the target 350 million customers.
Several companies are developing multipurpose entertainment and leisure entities that include, in the same one facility, amusement parks, recreational facilities, games, food courts and multiplexes.
Opportunities exist to provide special purpose technology and equipment for such facilities, and construction and management services.
Competitive environment
In the past four years Australia has increasingly become a preferred destination over the traditional film centres of USA, Europe and Asia. Since 1998, over 40 Indian films have been shot in Australia. With increasing reforms and opening up of the sector, opportunity exists for foreign companies to invest in infrastructure development in this sector.
Top industrial houses such as Modi Entertainment, United Television and Sony Corporation have already expressed their interest in Mumbai’s movie exhibitor multiplexes, which alone could cost $600 million to construct.
IMAX has invested into a dome theatre project with four screens multiplex in suburban Mumbai.
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