The entertainment industry comprising film, television and music is set to grow from Rs 22,300 crore (Rs 223 billion) to Rs 58,800 crore (Rs 588 billion) in the next five years.
The film industry in particular is expected to touch Rs 14,300 crore (Rs 143 billion) by 2010, a 142 per cent jump from its current size of Rs 5,900 crore (Rs 59 billion). The growth forecast is part of the KPMG report on the entertainment industry that will be unveiled next week.
The report has identified four major growth drivers for the entertainment industry in the next five years. These include new delivery or distribution platforms, niche content, newer technologies and a meaningful regulatory intervention.
For starters, rise in additional content delivery platforms such as IP TV, direct-to-home and mobile will propel growth in the sector. That is not to say that traditional content delivery via cable will stagnate.
On the contrary, the cable and satellite household numbers are set to almost double --from 48 million to 80 million -- in the next five years.
Needless to say, the cable subscription revenue will grow as a result of higher cable connectivity as well as increased rates. Broadcasters made Rs 7,300 crore (Rs 73 billion) from subscription revenue in 2004.
This will grow to Rs 25,000 crore (Rs 259 billion) in 2010. Their advertising revenue, however, will grow only marginally: Rs 7,800 crore (Rs 78 billion) in 2010 from Rs 4,900 crore (Rs 49 billion) in 2004. This year it is expected to be Rs 5,400 crore (Rs 54 billion).
Clearly, ad revenue will grow only 8 per cent a year for the next six years while subscription revenue will jump at 19 per cent a year.
"Advertising revenue can grow faster depending on the speed and effectiveness of reforms, the quantum of investments made by companies and the entry of telecom companies in the broadcasting distribution business," says Rajesh C Jain, national industry director, ICE, at KPMG.
Jain says that the second big agent for growth will be content itself. "We expect more niche channels to come in. Besides, reality television will emerge stronger," he says.
Even as content variety improves, more programming for children as well as the younger audience will be produced. Consolidation of companies creating content is also expected.
"If television grows, companies producing programmes will also grow bigger," remarks Jain.
Interestingly, the report also makes several suggestions to the government on favourable regulatory initiatives for the entertainment sector. For starters it maintains that addressability in broadcasting is desirable.
"It may be a pain for a while, but it will be a good thing for the industry and the consumers," says Jain. Addressability essentially involves delivering content through a set-top box that helps the cable operator and the broadcaster to talk to his consumer directly.
The report says that the broadcast industry requires addressability, which can be introduced voluntarily or pushed through a government legislation.
It also votes for a clearer programming code and censorship rules that can be enforced.
"No, we are not saying that the government should clamp down on content, but what we're suggesting is that the policy framework must be in place," says Jain, adding, "there must be an administrative mechanism for policing."
It also highlights the need for a unified regulator for the entertainment industry as a whole. "We need a single authority to oversee the industry affairs rather than have different people with bit roles."
In the film industry, more "risk mitigation" is expected. This means that the film production houses will take the portfolio approach, that is, make more film to spread their risks.
"Several film companies have already moved in this direction and are working with different directors as well as in collaboration with other productions houses," says Jain. However, he expects more investment to go into "scripting and marketing" of films, as is the trend internationally.
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