Media & Entertainment (M&E) Industry: The Sunrise Sector Of India

Media & Entertainment (M&E) Industry: The Sunrise Sector Of India

The year 2015 is considered to be an inflection point for the Indian Media & Entertainment (M&E) industry. It has now positioned itself on the cusp of a strong phase of growth backed by digitization and increased consumer demand. Following are the key triggers that we think will make M&E the sunrise sector of our economic growth:

Summary:

  • The Indian M&E industry which is valued at close to $20 Billion is expected to reach $29-30 Billion by 2019 and more than $62-63 Billion by 2025. This year, it registered a growth of close to 13.5% over its value in 2015.
  • The industry is divided into 9 segments. Their growth since the past 6 years and the future prospects are as follows:

$ Billion FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E FY20E CAGR
Television 4.96 5.58 6.29 7.17 8.18 9.31 10.71 12.42 14.44 16.56 12.81%
Print 3.15 3.38 3.67 3.97 4.28 4.60 4.97 5.37 5.79 6.22 7.04%
Films 1.40 1.70 1.89 1.91 2.09 2.39 2.63 2.87 3.14 3.43 9.37%
Radio 0.17 0.19 0.22 0.26 0.30 0.35 0.43 0.49 0.57 0.65 14.35%
Digital Advertising 0.23 0.33 0.45 0.66 0.91 1.22 1.71 2.31 3.01 3.85 32.55%
Music 0.14 0.16 0.14 0.15 0.16 0.18 0.21 0.24 0.28 0.31 8.27%
Out-Of-Home Advertising 0.27 0.27 0.29 0.33 0.37 0.43 0.48 0.53 0.60 0.68 9.68%
Animation 0.47 0.53 0.60 0.68 0.77 0.88 1.01 1.18 1.38 1.63 13.24%
Gaming 0.20 0.23 0.29 0.35 0.40 0.46 0.52 0.59 0.68 0.76 14.28%
Total 10.99 12.38 13.85 15.47 17.45 19.84 22.67 26.01 29.88 34.10 11.99%

  • Television continues to dominate the M&E industry, with almost 50% of the total market share; the reason being increase in the number of TV Households over the years. The number increased from 168 Million in 2014 to 175 Million in 2015, i.e. close to 70% of the total households in India. India is the second largest television market in the world, after China. Have a look at the television industry growth, which is divided into two sectors:

$ Billion 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E
Subscription Revenue 3.21 3.70 4.24 4.83 5.45 6.14 7.06 8.27 9.61 11.06
Advertising Revenue 1.75 1.89 2.05 2.34 2.73 3.17 3.65 4.16 4.83 5.51
Total 4.96 5.58 6.29 7.17 8.18 9.31 10.71 12.43 14.44 16.57

  • Out of the total households mentioned above, 145 Million are Cable & Satellite subscribers (C&S) which implies a penetration of 83% and is expected to grow to 87% by 2020.
  • The total number of transactions in the industry decreased from 61 deals worth $ 2.38 Billion in 2014 to 57 deals worth $1.20 Billion in 2015. The reason for this huge difference in the total deal value is the acquisition of Network 18 Media & Investments Ltd. and TV 18 Broadcast Ltd. by Reliance Industries Ltd in 2014 for around $1.42 Billion.

Growth Drivers:

  • India has around 500 Million unique mobile users which is likely to become 1.3 Billion by 2020. Currently, around 200 Million have access to internet and this number is set to increase with the introduction of 3G and 4G services.
  • In a market like India, which is not yet blessed with high data speeds, as of now, 2G users are important too. However, with increasing choices in smartphone selection and the pace at which the smartphone penetration is growing, it is expected that by 2020, all handsets sold will be atleast 4G ready. Also, the rise in app downloads in the recent times have increased the revenue from paid apps from around $145 Million in 2014 to $250 Million in 2015.
  • India will witness more than 2x growth in the average household incomes from around $8000 currently to $18500 by 2020. This will help the industry to a great extent as a significant portion of the mobile users are in the lower half of the socio-economic pyramid who provide an Average Revenue Per User (ARPU) of just Rs. 120 per month. Hence, an increase in the spending power will definitely increase the ARPU in India and enable its users to explore other applications like email and browsers more, apart from Facebook and Whatsapp.
  • The Information & Broadcasting (I&B) ministry completed the rollout of digital cable set top boxes in phases I and II.
    • The phase I digitization covered the four metropolitan cities of Delhi, Mumbai, Kolkata and Chennai.
    • Phase II covered 38 cities across India which seeded 12 Million set top boxes in all.
    • Phase III, whose deadline was extended from 30th Sept 2014 to 31st Dec 2015 covered all the remaining urban areas in India.
    • Phase IV, whose deadline too was extended to 31st Dec 2016 will cover all the remaining households in India
    This will increase the relevant consumer base by a great extent thereby facilitating increase in advertisement revenues and reach.

Government Subsidy & Initiatives:

  • Television
    • DTH Satellite: FDI raised to 100% from 74%
    • Cable Network: FDI raised to 100% from 49%
    • News Channels: FDI raised to 49% from 26%
    • Cable Network: FDI raised to 100% from 49%
    • No restriction on FDI in uplinking and downlinking of TV Channels apart from news channels
    • The government has allotted around $50 Million in the current Five-Year-Plan for various development projects in the film industry. The funds will be utilized to set up a centre for excellence in animation, gaming and visual effects among others.
    • The Indian and Canadian governments have signed an audio-visual co-production deal that would help producers from both countries to explore their technical, creative, artistic, financial and marketing resources for co-productions, and subsequently, lead to exchange of culture and art amongst them. A similar agreement is under negotiation with the Republic of Korea.
    • The Government has also given licenses to 45 new news and entertainment channels in India. Star, Sony, Viacom and Zee are amongst those who have received these licenses.
  • Print
    • Newspapers & Periodicals: FDI stands at 26%
    • Foreign Magazines (Indian Edition): FDI stands at26%
    • Scientific & Technical Journals: FDI stands at 100%
    • The Union Budget 2016-17 has proposed basic custom duty exemption on news printing. The customs duty on the wood in chips or particles for manufacture of paper, paperboard and newsprint has been reduced to 0% from 5%.
  • Films
    • 100% FDI through automatic route
    • Given the industry status to the films segment
    • With GST expected to pass in the monsoon session, entertainment tax will be subsumed in GST thereby creating a uniform tax rate regime and reduce the burden and complexity.
  • Radio
    • FDI raised to 49% from 26%
    • This will bring in global expertise, innovation and better programming. Also, private players are now allowed to own multiple channels in a city provided they don’t exceed 40% of the total channels.
    • The third round of Phase III radio channel auction, which was delayed for 2 years, finally got the green signal and will enable as many as 839 new FM radio channels to go on air in nearly 300 cities by the end of the year. This is expected to earn close to $390 Million for the government too.

Other Major Developments:

  • Last week, Reliance Entertainment today sold majority stake in film and television studio IM Global to Los Angeles-based Tang Media Partners (TMP) for $200 Million.
  • Eros Now, the digital over-the-top distribution service of Eros International Ltd., has expanded the availability of its service to the Apple TV platform, which will allow the former to showcase its repository of media across Apple TV’s presence in 80 key countries.
  • PVR Ltd. recently acquired operations of 32 screens of DLF’s cinema exhibition business, DT Cinemas for around $64.5 Million.

What to expect next:

  • With the FDI limit raised in many of the segments in the M&E industry, global giants like Comcast, 21st Century Fox, Time Warner Cable, Liberty Media Corporation, etc are set to invest in their Indian peers or even set up headquarters in India. From April 2000-June 2015, the FDI inflows in the information and broadcasting (I&B) sector (including print media) stood at more than $4.3 Billion.
  • Also, India is set to have the youngest population in the world in the next 4-5 years. Internet will then become the new television and online music the new radio. The revenue from advertising is expected to grow at a CAGR of 13% and will exceed $ 12.29 Billion. Hence, there is no doubt that the Indian M&E sector, particularly the Digital Advertising segment (expected to grow at a CAGR of 32.55% 2011-2020E) will be a happy place to be invested in and can be rightfully called the sunrise sector of India.
  • Have a look at the performances of some of stocks in the M&E industry in the last three months:

 

We are pleased to say that out of the above mentioned stocks, we have already recommended Shemaroo Entertainment Ltd. and PVR Ltd. to our subscribers apart from two other open calls in the M&E industry.

  • Lastly, one can, without any doubt say that the Indian M&E industry has witnessed tremendous growth in the last few years and this momentum is expected to continue in the future as shown in the table. Although it faces some tax and regulatory issues, with our government’s positive stance and approach on making business easy in India, it can be safely assumed that M&E has many more miles to go!

27 comments: Media & Entertainment (M&E) Industry: The Sunrise Sector Of India

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  • ahmad        
    RAHUL DEB ROY
    aug 21,2016 at 09:51 - Reply

    thankes for good informations.

    • ahmad        
      Team StockAxis
      aug 22,2016 at 11:36

      Hello Mr. Rahul,

      Thank you very much for your remarks.

      Happy Investing!

  • ahmad        
    raghavendra
    jul 24,2016 at 05:56 - Reply

    your comments on subject are very articulate. but to enter into trad zone u.r subscription amount is too high at this point sir.

  • ahmad        
    Kristen
    jul 07,2016 at 12:27 - Reply

    I am sure this post has touched all the internet users, its really really nice paragraph on building up new blog.

  • ahmad        
    Subhash Subhash Rohra
    jun 21,2016 at 02:10 - Reply

    Good analysis of M&E industry. It will be nice if some scripts are suggested

    • ahmad        
      Team StockAxis
      aug 05,2016 at 12:17

      Hello Mr. Rohra,

      Thank you very much for your remarks. Our adivsor will get in touch with you for solving your query!

      Happy Investing!

  • ahmad        
    Hasmukh patel
    jun 21,2016 at 12:47 - Reply

    Excellent information

  • ahmad        
    Sanjay Bejwani
    jun 20,2016 at 03:38 - Reply

    Very Interesting article.... Good Work Stockaxis Team !!!! Keep up Good work .................

    • ahmad        
      Team StockAxis
      jun 21,2016 at 11:28

      Hello Mr. Sanjay,

      Thank you very much for your remarks. We'll be coming up with such articles on a regular basis. Do let us know in case you have queries related to the stock market, we'll be happy to assist you. You can write to us at research@stockaxis.com and we'll get back to you!

      Happy Investing!

  • ahmad        
    VIMAL Srivastava
    jun 19,2016 at 08:19 - Reply

    The recommendations most of time form your end have been good. The MIRZA is one where movement is not noticed, however I am sure due to strong fundamentals it will come up in an year or so.

    • ahmad        
      Team StockAxis
      jun 21,2016 at 11:36

      Hello Mr. Vimal,

      Thank you very much. Yes, Mirza International Ltd. is company boasting strong fundamentals, as well as a decent technical setup. We're positive on the company's growth story. It is pleasing to see that you've been following our recommendations for quite some time.

      Do let us know if you have any queries related to the stock market, we'll be happy to solve them for you. You can comment them here, on the blog page or write to us at research@stockaxis.com and we'll get back to you.

      Happy Investing!

  • ahmad        
    Shaikh Ahmed
    jun 19,2016 at 12:36 - Reply

    Shemaroo still can be bought at this rate .for 6 to 9 month and what would be ur target and stoploss.

    • ahmad        
      Team StockAxis
      jun 21,2016 at 11:49

      Hello Mr. Ahemad,

      Shemaroo is a strong fundamental company, and has been given as a BUY from StockAxis. Click Here For Its Detailed Research Report.

      Although the stock is currently trading well above our BUY price, it still remains a potential multibagger.

      You can subscribe to our paid services to get more of such multibaggers. Do let us know if you have any other queries related to the stock market, we'll be happy to assist you.

      Happy Investing!

  • ahmad        
    ravi kumar bansal
    jun 18,2016 at 07:37 - Reply

    Please send list of high priced shares.

    • ahmad        
      Team StockAxis
      jun 21,2016 at 11:56

      Hello Mr. Ravi,

      Can you be a bit more specific on your requirement? What exactly are you looking out for?

      Looking forward...

      Happy Investing!

  • ahmad        
    Devendra Prasad Sharma
    jun 18,2016 at 04:39 - Reply

    Very encouraging,stock specifics in chemical industries will be highly appreciated.

    • ahmad        
      Team StockAxis
      jun 21,2016 at 12:05

      Hello Mr. Devendra,

      Thank you very much for your remarks. We have already come up a report on the chemical industry. You can access it here.

      Also, we cannot disclose individual stock names here on the portal. If you wish to know more on this front, we can have our advisor get in touch with you. Do let us know if you wish the same.

      Happy Investing!

  • ahmad        
    R R SHARMA
    jun 18,2016 at 02:41 - Reply

    Good job ,EXCELLENT EFFORT and analyses on M&E to help readers/ Investors to INVEST in stocks for long thanks a lot. Keep it up for other industry as well God bless you.

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:51

      Hello Mr. Sharma,

      We are pleased to see that you found our report useful. We'll be coming up with such reports on a regular basis.

      Do let us know if you have any queries related to the stock market, we'll be happy to assist you. In the meanwhile, don't forget to read Indian Pharmaceuticals Industry: Still A Good Bet? for insights into the pharmaceutical sector.

      Happy Investing!

  • ahmad        
    rajeev k gupta
    jun 18,2016 at 02:23 - Reply

    I really appreciate the level of your deep and detailed study and way of presentation.

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:52

      Hello Mr. Gupta,

      Thank you very much for your remarks. We hope that you found our report useful. Please feel free to comment if you have any queries related to the stock market, we'll surely get in touch with you with a solution.

      Happy Investing!

  • ahmad        
    penugonda Prabhakar
    jun 18,2016 at 11:11 - Reply

    Iam Penugonda Prabhakar growth amount in future estimate will com well. I and we also appreciated congratulate. yours Lovely Penugonda Prabhakar

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:03

      Hello Mr. Prabhakar,

      Thank you very much for your comments. We are pleased to hear them.

      Happy Investing!

  • ahmad        
    patel manish
    jun 18,2016 at 09:28 - Reply

    Very rich information

  • ahmad        
    Dinesh Singh
    jun 18,2016 at 12:34 - Reply

    I'm regular reader of all your posts. I have of appreciation of the post on Chemical industries couple of months back.Similarly the present post Is of value information and deserves all appreciations !***** Regards

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:05

      Hello Mr. Dinesh,

      We are pleased to hear that you are a regular reader of our blog posts. We hope that you found them useful.

      Also, do let us know if we can help you in any way related to the stock market. You can write to us at research@stockaxis.com and we will be happy to assist you.

      Happy Investing!

  • ahmad        
    p s agrawal
    jun 17,2016 at 09:51 - Reply

    It is a good Idea. The rates are already peaked out . Is it advisable to buy noe ?

  • ahmad        
    Nagpal
    jun 17,2016 at 09:08 - Reply

    Useful information

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:48

      Hello Mr. Nagpal,

      Thank you very much for your remark. Hope that you found the report useful.

      Happy Investing!

  • ahmad        
    S.BHAGAVAN BABU
    jun 17,2016 at 09:01 - Reply

    SIR, I AM HOLDING SHEMAROO IN BIG QUANTITY FROM OUR RECOMMENDATION DATE. THE FRESH ARTICLE(THE SUNRISE SECTOR OF INDIA) IS SO INFORMATIVE AND ENERGIZED ME. THIS YEAR I BOUGHT ALL YOUR SERVICES.I AM A BIG FAN OF STOCK AXIS. ALL THE BEST TO OUR STOCK AXIS FAMILY.

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:46

      Hello Mr. Babu,

      We are very happy to see that you've been following our recommendations. Thank you very much for your remarks.

      We wish you all the success in the stock market and pleased to have you as an esteemed client at StockAxis. Also, don't forget to read High Priced And Super High Priced Stocks – Don't Just Ignore Them... for further insights into investment methodologies.

      Happy Investing!

      Happy Investing!

  • ahmad        
    manish sehgal
    jun 17,2016 at 08:50 - Reply

    Subscriptions charges are too high of stock axis.com

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:42

      Hello Mr. Manish,

      We can surely work something out in this matter. Our advisor will get in touch with you shortly for the same.

      Happy Investing!

  • ahmad        
    kannan
    jun 17,2016 at 08:25 - Reply

    Excellent. That's all I can say.

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:41

      Hello Mr. Kanan,

      Thank you very much for your remarks. Do let us know if you have any queries related to the stock market, we'll be happy to assist you.

      In the meanwhile, don't forget to read When To Buy A Stock – The GREAT PARADOX! for further insights into investment methodologies.

      Happy Investing!

  • ahmad        
    Mvr reddy
    jun 17,2016 at 08:07 - Reply

    Thank U but miss to identify multi bags in media sector.

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:38

      Hello Mr. Reddy,

      There are still a lot of lucrative opportunities in the M&E sector. Our advisor will get in touch with you if you'd like to know more on the same.

      Also, don't forget to read High Priced And Super High Priced Stocks – Don't Just Ignore Them... for further insights into investment methodologies.

      Happy Investing!

      Happy Investing!

  • ahmad        
    Sunil Puranik
    jun 17,2016 at 07:11 - Reply

    Good research

    • ahmad        
      Team StockAxis
      jun 18,2016 at 02:27

      Hello Mr. Puranik,

      Thank you very much. Do let us know if you have any queries related to the stock market, we'll be happy to assist you.

      You can write to us at research@stockaxis.com or just comment in the blog and we'll get back to you.

      Happy Investing!

  • ahmad        
    Bala
    jun 17,2016 at 07:08 - Reply

    Dear Stock Axis, Your website is really very informative and research details are very useful. By going thru' your website and do your reasearch options one can analyse and find out trends of various stocks before investing.

  • ahmad        
    RAGHAVENDRA RAO
    jun 17,2016 at 06:26 - Reply

    Very very good article.

    • ahmad        
      Team StockAxis
      jun 17,2016 at 06:33

      Hello Mr. Raghavendra,

      Thank you very much for your remark. We are pleased to hear it.

      Do let us know if you have any queries related to the stock market, we'll be happy to assist you. You can write to us at research@stockaxis.com and we'll get in touch with you at the earliest.

      In the meanwhile, dont forget to read (click here) for further insights into the market scenario. We would love your feedback!

      Happy Investing!

  • ahmad        
    Naresh
    jun 17,2016 at 05:30 - Reply

    Pls share company name if you can

    • ahmad        
      Team StockAxis
      jun 17,2016 at 05:43

      Hello Mr. Naresh,

      We're sorry to say, but we can not disclose individual stock names. Our advisor will get in touch with you shortly for the same.

      Happy Investing!

  • ahmad        
    Harish Kumar Anand
    jun 17,2016 at 05:22 - Reply

    Excellent Analysis.

  • ahmad        
    Patel KALPESH
    jun 17,2016 at 05:15 - Reply

    You are adviser ? I am trader

    • ahmad        
      Team StockAxis
      jun 17,2016 at 05:31

      Hello Mr. Kalpesh,

      Yes, we are a long-only equity advisor, and with our thrust on fundamental and technical research, we've been providing our clients with multibaggers like M&M Financial Services, Astec Lifesciences, JBM Auto, etc for quite some time now.

      Sir, we would strong suggest you to consider Investing over Trading, as the former has tons of benefits over the latter. To explain this, we have come up with an article Why Trade Intraday? Go To Las Vegas Instead!!! (click here) which explains all the cons of trading and pros of investing in the most easy way possible.

      Please go through the article, it is just a 5 min read, and who knows, it might help you change your mind.

      Looking forward to your response!

      Happy Investing!