The media and entertainment industry appears poised for a strong comeback in 2010.
Riding on the back of improved economic growth, the industry is expected to register a growth rate of 11.2 per cent in the year, the Federation of Indian Chambers of Commerce and Industry (FICCI) and KPMG have said in a report on the sector.
The report was released in the inaugural session of FICCI Frames 2010 on Tuesday.
The entertainment industry, which is dependent on advertising for 38 per cent of its revenue, was hit by shrinking ad budgets in a slowdown-hit economy. The industry as a whole registered a very modest growth of around 1.4 per cent in 2009 compared to 12 per cent in 2008, the report said.
The industry grew from Rs 57,900 crore in 2008 to Rs 58,700 crore in 2009 and it is expected to increase to Rs 65,200 crore in 2010 – a growth rate of 11.2 per cent, the report said. Over the next five years, the industry is projected to grow at a compounded annual growth rate (CAGR) of 12.5 per cent to reach Rs 1,05,200 crore by 2013. It grew at a CAGR of 10 per cent between 2006 and 2009.
Explaining the dynamics of the growth, Rajesh Jain, executive director, corporate finance division and head of information, communication and entertainment, KPMG said, “The projected 12.5 per cent growth for the sector will be driven on the back of factors like strong long-term fundamentals of the Indian economy, expected rise in advertising to GDP ratio compared to developed economies and increasing media penetration and favorable demographics.”
TV and print are the largest sectors of the industry, contributing more than 70 per cent of the revenues. Their dominance is expected to continue and gaming and internet have shown the highest growth rates due the small base effect and the trend is likely to continue.