A Report on FICCI FRAMES 2010

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Shah Rukh Khan, Katrina Kaif among Bollywood stars who kicked off The 3 days convention of FICCI FRAMES 2010 on Entertainment Industry.


‘Need to Learn Screenplay Writing, VFX Techniques & Business Organisation’

Super star Shah Rukh Khan, the star attraction of the FICCI FRAMES 2010, held out a three-fold prescription for globalization of Bollywood films by learning for Hollywood the screenplay writing techniques, visual effects knowhow, and the discipline and organization in doing film business.

In his keynote address at the inaugural session of FICCI FRAMES 2010, Mr. Khan cautioned that “Learning Hollywood screenplay and technology is not about losing the intrinsic quality of our stories. We have to maintain our own cinematic individuality.” He called for the formation of alliances with Hollywood to help the Indian film industry nurture its potentially different story format, the drama- musical format, and “make us travel around the world.”

Mr. Khan said the sooner Indian film makers realize that screenplay was not an art form but a science, the faster Indian films will globalize and Hollywood can exchange that knowhow with India.

He said that “The big investment we are looking for from Hollywood is the training of mechanics for running machines for visual effects. We need to develop people who can make us our own cheaper, better and faster softwares for filmmaking and have a special branch of trained visual effect teams and talent here.”

Mr. Khan said that the Indian film industry needed to adopt from Hollywood the discipline and organization with which it does its business. “This organization already exists in other businesses in India, but is woefully lacking in the business of films. This needs to filter down to our own distribution system of films based on their models and most the most essential aspect that we need to learn is the science of marketing of films,” he added.

He said the knowledge that Hollywood could bring to Bollywood was much more essential that the investments it was already doing in India. “The time has come to have a symbiotic relationship where we can both feed off the knowledge that we have instead of just the monies. The economic will follow, because then Hollywood and Bollywood together can have a global audience watching our films" Khan concluded.




Industry Eyeing Newer Target Segments, Geographies & Mediums

The Media and Entertainment (M&E) industry is poised to start recovery in 2010, after hitting a rough patch in the previous year due to economic slowdown. Growth in the industry is expected to be driven, amongst other factors, by the growth in subscription through enhanced penetration and expansion of digital delivery infrastructure.

The report notes that rising disposable incomes of the working population and increased spend on discretionary items, not only in Tier 1 but also Tier 2 and 3 cities is expected to continue impacting the M&E industry favorably. Growth of newer delivery platforms with superior technology and functionality is likely to expand horizons for the M&E business. Aspirations of Indian players to go global and foreign players entering the industry will also help the industry target a double digit growth in next 5 years.

The report states that the role of new media is becoming increasingly important in the distribution portfolio of advertisers. Focus on talent development, consumer research and innovation will help the players in differentiating themselves amidst growing competition.

The FICCI-KPMG Report was released by Ashok Shankarrao Chavan, Chief Minister of Maharashtra, and Ambika Soni, Union Minister for Information & Broadcasting, in the high profile presence of eminent actors, Shah Rukh Khan, and Katrina Kaif and Yash Chopra, Chairman, FICCI Entertainment Committee & Yashraj Films Pvt. Ltd.; Karan Johar, Co-Chairman, FICCI Entertainment Committee & Director, Dharma Productions; foreign and Indian industry leaders, James Nicholas Gianopulos, Chairman & CEO, Fox Filmed Entertainment, Inc.; Harsh C. Mariwala, Senior Vice President, FICCI & Chairman & Managing Director, Marico Ltd; Louise Sams, Executive V.P and General Counsel, Turner Broadcasting System Inc. & President, Turner Broadcasting System International and Marijke A. Van Drunen Littel, Consul General, Consulate General of the Kingdom of The Netherlands.

The FICCI-KPMG report points out the Indian M&E industry went through a tough phase in last two years due to the economic slowdown which impacted businesses in the country. The industry which is dependent on advertising for almost 40% of its revenues was hit due to shrinking ad budgets of the corporate world. However, the industry as a whole remained at an almost flat rate registering a very modest growth of around 1.3% in 2009 compared to 12 % in 2008. It is poised for recovery in 2010, riding on the back of economic growth picking up and favorable demographics of the country.

2009 was a year marked with innovations and cost efficiencies which came about in all the sectors, more as a necessity to combat the pressures on bottom line. Newer content formats and strategies adopted by the players in the industry ensured that customers had more choices and led to the evolution of the industry. Cost efficiencies which came about last year proved to be a silver lining for the industry in a bad year as the industry feels some of the measures adopted are here to stay and will benefit players in the long run

Some sectors were impacted more than the others like OOH and Films, both of which registered a negative growth during the year. Even in 2010, they are expected to recover with an almost flat or moderate growth rate. Sectors like Print, Radio and music either remained flat or showed a very moderate growth. TV industry displayed an almost double digit growth rate, mainly on account of subscription revenues, though advertising revenues also showed positive growth. Internet, Gaming and Animation, brought reasons to cheer for the industry with their growth rates touching double digits, albeit on a smaller base.

The FICCI-KPMG Report identifies 10 key drivers for the growth of the M&E industry.

1. Digitization to help in spreading the reach and impact of M&E industry

Availability and penetration of newer distribution platforms like Digital Cable, DTH and IPTV, digitization of newspapers, magazines, films and sale of online and mobile music are some of the ways in which the M&E industry has benefited from digitization and the growth is likely to continue in years to come

The digitization of TV platforms has given way to better technology and picture and sound quality for viewers, more transparent distribution of revenues for stakeholders in the value chain and more band width becoming available to broadcasters giving them opportunity to provide value add services. This will enable niche content being available in future. Digital production in films has reduced film processing and storage costs and digital distribution and exhibition has led to enhanced picture quality, reduced costs, shortened release window and a wider reach. Digital music distribution is mainly restricted to the telecom segment, through ring tones and caller ring back tunes. With increase in mobile and broadband penetration and expected 3G rollout, market for other digital distribution platforms such as full track downloads, streaming music and subscriptions etc might also open up

2. Regionalization to aid in inclusion of untapped

2009 was the year of providing content in regional languages across sectors like Print, TV, Music, Films and Radio. Going forward, it is expected that Regionalization will be one of the significant factors driving growth with growing increase in literacy, consumption and disposable incomes in Tier 2 & 3 cities. Advertisers are also increasing focus on rural markets due to saturation of urban markets. Demand for regional content is emerging fast.Ad spends on regional TV channels is increasing and national broadcasters are looking at adding regional channels to their portfolios. The share of local advertisers on radio and in print is increasing. Corporates such as UTV, Reliance, and PNC etc. are taking exposure in regional cinema in order to diversify. Multiplexes which were largely based in HSM, are now increasingly opening up properties in other regions. Over last few years, Hindi cinema has lost share to other languages in terms of total films certified. Tapping of regional markets is growing in importance in the India strategy of international film studios which are releasing prints and doing dubbed language screenings in these markets. The untapped potential and latent demand in these markets is also leading to the roll out of Phase III radio licenses largely in Tier 2 and 3 towns and OOH space seeing increased investments in these cities.

3. Convergence and Impact of new media to benefit media players

Advertisers are looking at multiple delivery platforms for content to break through the clutter in existing platforms. This allows superior and more convenient technology to take over. The new media is bringing about a revolution by merging the functionalities of customer end terminal devices like TV, PCs, Mobile phones etc. For example, IPTV, Online newspapers and magazines, podcasts, Wi-Max, new video formats, internet streaming etc are technological advancements leading to convergence of two or more media into one entity. It is expected to benefit the players by enabling them to leverage synergies and attract a whole new set of consumers. Advent of 3G can fuel the convergence phenomenon by making the mobile phone a very handy tool for accessing video and audio formats.

This has increased the number of entertainment and information delivery choices available to consumers and intensified the challenges posed by audience fragmentation. The recent launch of I-Pad has the potential for becoming a delivery platform for news, entertainment etc in future. We expect to see more content being customized for these new portable devices compared to the traditional stay-at-home devices.

4. Consolidation leading to emergence of players with superior

The M&E industry is increasingly becoming fragmented in nature due to entry of newer players and newer customers and regions getting added. We have seen existing players expanding horizons by coming out of their traditional businesses and establishing presence in other domains. Also, players from other sectors like IT, Telecom etc have entered the industry. Foreign players are also looking at increasing investments in their Indian portfolios. Growing regionalization is also helping some regional players to become strong by tapping newer markets. Also, media players are looking at leveraging their content across platforms leading to emergence of conglomerates.

These trends giving rise to increasing competition are expected to give way to consolidation of operations. Some of this has already started happening, with last year being a tough year seeing some of the smaller players finding it difficult to survive. The players which are able to weather the downturn will look at enhancing their market shares. This will help in emergence and growth of players with superior product, marketing, distribution, technological and innovation capabilities. It will aid the growth in the overall market size and reach for the industry.

5. Competition expanding the operating market

The entry of newer players in the market has had a positive impact on the overall market as it has helped in expanding the market size. This will continue in future with new players emerging to capture newer set of audiences with advancements in their product, marketing and distribution to tap these customer segments.To take the example of DTH, entry of Sun which was a strong regional broadcaster in the business has expanded the overall subscriber base by tapping the entire Southern Pay TV market. Similarly, it has been proven that in some cases, entry of a new TV channel has expanded the size of the overall market / genre. For example, the entry of ‘Star Jalsha’, expanded the GRPs of the Bengali GEC / News market. The leader in the segment lost GRPs and leadership but given the potential for growth in the market, it managed to moderately increase ad rates. The entry of ‘Colors’ also expanded the GRPs of the Hindi GEC market

6. Talent development and Management key to business success

The M&E industry relies heavily on its human capital for business success and differentiation, as it is talent driven to a great extent. The industry has dealt with a lack of supply of trained professionals in the sector for a long time. Investment in educational institutions providing specialized courses for skilled technicians is a step in the right direction to develop talent and meet the demand of the industry. The curriculum in media schools can be made sensitive to the actual needs of the industry to impart basic and advanced skills. This is being further augmented with investments in training and development of employees by media houses. This will help in creating talent within the M&E industry, thereby reducing the need to hire people from other sectors. Furthermore, identifying and retaining high potential staff by media players will also be key to performing well in the industry for media players.

7. Innovation across product, process, marketing, distribution and business model by media players

Innovation is essential for players to adapt to the changing market scenario, technology and consumer behavior. If done rightly, it not only helps in making an impact in the increasingly competitive market place but also increases the overall market size by tapping newer customer segments and retaining the existing ones. It requires continuous investment in research and development and is an ongoing effort on the part of the players in order for them to be responsive and to market needs and consumer choices. An example of successful product innovation is the introduction of T20 format in cricket, followed by IPL which effectively combined entertainment and sports. T20 made the sport more popular and convenient to watch for cricket enthusiasts, whereas IPL not only brought male audiences to prime time TV viewership but also attracted female audiences and kids. In advertising, the Zoozoo campaign was a content innovation by Vodafone, that was different from the celebrity driven campaigns. It was successful in effectively reaching out to customers and creating a good recall for the brand. Advent of social networking sites like Facebook, Twitter and LinkedIn is an innovation that enabled brands and advertisers to gather momentum and attract media and consumer attention.

8. The growing importance of pay markets in media business models

Traditionally advertising revenues have had a strong hold in the M&E industry, but now even subscription revenues are becoming important with consumers paying for media services. The media business models in India are undergoing a change with audiences becoming more willing to pay for content and value added services. Technology has brought about convenience and offered superior quality to consumers who have responded positively. The growth in ticket prices of movies at multiplexes, increasing number of Pay TV subscribers, increasing penetration of DTH with its user friendly interface and technology, and introduction of VAS by media players are some examples of pay markets gaining importance. Growth in this will be driven by research in consumption trends and better understanding the set of audiences who are likely to pay more for these value added services. This will ensure going beyond basic monetization of audience through ad sales.

9. Consumer research to ensure consumer oriented media products and delivery

With increasing fragmentation of audiences and competition within and from outside media sectors, it is becoming difficult for players in the M&E industry to rely purely on past experience and creative ex-pression. There is an increasing need for investments and focus on research in concept testing, new product development and delivery platforms. Companies are increasing spends on consumer research as the stakes have increased. Many players have a separate team within the organization to concentrate on research as an ongoing process, whereas others take help of outside research agencies for specific projects / concepts.

In a market like India, need for research is enhanced due to the inherent diversity in consumer preferences. Also consumers are becoming more savvy and demanding. Furthermore, in order to monetize pay audiences, product needs to be developed with a consumer oriented approach across pricing, distribution and promotion. This would not only help in growing the overall content market, but will also help target niche segments

10. Focus on 360 degree connect with consumers

The players are looking beyond just the traditional mediums by reaching the consumers across multiple platforms in order to establish a stronger connect. They are taking the help of multiple touch points at the same time to communicate to the consumer across platforms like TV, Print, Radio, OOH, Films, Internet, Mobile and Retail.

Recent examples of two very successful 360 degree marketing campaigns of films are ‘Avatar’ and ‘3 idiots’. ‘Avatar’ was released globally with one of the most successful digital marketing campaigns. ‘3 idiots’ repeated the success story in India with their innovative techniques and all inclusive marketing strategy. These films managed to explore multiple touch points and reach out effectively through digital media and experiential marketing techniques. TV channels in the kids genre also created a 360 degree communication platform to interact with kids through websites, phones, SMSes, polls and activation campaigns in schools, retail outlets, malls, cinemas etc.

The report states that the amount of media spends in India as a percentage of GDP is 0.41%. This ratio is almost half of the world’s average of 0.80% and is much lesser compared to developed countries like USA and Japan. This indicates the potential for growth in spends as the industry in India matures and the potential of the untapped market is explored.

A comparison of the contribution of India to the world in terms of population, it is second only to China at 22%. China’s media spend ratio at 0.75% is much in line with the world average, whereas India lags behind. This is largely due to some of the media platforms being relatively new and in a nascent stage, due to which they have not been able to break the penetration barrier. As penetration increases and more and more audiences come in the fold of M&E industry, it is expected to show a higher growth going forward.

The current media spend per capita for India is very low at 4 USD compared to the other countries. Even though it is difficult to reach the levels of countries like US, Japan and UK, due to a very large population base and lower spending power per capita, there is scope to follow China and enhance this ratio.

With revised growth estimates for GDP at 6.8% in 2009 by IMF, which is higher than the world average and the expected recovery from the slow down, the M&E industry is expected to grow steadily over the next 5 year period. The industry is looking at tapping newer target segments, geographies and mediums, while tapping the potential of the existing ones.

Written by: 

Mohan Siroya

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