Digitisation Boost for Indian Entertainment Industry

December 19, 2007

Source: New Delhi

The face of the $11 billion Indian entertainment and media industry is changing beyond recognition with the invasion of digital technology, says a new joint study by a leading industry chamber and a global consultancy.

Rising disposal incomes, increasing density of alternative delivery platforms and digitisation are collectively changing consumption patterns in the media entertainment industry across the country, says the study released Wednesday.

While investment in exhibition infrastructure is increasing theatrical capacity, digitisation of distribution is helping filmmakers maximize revenues, adds the study by Ernst and Young and the Associated Chambers of Commerce and Industry (Assocham).

Take, for example, "Vivah", a film by Rajshri Production released simultaneously in November 2006 in theatres and online on its website - the first such attempt by any production house in India.

The movie was made available on a free view basis for the first few days, post which it was sold at Rs. 400 ($10) per download. Nine months later, it had sold 6,500 downloads.

According to the study, tiled "Digitisation: Paving the Way for New Media", multiplexes set box office tills ringing with 100 per cent revenue and manifold increase in ticket prices, compared to the old single screen theatres.

This, the study says, augurs well for India, which is the largest film market in the world for movies, churning out more than 1,000 films every year in more than 10 regional languages.

To top it, higher "penetration" of television sets and VCDs/DVDs and the arrival of digital pay channels are opening new avenues of income, as well as changing existing business models.

Digitisation, coupled with the new awareness among consumers and industry alike, has brought in a change of content. Niche is the new buzzword in the multiplex circuit.

Multiplexes, says the study, are providing a platform for thematic and stylistic exclusivity, which were so long sacrificed at the altar of profit and big banners.

Take the small budget film "Bheja Fry", a multiplex comedy made by Rajat Kapoor with a modest budget of Rs. 6 million ($150,000). The movie was released last April with just 60 prints, virtually without marketing.

But by the end of the second week, revenues had picked up to such an extent that its makers ordered 60 more prints. Publicity was chiefly by word of mouth.

Given that niche films are released in limited numbers, a producer has to rein in production and distribution costs to ensure maximum gains. But digitisation, says the report, will slash print duplication cost to mere Rs. 5,000 ($125) as against Rs. 60,000 ($1,500) per print on the celluloid format.

This, according to the industry, will allow the producer to tap wider markets - at least 10 times the existing one on the first day itself. Timely screening will check piracy losses, estimated at Rs. 110 billion ($2.75) annually.

Distribution costs will drop further when digital cinema grows into a "sizeable mass" and the transmission process becomes centralized like TV broadcast, the report predicts.

Explaining the impact of digitisation on content, the report says the spurt in mobile telephony, the use of Internet and the burgeoning Indian diaspora abroad, have led to increased sharing of content and vigorous net consumption because of the high bandwidth connectivity.

Mobile telephony users in India are currently estimated at close to 220 million, while Internet penetration is pegged at 46 million, with an active base of over 32 million.

This, claims the study, has created demand for regional diversity to suit individual ethnic groups or communities.

Marathis abroad now want to watch Marathi cinema, Gujaratis crave for their own films, while Bengalis pine for their vernacular content. The global demand for Bollywood staple is also ever increasing.

The result: Revival of regional cinema and content both in screen and TV.

But the report points to an imbalance in the growth of regional content. Hindi movies from Bollywood and Tamil and Telugu movies from the south shoot past all other regional players, which are yet to get a toehold in the new domain.

The same holds true for TV.

Dwelling on the problems faced by the cable and satellite industry, the report identifies the four major bottlenecks - monopoly of cable operators, rampant piracy, limited bouquets and high carriage fee.

These, the study says, will force a mass migration to digital domain by 2010.

Highlighting the interdependence between advertising and mass media entertainment, the report says with over Rs. 227 billion ($5.6 billion) spent in advertising industry, it is now the cornerstone in media entertainment in India.

This is expected to rise 14 percent in the next three years, and coupled with the decreasing cost of content delivery and interactive platforms, the demand for niche content will go up.

To capture the fragmented audience, broadcasters will have to innovate their product lines in terms of niche offerings, the study warns.

The media and entertainment industry in India, according to the report, is currently estimated at Rs. 440 billion ($11 billion) and is growing at 18 per cent.

As the world turns digital, only those players who use the available resources intelligently and optimally will be able to survive the race. And grab a slice of the revenue pie.

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