Why is the Media And Entertainment Industry Climbing New Heights?

The media and entertainment industry of India comprises multiple segments, namely, movies, television, live events, digital media, advertising, gaming, music, radio, out of home (advertising via banners, billboards, bus shelters, etc.), and print. Each of these verticals/segments is unique but are combined together to fulfill the increasing demand for information and entertainment.

Over the past few years, digitization, globalization of services, increased internet users, affordable internet data plans, and availability of multiple platforms have remodeled this sector. This has led to significant growth in the sector which is expected to reach between US $50-70 billion by 2030 as per the BCG report. Now, let’s dive deeper into the sector and understand the potentials which make it a favorable choice among investors.

Expected growth for various segments

The below charts will represent the share of major industry segments in 2020 and the projected share in 2023.

Source: IBEF

Different government initiatives that pushed the media and entertainment industry in India

We have seen the projected growth of the various sectors of this industry but don’t you want to know what led investors towards this sector? Various government initiatives, mergers, and acquisitions, changing consumer preferences, and more led to this growth. Below-mentioned are a few of the government initiatives and policies that helped the media and entertainment industry in India to perform exceptionally.

1. A National Film Policy was framed by the government with an aim to promote the animation segment
2. Entertainment tax to be included in GST
3. The FFO (Film Facilitation Office) collaborated with the Ministry of Railways to streamline the process of filming across railway premises
4. Strengthening of royalty claims of musicians, lyricists, and the same with the Parliamentary approval on the Copyright Act (Amendment) Bill, 2012
5. In February 2021, the digital entertainment committee of the Internet and Mobile Association of India (IAMAI) formed a code of conduct for self-regulation code for OTT content
6. In December 2020, the merger of the National Film Development Corporation Limited (NFDC) with four government film media units, (the Films Division, the Directorate of Film Festivals, the National Film Archives of India, and the Children’s Film Society, India) was approved by the government
7. Private Equity/Venture Capital firms invested US$ 4.5 billion with approximately 56 M&E (media & entertainment) deals in 2021
8. Cumulative FDI inflow in the information and broadcasting industry along with the print media is US$ 9.6 million between April 2000 and December 2021
9. Following are the FDI limits for the various sub-sectors
   1. Films – up to 100% (automatic route)
   2. Radio (including private FM channels) – 49%
   3. DTH satellite and digital cable network – 100%
   4. Animation, gaming, and VFX – 100%
   5. Publications of scientific and technical journals – up to 100%
   6. Publications of Indian editions of foreign magazines – up to 26%
   7. Indian firm dealing with the publication of newspapers and periodicals – up to 26%

Recent mergers and acquisitions in the sector

There have been major mergers and acquisitions deals that have happened in the last few years which led to large capital inflows in the industry. A few of the major deals are mentioned below:

Acquirer	Target	Date	Value
Sony Pictures Networks India (merging entity)	Zee Entertainment Enterprises (ZEEL) (merging entity)	September 2021	US$ 1.57 billion
ZEE Entertainment	Margo Networks	April 2020	72 million
PVR Ltd	SPI Cinemas	August 2018	US$ 94.42 million
Zee Entertainment	9X Media and INX Music	October 2017	US$ 24.56 million

In addition to the above, India’s top multiplex companies, PVR and INOX announced a merger in March 2022 which is expected to happen soon.

Developments in the media and entertainment industry

Another major development was seen in the online video subscription platforms. Over the past few years, there has been a significant increase in the number of users for various platforms like Netflix, Amazon, Disney+ Hostar, Zee5, Voot, MX Player, Sony LIV, and more.

Apart from the above, there are many other government initiatives, deals, developments, and partnerships under process which will help boost the media and entertainment sector.

Key players in the media and entertainment sector in India

1. Inox Leisure Ltd.
2. Network18 Media & Investments Ltd.
3. PVR Ltd.
4. Dish TV India Ltd.
5. Hathway Cable & Datacom Ltd.
6. Saregama India Ltd.
7. Sun TV Network Ltd.
8. TV18 Broadcast Ltd.
9. Zee Entertainment Enterprises Ltd.
10. Nazara Technologies Ltd.

Conclusion

The media and entertainment industry in India is on an outstanding growth trajectory and has been hitting new milestones rapidly. The growth in this sector is visible and the same is expected to grow at a much faster rate as compared to the global average rate. Government initiatives, FDI inflows, mergers and acquisitions, high internet demand, availability of affordable internet plans, and popularity of OTT platforms have led to this growth. Along with the media and entertainment industry, the EV sector and renewable energy sector are also witnessing significant growth in India and are emerging as good investment opportunities.

Source: All the data and statistics mentioned in the article are sourced from IBEF.

Disclaimer: This blog is exclusively for educational purposes. The securities quoted are exemplary and are not recommendatory.