Format Licensing in India – The Opportunity

Why you need to turn your attention to India?

The last 18 months have been nothing short of a revolution for the Indian Media & Entertainment industry. The revolution was sparked by the launch of Reliance Jio, the world’s fastest growing mobile network. Jio reduced mobile data charges by more than 100% and increased the per capita data consumption five fold.

India leapfrogged into second position of the world’s largest mobile phone markets, behind China but realistically India is a far larger market with faster growth in telecom and population and the greater freedom extended to its internet users.

The ever-growing TV sector and film segment are now complemented by digital media which is growing at a breakneck pace. Users now have access to all their favourite shows and sports online. The biggest winner of this revolution is content, the quality and quantum of content has gone up drastically. There is room for all kinds of content in multiple languages, catering to people of all age groups

Many Markets in One
A gargantuan population of 1.3 billion of which around 550 million are below the age of 25. The large diversity in language, culture and age groups offers many markets in one. This feature unique to India presents an opportunity to create multiple revenue streams from a relatively smaller investment and from a single IP. For example “Big Brother” has six versions in the country (6 languages) and all are garnering great ratings on a consistent basis.

The large population also present the opportunity to create and market a large variety of content. The country currently enjoys great success in all varieties of content – the mass market entertainers gain a lot of traction on TV GECs and theatres but quality content has played catch up in recent years with good movies and shows turning into commercial successes

The viewer subscription base is on the rise. India will be the second largest digital market globally by 2020.

English is an aspirational language; the number of speakers is growing at a fast rate as India gets integrated into the global economy. Languages such as Bengali and Hindi have a large number of speakers in Bangladesh and Pakistan due to historical reasons. Additionally, the large number of Indian migrants opens up multiple markets

Digital Media
Digital media consumption is on the rise, ad revenue increased by a whopping 50% last year and subscription is up by 29%. The biggest push came from the drastic drop in mobile data tariffs coupled with the launch of inexpensive feature phones. Around 70% of the mobile data usage is for viewing videos – especially on OTT platforms. India currently has around 30 OTT platforms, both local and big global players and all are investing heavily on content.

India has the distinction of being a phone first digital market and this segment is slated to grow at the fastest rate globally as the access to internet grows among the rural folk and the youth becomes a digital first generation of the country

Entertainment Apps witnessed a 120% increase in downloads and time spent on Video apps rose by 85% in the previous year

TV witnessed an 11% growth in revenue. Both ad revenue and subscriber revenue grew.TV penetration is at 64% with a lot of headway to grow, especially in rural areas. TV viewership grew by 21%, especially adding viewing hours in the regional languages of the south. The southern region clocks in an average of 3 hours and 44 minutes of TV viewership every day.

India remains an entertainment first market with 80% of TV viewing being movie channels and GECs

The film industry grew at 11%, the growth was led by regional languages which clocked in growth rates as high as 47% in Telugu and 44% in Gujarati, theatre occupancy was also up in 2017 vis-a-vis 2016.

The value of digital Rights has gone up dramatically with the high demand for movies on OTT Platforms. Another highlight of the year gone by is the success of small budget/ non mainstream movies which indicates the emergence of a new generation of Indians who are keen on viewing quality content

Netflix CEO Reed Hastings:
“Next 100 Million Subscribers Will Be Coming From India”

With the increasing demand for entertainment, the opportunity in this sector has gone up substantially. Studios such as Fox, Disney, Lionsgate and Viacom have established domestic divisions in the country and have ramped up their investment in Bollywood productions

The biggest investors in India are Amazon and Netflix. Both entertainment powerhouses have multiple original shows in the pipeline; the highlight of their investment in India is the broad focus on many languages. Both have entered into partnerships with many local production houses.

With the scope to add many more internet users and increase the data bandwidth makes India the fastest growing market for digital content consumption as China has many restrictions in place for this sector. The CEO off Netflix Reed Hastings has even said that “The Next 100 Million Subscribers Will Be Coming from India”

The betterment of infrastructure, the high demand for content across multiple languages and a young population were some of the reasons highlighted by Mr. Hastings

The time is ripe to enter the media & entertainment space in India. While there are many ways to go about it, Licensing of shows and formats is the best way forward. The high demand for content has ensured higher prices for it.

For more details, contact MORRIS STREET ADVISORS