A “filmi” approach to regulation might not be a bad idea. For years, India remained the largest, but most pathetically unprofitable film-producing country in the world. Then, in 2001, two things triggered growth — industry status and tax breaks for multiplexes. Of these, the latter had the most impact on growth and profitability.
Similarly, unless there is an incentive to invest in venues for big-ticket events — concerts, auto shows, and award ceremonies — almost all the real estate investment will keep going into commercial and residential infrastructure. Demand for the latter far outstrips the demand for venues. And without any venues to hold events at, the event business cannot take off.
Consider the facts. A rising proportion of marketing spends goes to non-mass media options such as brand activation and on-the-ground promotions. Weddings are bigger and richer. The viewership of award ceremonies and concerts usually sets new records every time. So, events should be a fast-growing, exciting part of the $16-billion (Rs 73,000 crore) Indian media and entertainment business.
Sure, there have been some flashes of excitement. In 2005, Mudra Group bought 74 per cent in Kidstuff Promos & Events for an undisclosed amount. In January 2008, WPP, the world’s second-largest marketing services group, acquired a majority stake in Encompass, another major event firm. Every major media company has an events arm. Some foreign players such as Reed Elsevier, EMap and George P Johnson too set up shop in India recently.
Yet events remains a small, fragmented, stressed out, business. At last count, the organised part of the business was about Rs 800 crore. The average size of event firms in India is anywhere between Rs 30 lakh and Rs 1 crore. If a company does well, operating margins could be in the region of 30 per cent or so. But fragmentation means that margins are about half of that. In fact, most media companies throw in events to get better advertising rates from clients. This, in turn, affects the ability of stand-alone event firms, which have no media, to compete.
Typically, the events business can be classified into three clusters — private, public and corporate. By their very definition, private events, such as weddings or birthday parties, do not seek to make money. However, they do provide livelihood to thousands of small firms that organise these.
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The two big clusters for our purpose are public and corporate events. Public events could be concerts, exhibitions, award ceremonies, a marathon, among dozens of other things. Corporate events could be anything from dealer conferences and strategy workshops to investor summits or brand promotions.
The only reason the events business has shown any growth or promise is because the number of corporate events has been growing. However, corporate events are small-ticket items — say Rs 5-50 lakh in size, depending on a variety of factors. They are steady on both top line and margins, but they are small. The really big-ticket stuff — an international or Indian band in concert, an award ceremony of the scale of IIFA which could bring in Rs 10-20 crore in a single shot — is almost impossible to host in India. There are no venues.
There are some sports grounds or stadiums in Delhi, Mumbai or Bangalore that double as concert venues. But largely, it is a pain to host anything in these places. Typically, it requires 17, maybe more permissions and licences. And, even after that some petty official could walk in and disrupt the show.
Think of grounds dedicated to auto shows where consumers could try the cars. Thinks of indoor or outdoor concert venues with hydraulic equipment, acoustics and technology that allow global acts like Madonna or Kylie Minogue to just plug and play.
Unless there are dedicated venues for entertainment or other events, it will be next to impossible to monetise the really big opportunities. And, it is only from doing the Rs 20 crore or Rs 50 crore events that scale will come to the business.
The question then is one of incentivising the building of media infrastructure, just like multiplexes were incentivised by the Maharashtra government. Maybe the recently formed event industry association could work on that.