ICE sector on a roll

Over the last one year, the ICE (information technology, communications and entertainment) age has truly caught up with India. LESLIE D'MONTE highlights the most promising trends and explains what they herald for the industry.

TELEVISION
Changing view

The Indian television market is on the threshold of a major technological change, states a recently-released FICCI-PWC 'Indian Entertainment and Media industry - Unravelling the potential' report.

An IBM research on this subject goes a step further. Over the next five to seven years, we can expect profound changes evolving in the television industry. The pace of change is ever accelerating and only the companies that ready themselves today will be competitive enough in the future. "Today is the beginning of the end of TV as we know it, and the future will only favour those who prepare now," it states

Reality formats, a trend that began in 2004, continued to be popular in 2005. SMS voting became the key ingredient of most programmes. A study by TAM revealed that while the average number of channels viewed in the last three years is the same, there was a sharp increase in 2005.

Besides, ad-skipping is taking off as viewers are gradually opting out of advertising content. This is expected to lead to losses of six per cent in the US TV annual advertising revenues in 2009. Consumers may opt to buy episodes without advertising or skip through on-demand content, wherever permissible.

Screen Digest, a research firm, suggests that IPTV is set to pose a significant challenge to established cable and satellite operators (read direct to home or DTH). 'Triple Play' implies high-speed internet, television (video on demand or regular broadcasts) and telephone service over a single broadband connection.

Hathway is digitising its entire network and is offering consumers more channels and content at the same cost. It is also pushing homes high-speed broadband internet and bundling the same with its digital product. Thus, Hathway is able to offer its universe analog cable TV services, digital cable TV services and bundling of digital cable TV services with high-speed broadband internet.

Eventually, in2cable (the Hinduja group) and Hathway (Rahejas) will also move into Triple Play to combat DTH and other delivery platforms. Siticable, too, has big plans for Triple Play services. Tata Sky will be introducing its DTH services by June. And Dish TV (Zee Telefilms) is of the opinion that since "it's not possible for IPTV to be everywhere "� at least for now, there's room for everyone".

TRAI has recommended a digitisation plan for the top 35 cities (by population) by 2010. These 35 cities have around 20 million homes with a cable connection. Even if 10 per cent of these C&S homes voluntarily opt for set-top boxes (STBs), there will be a demand for two million STBs in the near future. Assuming a price of Rs 2,500 per STB, the potential of this market is estimated to be at least Rs 500 crore, according to the FICCI-PWC report.

The TV distribution system continues to be analog, hence the exact reach of broadcasters cannot be determined. Cable operators, therefore, continue to charge huge sums of money from broadcaster as 'carriage fee' and consumers are bombarded with channels they do not wish to see. And it is here that the CAS (conditional access system) will help the system be transparent. The final verdict should be known by the end of this month.

Incidentally, the global TV network market is estimated to be $204 billion in 2009. Latin America is projected to be the fastest-growing market at a CAGR of eight per cent. Asia Pacific is expected to expand at a 7.1 per cent CAGR followed by the US, Canada, Europe, the Middle East and Africa.

FILMS
Getting tech-savvy

India has the world's largest movie industry, which churns out around 1,000 movies a year. It stands at an estimated Rs 6,800 crore (FICCI-PWC) and is expected to grow around 20 per cent annually. It is projected to reach Rs 15,300 crore by 2010. Domestic box office revenues account for 78 per cent of the total industry revenue.

Ancillary revenues "� earned by film producers by selling their digital rights to mobile companies, satellite rights to TV broadcasters and distributors (cable companies and DTH players) "� are estimated to increase by 20 per cent a year.

The home video households, which currently stand at three million, are projected to increase to about 13 million by 2010 "� primarily because VCD and DVD prices are falling. However, what can upset the balance is the introduction of video-on-demand and pay-per-view services by TV distributors.

Mulitplexes "� though only 250 compared with the estimated 12,000 single-screen theatres in the country "� are helping the domestic box office revenues.

THEATRES
Going digital

Currently, there are about 100 digital theatres. Digital prints are cheaper (estimated to be one-fourth of regular celluloid prints), of better quality and less vulnerable to piracy. However, you need more digital theatres for this phenomenon to grow. Unfortunately, the FICCI-PWC report estimates that only around 10 per cent of the total theatres in the country plan to go in for digital conversion today.

Incidentally, one can book cinema tickets online and also with one's cellphone. And even pay for it using cellphone. Bangalore-based Jigharak is believed to be working on the software application. Inox Leisure is about to kick off one such initiative soon either in Bangalore or Pune. Besides, Shringar Cinemas has plans to start hawking tickets through PDAs in the next couple of months at its multiplex in Andheri. Moreover, with the setting up of self-collection kiosks, buying tickets will become as simple as withdrawing cash from an ATM. Kiosks will be installed in all metros soon, at a cost of around Rs 1 lakh each.

PVR Cinemas has already installed one in Bangalore. As for theatre screens, D-Cinema 2006 (the high-end of digital cinema is still about five years away, thanks to high costs) could see some upgrades of e-Cinema. However, only two screens of Satyam Cinema in Chennai have real D-Cinema. The price of a D-Cinema projector is four times that of an e-Cinema projector, which currently costs between Rs 15 lakh and Rs 20 lakh.

Internationally, six major Hollywood studios have already drawn up plans to begin selling movies over the internet so that buyers can download and preserve for watching anytime at will. The service is being launched by Movielink "� an online joint venture formed in 2002 by MGM Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Brothers. Until now, the only downloads the studios have offered have been on online rentals, which can be watched only for a 24-hour period. Downloading new movies will cost about $20-30; older titles will cost as little as $10. Downloads will be available on the same day on which the DVD is released "� quicker than rentals, which are put online about 45 days later and cost $2-5.

RADIO
Alive and kicking

Near-obituaries have been written, but radio (liberalised in 2005) is alive and has been resurrected "� in fact, it is kicking. The segment is estimated to be a Rs 300 crore industry. It is estimated to garner a share of about two per cent of the total ad spend in India.

The oldest of them all "� All India Radio "� reaches out to nearly 99 per cent of the Indian population. However, with 338 licences being given by the government for FM radio channels in 91 big and small towns/cities, the scene is in for some rapid changes.

Worldspace, the only player in the satellite radio sector, has about 47,000 subscribers in India (globally, it has around 1.15 lakh subscribers). In India, its target was one lakh by March 2006.

In-car listening accounts for one-fifth of all radio listening hours and this is the trend that the company plans to cash in on in India, states the FICCI-PWC report. Worldspace has already invested around Rs 100 crore in India. It has plans to invest another Rs 675 crore.

On the other hand, community radio "� introduced in 2004 in the Anna University campus, Chennai "� has not picked up well, because advertising and news are not allowed. However, the government, is thinking of introducing limited advertising and news (non-political) on community radio to make it a viable proposition.

Internationally, the radio and out-of-home market, according to FICCI-PWC, is projected to be $78.2 billion in 2009. The US is expected to be the fastest-growing market. The Asia-Pacific region is expected to register a growth of 3.8 per cent a year.

MUSIC
Singing to your tune

Globally, around 420 million single tracks were downloaded in 2005 "� up more than 20 times from two-year-ago figure. It excludes music on mobile phones. Together in 2005, these two new distribution channels took record company revenues from digital sales to an estimated $ 1.1 billion globally (split roughly 60:40 between online and mobile music), tripling in value compared with 2004, according to the IFPI:06 "� Digital Music report.

Music is contributing in a major way to the development of the world's digital economy. For instance, in 2005, consumers bought over 60 million portable digital music players (worth an estimated $9 billion), paid over $75 billion in broadband subscriptions and purchased $50 billion worth of mobile data services. Nokia, the world's largest mobile handset manufacturer, alone sold over 40 million music-capable phones.

In 2005, the number of legitimate music download sites reached 335, up from 50 two years ago. In just two years, the volume of music made available online by record companies has increased more than six-fold to over two million songs, states the report.India is predominantly a mobile music market, with currently low broadband penetration. It has the fastest-growing mobile population in Asia and is projected to reach 200 million by 2007-08. Mobile music downloads in the domestic market are currently valued at Rs 160-180 crore, according to Soundbuzz India. Royalties worth approximately Rs 50-60 crore were paid to the music industry in the past 18 months, and value added services "� of which music forms the bulk "� are estimated to contribute 15-20 per cent to the overall telecommunication company revenues.

About 400,000-500,000 ringtones are downloaded daily. Mono and polyphonic ringtones currently sell at a 75/25 ratio, while the fastest-growing ringtone genre is ringback tones with about 3.5 million users. Truetones plus full-track audio and video downloads are expected to grow very fast.To become the mass market phenomenon it promises to be, mobile music must continue to develop beyond master ringtones to full-track downloads and premium content. New opportunities lie in the exploitation of live content via handsets, song recognition services, digital audio broadcasting (DAB), visual radio and mobile TV. Ultimately, the mobile music market will allow artists to reach a wider audience as well as win back the younger audience by reaching them in a new way.

GAMES
Play the mobile way

The mobile gaming market is projected to touch Rs 260 crore by 2010. It currently stands at Rs 20 crore. The global mobile games business is pegged at $2.2 billion, with India accounting for around $100 million of the overall pie. Nasscom states this market could well touch $500 million in exports alone by 2010. And thanks to the next generation cellphones with enhanced graphical, sound and data capabilities, mobile gaming is poised to be the next big thing in the domestic gaming scenario.

ECOMMERCE
and Mcommerce tick

Air and rail tickets worth an estimated Rs 30 crore are sold online in India everyday. A jewellery piece sells every 5 minutes, a mobile handset every 8 minutes and a car every 9 hours on eBay. Business worth over Rs 5,000 crore (domestic and international) materialised through leads generated by Indiamart.com during the last one year. Online shopping is now prevalent in nearly 2,000 towns and cities (including tier-II cities like Surat, Ankleshwar, Sholapur, Kottayam, Faridabad and Bhopal). Maharashtra tops the list, while Kerala is yet to pick up.

Recent Internet and Mobile Association of India (IAMAI) figures estimate the size of the domestic e-commerce market to touch Rs 2,300 crore (around 10 per cent of the organised Indian retail market) by 2006-07 "� a 95 per cent rise over last year's figure of Rs 1,180 crore and a more than 300 per cent rise over the figure of 2004-05. Goods sold online include books, electronic gadgets, air and rail tickets, apparel, gifts, computer peripherals, audio and VCDs.

Mcommerce: While it took the print media 128 years to achieve a target audience of 50 million subscribers, it took mobile communications just 10 years to reach a similar target. India has close to 85 million mobile users and is adding three million and more every month. The mobile subscribers base is expected to touch 300 million by 2010. Nasscom estimates the m-commerce market to be in the region of $50 billion worldwide. According to Merrill Lynch, SMS could bring in as much as $75.6 million of revenues for domestic GSM operators.