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PROJECT REPORT ON ROLE OF FILM AND TV INDUSTRY IN OUR ECONOMY Submitted to : - Submitted By :- Dr. Tapan Kumar Nayak Gaurav Rastogi (076) 1

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  • PROJECT REPORT ON ROLE OF FILM AND TV INDUSTRY IN OUR ECONOMYSubmitted to: - Submitted By:-Dr. Tapan Kumar Nayak Gaurav Rastogi (076)Associate Chairperson Gaurav Sharma (077)PGDM (General) Harshit Suri (078)IMS C-238, Lal quan Hemant Trivedi(079)GT road, Ghaziabad- 201009 Hina Gupta (080) Section B, PGDM IIIrd 1
  • DECLARATIONWe hereby declare that the Project entitled Role of Film and TV Industryin our Economy submitted to Dr. Tapan Kumar Naik (Faculty Member)Business and Economic Policies, IMS Ghaziabad in partial fulfillment forthe award of the degree of PGDM and the project has not previouslyformed the basis for the award of any other degree, diploma, associateship, fellowship or other title.Gaurav Rastogi Gaurav Sharma Harshit Suri(BM-011076) (BM-011077) (BM-011078) Hemant Trivedi Hina Gupta (BM-011079) (BM-011080) 2
  • ACKNOWLEDGEMENTWith our sincere regards, we wish to acknowledge our indebtness andgratitude to the contributions of people who helped us at every stage of theproject. We are very much like to express our gratitude and profoundestthanks to our project guide Dr. Tapan Kumar Nayak (AssociateChairperson PGDM IMS, Ghaziabad) for their sustained guidance,invaluable suggestions and constant encouragement without which it wouldnot have been possible for us to complete this project. 3
  • TABLE OF CONTENT1. Introduction (a) Film industry in India (b) Regional Films in India (c) Brief history of Film industry in India (d) TV Industry in India2. Objective of the study3. Literature review4. Role or Importance of Film industry in India5. Prospects of Indian film Industry6. Major problem of Indian film industry 4
  • INTRODUCTIONThe film and industry consists of the technological and commercialinstitutions of filmmaking: i.e. film production companies, filmstudios, cinematography, film production, screenwriting, pre-production, post production, film festivals, distribution; and actors, filmdirectors and other film crew personnel.Though the expense involved in making movies almost immediately led filmproduction to concentrate under the auspices of standing productioncompanies, advances in affordable film making equipment, and expansionof opportunities to acquire investment capital from outside the film industryitself, have allowed independent film production to evolve. Film Industry in India India is the largest producer of films in the world. In 2009, India produced a total of 2961 films on celluloid that include a staggering figure of 1288 feature films. Films are made in different 20 languages. With 3.3 billion tickets sold annually, India also has the highest number of theater admissions Indian film industry is multi-lingual and the largest in the world in terms of ticket sales and number of films produced. 5
  • The industry is supported mainly by a vast film-going Indian public,and Indian films have been gaining increasing popularity in the restof the worldnotably in countries with large numbers of expatriateIndians.Largest film industry in India is the Hindi film industry mostlyconcentrated in Mumbai (Bombay), and is commonly referred to as"Bollywood", an amalgamation of Bombay and Hollywood.The other largest film industries are Tamil cinema and Telugucinema which are located in Chennai and Hyderabad and arecommonly referred to as "Kollywood" and "Tollywood".The remaining majority portion is spread across northern, western,and southern India(with Punjabi, Bengali, Marathi, Oriya, Malayalam, and Kannada).However, there are several smaller centers of Indian film industriesin regional languages centered in the states those languages arespoken. Indian films are made filled with musicals, action, romance,comedy, and an increasing number of special effects. 6
  • Regional Flims in IndiaMainstream Cinema in India is dominated by Hindi language film whichtypically makes up a significant portion of total box office collections.However, over the past few years, regional films have been growingpopularity with releases in a great number of theaters both within andoutside the Indian Territory.Within regional languages, south Indian segment is an important market interms of number of film releases with the four southern states comprisingAndhra Pradesh, Tamil Nadu, Karnataka and Kerala together accountingfor a majority of the total number of film releases in India. Other regionallanguage markets in India include films made in Bengali, Bhojpuri, Marathi,Punjabi etc. The total domestic box-office collections from regionallanguage films in India are estimated to be about Rs. 1,508 crores. 7
  • Brief History of Film Industry in India 1896: First moving picture showed in India 1913: - first Indian-made feature film (3700 feet long) released 1931: Indias first talkie, Alam Ara released dubbed into Hindi and Urdu 1930s and 1940s: i) Talkies addressing social differences of caste, class and the relations between the sexes were released ii) Radical cultural organizations led to the formation of All India Progressive Writers Association and the Indian Peoples Theatre Association (IPTA) 1950: Calcutta becomes the vanguard of the art cinema 1951: industry became the object of considerable moral scrutiny and criticism, and was subject to severe taxation 1960s: i) popular cinema had shifted its social concerns towards more romantic genres ii) The period is also notable for a more assertive Indian nationalism. 1970s: By the beginning of the year there existed above150 film societies all over India. 1980s: the films took a stronger stance on the social issues with an outpouring of the social conscience, and flowing of new images. 8
  • 1990s: In the 1990s, video, national and satellite/cable television haveresulted in the development of a prolonged crisis in Indias movieindustry, where commercial and art films are equally at risk of failingat the box office. 9
  • TV Industry in IndiaTelevision is one of the major mass media of India.India is the second-largest pay-TV market in the world, with 108million subscribers and a reach of 48% of Indian householdsIt is a huge industry which has thousands of programmes acrossIndian states ranging from national language to regional ones.The small screen has produced numerous celebrities of their ownkind some even attaining national fame.Approximately half of all Indian households own a television.As of 2010, the country has a collection of free and subscriptionservices over a variety of distribution media, through which there areover 515 channels and 150 are pay channels.According to Pioneer Invest corp, the Indian cable industry isworth 270 billion (US$ 5.94 billion) and is the third largest in theworld after China and the US.The number of TV homes in India grew from 120 million in 2007 to148 million in 2011.Cable reaches 94 million homes with 88 million analog connectionsand 6 million digital ones, while DTH has commanded 41 millionsubscribers. 10
  • Objective of the StudyThe main objectives of the study will be: 1. To know importance of Film and TV Industry with respect to Indian Economy. 2. To evaluate performance of Film and TV Industry. 3. To figure out the problems and issues related with Film and TV Industry. 4. How this industry is helping other Sectors of the Economy? 11
  • Role or Importance of Film and TV Industry in our EconomyFilm and TV industry is one of the important contributors to the economyand plays a very important and critical role in economic development due tothe following reasons: Contribution of Film and TV industry to the GDP was 0.532% The combined revenues of film and TV industry was around Rs. 50,000 crore (USD 10.00 billion) in the calendar year 2011. It is expected that it will be around Rs. 54,000 crore (USD 11.00 billion) in the calendar year 2012. The film and television industry in India is one of the worlds largest markets in terms of number of consumers and offers significant growth potential. Over the past few years the industry has experienced rapid double-digit growth and it is expected that this trend will continue in future, resulting in increasing contribution to the Indian economy. The sector has a total output more than $20 billion (Rs 1,00,000 crore), contributing more to the Gross Domestic Product (GDP) of India than the advertising industry. Film and TV industry creates more than 2 million jobs (directly or indirectly) in the economy. 12
  • Prospects of Indian Film IndustryGrowth is expected to come from the expansion of multiplexesin smaller cities, investments by foreign studios in domestic andRegional productions, the growing popularity of niche movies andthe emergence of digital and ancillary revenue streams.Rise of multiplexes: Multiplexes continue to gain prominencesacross major Indian cities and companies have lined upinvestments to accelerate multiplex penetration in smaller towns.The number of multiplex screens is expected to double in the nextfive years, from 900 to 1,775 screens.Digitization is providing scale and reducing piracy: Digitalprints cost 80% less than conventional film prints, allowingproducers to reach five times the number of screens at the samecost. This has significantly improved realization, as 60% of box-office collections are now earned within the first week of a moviesrelease. Digital cinema allows companies to control exactly wheremovies are showing and how many times they are shown. It alsoexpands the reach of releases, from large cities to remote townsand villages across India. 13
  • Emergence of new sources of revenue: In the last few years, thewindow available to monetize a films revenues at the box office hasshortened considerably. This is driving film studios to exploit ancillarystreams of revenue such as pay-per-view, mobile, online gaming, andlicensing and merchandising. The revenue from these ancillarystreams and cable and satellite (C&S) rights are projected to grow ata CAGR of 16% from 2009 to 2014.79 The pre-sale of satellite andhome video rights has also gained momentum.Regional-language cinema forms an integral part of Indias filmindustry: 60% of all movies produced in India are in the four SouthIndian languages of Telugu, Tamil, Kannada and Malayalam.80 Thismarket is witnessing rising investments from Indian and foreignstudios, with a gradual shift in favor of regional films as compared toHindi films. Studios are also releasing dubbed versions of popularHollywood films, while multiplexes are increasing their Screenings ofregional movies.Outsourcing of film services: Services such as postproduction,animation, visual effects, and 2D to 3D conversion are beingincreasingly outsourced to India, driven by the availability of a skilledworkforce and the low cost of services. 14
  • Small-budget films go mainstream: Small-budget niche films withhigh-quality scripts have recently gained acceptability amongmainstream audiences. Strong content and word-of-mouth marketinghave helped studios to generate high returns from these films,thereby diversifying their risk from big-budget movies.Globalization of the Indian film industry: Indian producers areimproving the international marketability of large budget Indianmovies by building partnerships with international screenwriters,composers and technicians. International fi lm studios are alsoproducing and distributing Hindi and regional movies. Of the top sixinternational movie studios, four are involved in distributing orproducing Indian movies. A number of Indian film studios and M&Ecompanies are also expanding their international footprint byacquiring international theater chains and production studios. 15
  • Prospects of Indian Television IndustryIncreased fragmentation in viewership: Viewership, especially inthe Hindi general entertainment genre, is increasingly gettingfragmented as a result of a large number of such channels beingbroadcast in India. However, a few players continue to dominate themarket, commanding a significant share of the industry segmentrevenues.Increased competition amongst broadcasters: With new channelsbeing introduced at regular intervals, there is increased competitionamongst broadcasters, for viewership and advertising revenue. Thiscoupled with high content and marketing costs is expected to impactthe profitability of broadcasters in the medium and long term.Increasing penetration of DTH (Direct-to-Home): There has beenrapid growth of DTH subscribers in the last few years. This trend isexpected to continue over the next few years. However, operatingprofits are still negative for the industry, due to high customeracquisition costs, and is expected to remain this way untill a criticalmass of subscribers is reached. Major DTH service provider in Indiaare : Dish TV, Airtel Digital, Reliance Digital, Videocon, Sun TV,Tata Sky. 16
  • Major Problem of Indian Film IndustryPiracy is the Major or main problem of Indian Film Industry.India is becoming as one of the biggest hub of film piracy.India is ranked fourth in the world when it comes to Illegaldownloads, behind US, UK and Canada.Indian film industry is losing nearly $1000 million (Rs 5000 Crore) inrevenue on a yearly basisIndian film industry is losing nearly 6,00,000 jobs due to piracyPiracy of cinematographic works takes two principal forms, namely`video piracy and `cable piracy.Video piracy takes place when a film is produced in the form of videocassette without taking proper authorization from the right holder i.e.producer.Many times producers of films sell video rights to another party(generally after six weeks or more of release in theatres) who makesvideo cassettes for selling or lending.The video cassettes kept for sale are meant for home viewing only.Any commercial use of such cassettes like in video parlours or incable networks amounts to copyright violation.Cable piracy is unauthorized transmission of films through cablenetwork. As mentioned above, showing a film in a cable networkrequires acquisition of proper authorization from the right holder.But many a time, films , especially the new releases, are shownthrough cables without such authorization, which tantamount topiracy. 17
  • ANALYSIS Contribution of Film Industry to the EconomyDirect Contribution to the Economy: Gross Output Gross Value Net Indirect Employment Added (GVA) Tax Rs. USD Rs. USD Rs. USD Lakh Crores Million Crores Million Crores Million Indian 12,312 2,709 2,132 469 800 176 1.4 FilmIndustry 18
  • Total Contribution to the Economy: Gross Output Contribution Employment (GVA+NIT) Rs. USD Rs. USD Lakhs Crores Million Crores Million Direct 12,312 2,709 2,932 645 1.4 Impact Indirect 8,154 1,794 3,914 861 2.8 Impact Total 20,467 4,503 6,846 1,506 4.2 ImpactGVA= Gross Value added, NIT= Net Indirect Tax 19
  • Contribution of Television Industry to the Economy Direct Contribution to the Economy Gross output EBITDA Wages Gross Value added(GVA) = EBITDA+Wages Rs. USD Rs. USD Rs. USD Rs. USD Crore million Crore million Crore million Crore million TV 1,500 330 120 26 60 13 180 40 Production TV 15,283 3,363 3,057 673 1,375 303 4,432 975Broadcasting TV 26,763 5,668 (149) -33 2,033 447 1,885 415Distribution Total 42,545 9,361 3,028 666 3,469 763 6,497 1,429 20
  • Total Contribution to the Economy Gross Output Contribution Employment (GVA+NIT) Rs. Crore USD Rs. Crore USD Lakh million millionDirect 42,545 9,361 7,348 1,617 4.24ImpactIndirect 28,178 6,200 13,525 2,976 9.62ImpactTotal 70,723 15,561 20,873 4,592 13.86Impact 21
  • Revenues of Film and TV Industry (Rs in Crore) Year Film Industry TV Industry Total 2008 24,470 10,700 35,170 2009 26,750 11,800 38,550 2010 29,800 13,200 43,000 2011 33,200 14,700 47,900 2012* 37,200 15,900 53,100 2013* 42,000 18,500 60,500* =Expected 22
  • Revenues of Film and TV Industry (in Rs. Crores)70000600005000040000 TV Industry Film Industry300002000010000 0 2008 2009 2010 2011 2012E 2013E 23
  • Revenue Breakdown of Indian Film Industry Revenue Breakdown 9% 8% Domestic Box Office 6% Ad Revenue2% Cable and Satellite rights Home Video Overseas box office 75% 24
  • Indian Film Industry Domestic Box office Collections 14000 12000 10000 8000 13233 6000 11550 10890 9825 8775 4000 8125 2000 0 2008 2009 2010 2011 2012 2013 Domestic Box Office (Rs. Crore) Column1 Column2Domestic box office collections are projected to increase to Rs. 13,000crores (USD 2.8 billion) by the year 2013, growing at a CAGR of 10%. Thisgrowth is primarily attributable to the growth in average ticket prices,projected to increase from Rs. 25 (USD 55 cents) in 2008 to Rs. 40 (USD88 cents) by 2013. 25
  • Indian Television Industry Revenue 45000 40000 35000 30000 25000 20000 42000 37200 33200 15000 29800 26750 24470 10000 5000 0 2008 2009 2010 2011 2012E 2013E Column2As per estimates, it is expected that revenue will be around 42,000 crore by2013. 26
  • FINDINGSLakhs of people are getting employment from both the Industries(directly or indirectly)Digitalization has helped a lot the industry in getting revenue fromnew sources.Piracy is a major or main problem of the film industry.People are losing lakhs of jobs due the piracy of movies.Penetration of Television in household is increasing day by day.Local cable operators are dominating the market.Direct to home service has helped a lot the Television industry.Foreign entertainment companies such as Fox, Disney etc. are alsointerested in Indian film industry. These companies are also investingcrores of rupees in India. 27
  • CONCLUSIONSOn the basis of study, we can conclude that Film and TVindustry is one the major important sector of the economy.Lakhs of people of different background getting employment indifferent fields of the Industry.Digitalization has helped a lot the Industry. 28
  • GLOSSARYGross Output: This represents the total value of goods and suppliedby the entities in the industry. This is measured by the aggregaterevenues of all companies in the industry.Note: Gross Output as a measure, is different from the totalconsumer spend in the industry, and may vary based on the industrystructure. However, the measures of "Gross Value Added", "NetIndirect Taxes" and "Employment" would remain the same,irrespective of industry structure. This has been further explained inthe methodology section of this report.Gross Value Added ("GVA"): This factor measures the returns tolabour and capital, i.e. the value of output generated by the entitysfactors of production. This measure, along with the Net Indirect Taxesindicates the industrys contribution to the economy.Net Indirect Taxes ("NIT"): Indirect taxes (net of subsidies) paid bythe industry.Employment: This measures the number of workers that areemployed in the industry. 30
  • BIBLIOGRAPHY1. "Economic Contribution of Indian film and Television industry",prepared by PricewaterhouseCoopers, March 2010.2. "Spotlight on Indias Entertainment economy", prepared by Ernst &Young, October 2011.3. 31