For English language publishers, India is an intriguing market to enter, with rapid growth expected as it quickly catches up on the last decade’s digital media evolution. Peter Phippen, Founding Partner, East West Relations, and a highly experienced international publisher, explains why now is the moment to enter India.
The Indian media market – currently worth about $20billion, so significant but not yet at the global top table – will be transformed over the next decade. Changes that have taken 50 years in the west and happened sequentially will take place in India in a condensed period and happen simultaneously. Even more than the Indian economy as a whole, growth will be dramatic.
Media content companies in the west, experiencing the combined challenges of re-invention, driven by digitisation and sluggish economies, are quite rightly eying the Indian market trying to determine whether this is the moment to seek to enter. Of course, many have well-established businesses, such as News Corp, Disney, Sony….each now, to all intents and purposes, indigenous operators. But others are saying let’s hold-off. Their caution is driven by a number of factors:
- The market is still relatively small and profits, in Television for instance, hard to come by. Internet penetration is still modest, compared with most western countries.
- Doing business in India can be hard. India has many of the challenges associated with developing economies….corruption, a tendency toward protectionism, inadequate infrastructure investment.
- In any case, the rapid economic growth of many years appears to have slowed and the stock market has been relatively weak.
These and other similar concerns support the beguiling position of ‘let’s wait and see. We can jump in later when the returns will come faster.’
In reality, this is the moment and time is running out for western media companies to establish a meaningful presence in what will become one the top three media economies in the world, along with the US and China.
During the next few years, the Indian TV industry will go through the digitisation process meaning that broadcasters and content producers receive an increased proportion of the subscription fees, at the moment siphoned off by local cable operators and a larger range of specialist channels will become profitable.
Radio will go through a substantial growth phase on the back of the roll-out of further FM licenses.
The B2B information market, currently small, will grow rapidly in response to a growing demand for professional support, as the rest of the economy transforms from fragmented and disorganised to national and organised with sophisticated supply chains.
Print, unlike in the west, will remain strong, with new parts of the country and demographics coming into the market.
And, of course, internet penetration will explode, mostly through mobile connectivity. Already today, 900m Indians have a phone subscription. The number of 3G enabled handsets and 3G and 4G connectivity will expand at astonishing pace…the former at a CAGR of perhaps 40%; the latter at a CAGR of 60%.
When is the right moment to seek to participate in this changing landscape? Is it now, when the experience, skills and brands from the west are at their most valuable? Or, is it when the market has largely taken shape and the mind-set of the highly successful Indian media companies is principally on export and global expansion.
It is true that the Indian economy is currently in a lower growth phase, about 5%. And the Indian government has sent mixed messages about economic liberalisation. The Indian currency is currently at a long-term low valuation. There is greater sense of reality regarding the valuation of Indian businesses, compared with just a couple of years ago. So, this is the perfect moment to look for the right partners.
Peter Phippen is Deputy Chairman of Immediate Media and Chairman of Sift. He is a co-founder of East West Relations, a research & advisory firm for Western media businesses considering entering India. Peter is chairing a session at the SIIA Digital Content & Media Summit on “Global Media Ecosystems” on 24 September and will also run an informal round table discussion for you to ask your questions about the Indian media market.