The Indian Entertainment and Media industry - Essay Example

The Indian Entertainment and Media industry Introduction Indian Media Industry is one of the fastest growing industries in the Indian Economy. Indian film industry produces the most number of films in the world and is the second largest film industry in the world after Hollywood. Over the period of time, it has been able to benefit from the improving economic conditions and increase in the income level of the Indians. It is also important to note that the Indian Diaspora is spread into most of the developed countries including UK and US besides having large presence in South Africa. Currently, the Indian Entertainment and Media industry is considered as the most robust and growing industries in the world as both growth and opportunities are embarrassing the various segments of the industry. The year 2006 has reported to be proved one of the most successful years for the Indian Film Industry as not local audience responded to the industry but also the foreign markets were more responsive to the new movies too. It was because of this reason that the industry has been able to witness consolidation through formation of formal companies as well as new firms entering into the market. Similarly the television channels in the country are getting mushroomed too as more and more niches are being developed to cater the various segments of the market. Apart from that the increased digitalization has allowed Indian T.V. Channels allowed them to deliver customized contents to their audience. Similarly the radio industry has evolved too with more and more FM stations are being started to again cater the various market segments. The above situation suggests a strong performance and expectations from the Indian Media industry and its capability to deliver. This work will undertake a detailed SWOT analysis as well as PESTL analysis in order to explore further the industry. A good SWOT analysis would outline that the organization aiming to enter into certain sector should have the capabilities to exploit the strengths of the industry as well as utilize its strengths to overcome its weaknesses also. Similarly Opportunities must be fully utilized to cater to the threats which the industry is facing. SWOT Analysis Strengths 1) Media industry in India is one of the most booming industries in the economy having large customer base. All the segments of the industry including TV, Films and radio have the large customer base to cater to. Any company willing to penetrate into the market will not have to divert their resources in the development of the market as the readily available market is readily available. 2) The improving economy in India has resulted into the emergence of the middle class in India providing a moderate income level cluster of customers who are willing to pay the premium price for high quality contents. This boom into the economy has given rise to a specialized niche of customers to which a company willing to enter can entertain however what is needed to analyze the media tastes of this group of customers to offer them contents according to their willingness and likeness. 3) Indian Cinema industry having more than 3 billion admissions per year is the large industry producing the highest number of films in the world. 4) The compound annual growth target of the industry in next three to four years is being expected at 16% showing the strong outlook of the economy. The growth in the sector provides very strong future prospects for the firms to enter into the market. 5) Due to its increasing popularity, the industry is getting exposure to various international markets. International markets will provide an opportunity for the companies to expand internationally and to develop markets which have remained traditionally out of their traditional market. 6) India has one of the most sophisticated information technology infrastructure which is greatly supporting the industry to produce the quality contents and at par with Holly Wood. The use of information technology at low cost and with local availability can be handy if utilized with proper use. 7) Cost of production is really low as compared to Holly Wood and other industries and given the large customer base, the return on investment is much higher than the alternative investments.( Aruvian Research,2007) Weaknesses 1) Media Industry in India is highly fragmented. Due to its large regional diversity, it may become difficult for the companies in the Media sector to offer a standardized set of product offering. 2) Indian Media industry is still lacking cohesiveness into its production and distribution facilities. It still lacks the technological sophistication and use of technology into the production process. 3) Despite its large customer base, Indian Media industry is still not catering the low income customers. However industry which is already enjoying the low cost of production can cater to those customers if costs are further rationalized. 4) India being the secular country has multi-ethnic population with Muslims as the second largest majority in the country. The religious values of this segment of the market may not allow them to view the media projecting pornography which is increasing in India Cinema. Growing pornography can therefore take away a substantial chunk of viewers from the Cinema. Opportunities 1) There are opportunities to cater to the crossover audience of the industry. Since quite substantial Indian Diaspora live abroad therefore bringing in multi-linguistic movies like Bend it Like Beckhem can provide the industry new markets to look for. 2) Due to rapid growth in the market and industry, it provides a very lucrative ground for the international investors to invest into the market based on the high rate of return offered by the industry. 3) The penetration of the industry into the lower income group is low thus providing a great opportunity to expand into that segment of the market. Companies can produce low budget movies; T.V. Serials as well as cheap delivery channel can help companies to tap into this segment of the market. 4) Industry is most de-regulated providing the ease with which the entry into the market can be made. This is perhaps one of the greatest opportunities offered by the industry. 5) Technological innovations like animations, multiplexes, etc and new distribution channels like mobiles and Internet have opened up the doors of new opportunities in the sector. Threats 1) Piracy and protection of copy right laws is the biggest threat the industry is facing now as most of the movies produced by the industry are easily pirated and sold into various countries. 2) The increasing reliance on technology has made the output in the industry uncertain and volatile as more and more expensive technologies emerge which can be hard to follow. PESTLE ANALYSIS PESTLE analysis is the more comprehensive analysis about any economy or country as it involves various segments which are studied and explored to better understand the market or industry in which company plan to enter. A traditional PESTLE analysis would involve an analysis of Political, Economic, Social, Technological, and Legal as well as environmental factors. The next section will conduct a PESTLE analysis of the Indian Media Industry. Political Analysis India is a democratic country with Parliamentary system in place. Prime Minister is the head of the State with executive powers whereas the legislative powers are vested into the Parliament. Political system in the country is considered as relatively stable however there are some issues which dilute the overall political environment in the country. The issues of Kashmir and other troubling areas pose a constant threat to the political stability in the country. Probably the greater strength of the India is the independence of its various institutions giving it much needed stability and prominence. The current government in the country is a coalition government called United Progressive Alliance, currently being lead by Indian National Congress with various different political parties including the Indian Communist Party is part of the coalition government. (economist.com, 2008). The National Legislature is bicameral in nature with lower house i.e. Rajia Sabah being vested with the legislative powers. There are two main parties in the country which have won the most seats in the last election and dominate the upper and lower house. Indian National Congress is in the government currently whereas Bhartia Janta Party is the main opposition party of the country. However, it must be noted that the Indian National Congress is headed by the Italian born Sonia Gandhi, wife of former prime minster Rajiv Gandhi. Being of non-Indian origin there was widespread criticism of Sonia leading the coalition government. Due to strong opposition, Sonia Gandhi has to give up and the government was handed over to the Manmohan Singh. Though the political system of the country may be termed as stable however the growing ethnic divide in the country may put the political system at the risk. Similarly the regional diversification can also prove detrimental to the overall political system in the country. Economic Analysis India has one of the largest and most sophisticated Information technology human capital in the world. Famous for its IT Software as well as hardware engineers, Indian economy thrived on the export of the high tech professionals. Apart from that India is now considered at par with China with regard to the economic growth and is being considered as one of the most important emerging countries in the world with substantial military power. “Though business-process outsourcing, information technology, telecoms and manufacturing have boomed in recent years, India’s economy remains mostly agricultural. Parts of the country are cut off from the benefits of free trade, and limits on foreign direct investment make profitable expansions difficult and the vast and Ошибка! Недопустимый объект гиперссылки. is a drag on everything. Economic reforms, especially labour-market reforms, have been slow in coming, and a plan to institute special economic zones has been frozen.”(economist.com, 2008). Over the past few years, Indian economy has been growing at more than 9% average growth rate with strong performance from few significant sectors including Media and software export. This has also resulted into the rising foreign exchange reserves of the company as well as the booming capital markets which are fuelling the growth of the economy on one hand whereas stabilizing the economic environment in the country also. On the whole, the economic outlook of the country is positive as well as stable. Social Factors India is a multi-ethnic country with mushrooming of various religious communities in the country. Hindus are in the majority whereas the Muslims are the largest minority in the country. Besides there are other factors like languages, cultures, sub-cultures which are markedly different from the other cultures in the country thus giving India a very rich and diversifying look. Apart from that, this diversity of the communities also proves to be a strong ground for division between the communities in the country. The caste system in the country is probably its biggest boon as the divide seems to be a permanent source of social conflict in the country. The so called untouchables are still being kept away from the mainstream society subjugating them to various humiliating situation to live and bear. Apart from that, India is probably the most volatile country in the world in terms of religious harmony. The constant conflict between the Muslims and Hindus is the point of constant conflict and disturbance in the society of economy. This conflict also put the Indian society as one of the most vulnerable societies in the world in terms of its harmony and coherence between various communities whether they are in majority or in minority. Technological factors India has the third largest technological scientific manpower in the world which is being used for achieving growth and effective change in the business efficiencies of the firms. This has not only allowed their firms to be more flexible and adaptable but also proved a cheap alternative to other technology driven alternatives available at much higher cost. India, as discussed above possesses one of the strongest information technology infrastructures in the world. Outsourcing of IT resources has remained one of the traditional comparative advantages of the Indian Economy as India is almost glutted with high tech information technology experts. However as for as other technological sophistication is concerned, the economy do not seem to be occupying the sound technological base. Though the cheap labor is available in the country however India has to yet to establish itself as a modern industrialized country with solid manufacturing base. However in terms of the Media Industry, technological factors seems to be corroborating the growth of the sector as the modern IT facilities allow the better pre and post production facilities including high tech animation services. Legal Factors India has a quasi federal system but Judiciary in India is unified. The whole legal structure in India is based on three tier system with Supreme Court of India being the apex court in the country. Besides, other institutions like Election Commission are also independent and free from any substantial government pressures. The three tier system involves administrative courts as the lowest form of courts which are supervised by the High Courts and the Supreme Court is the highest Court after the High Courts. India has inherited its legal system from Britain and is being considered as one having extensive powers and substantial degree of freedom and independence from the government influence. The entire legal environment for doing business in the country is stable and forward looking. India is a country which is on the path of modernity and its legal system is adapting the same route also. Conclusion India has a very rich history which allowed it to develop systems and procedures over the period of time which successfully ensured the emergence of India as one of the powers in the World. India Media is not only the significant part of the Indian Society but also gaining a widespread recognition at the international level. The stable political as well as economic system in the country make it conducive for Foreign direct investment and it is because of this reason that Indian Capital Markets are considered as the most booming markets because of the heavy inflow of Foreign Direct Investment in the country. India media and entertainment industry due to its large customer base provide a very lucrative option to make FDI into this sector as there are good prospects that the investment into this sector will provide better and quicker returns to international investors. References 1. Aruvian Research. (2007). Indian Media & Entertainment Industry - SWOT Framework Analysis. Available: http://www.reportbuyer.com/leisure_media/country_overviews_leisure_media_/indian_media_entertainment_industry_swot_framework_analysis.html. Last accessed 17 April 2008. 2. Economist.com. (2008). Country Briefings: Political Structure. Available: http://www.economist.com/countries/India/profile.cfm?folder=Profile%2DPolitical%20Structure. Last accessed 16 April 2008. 3. Economist.com. (2008). India's economy. Available: http://www.economist.com/research/backgrounders/displayBackgrounder.cfm?bg=2454949. Last accessed 16 April 2008. Read More