Guest Times: M&E sector – The India opportunity

Sudhanshu Vats, Group CEO, Viacom18, traces the evolution of India's M&E sector and stresses that the future of this sector lies in building global alliances in spaces such as content, technology, online, and carriage

Delhi | April 27, 2015

Sudhanshu Vats

Any discussion about the India opportunity is incomplete without the juxtaposition of the growth of our sector with the growth of our country. One might begin with the 1990s. While our industry has been around for much longer, it only makes sense to look at a time frame that includes the launch of India's first private satellite channel – which was around that time. A large part of what makes up our Rs 1 lakh crore or roughly $16 billion industry is either the broadcast business or the businesses that exist because of the broadcast business – I refer to the cable, DTH space, etc., here.

Early 1990s: Birth & early days

The early 1990s were the definitive years around which both – the India we know today, and our industry as we know it today – were born. Till 1990, most families in India had access to a limited set of channels owned by the public broadcaster. Slowly but surely, the world of private TV entertainment started opening up. The year 1991 marked the start of economic liberalisation in India. A decisive shift towards an open economy was witnessed at the time, with greater reliance on market forces.

Growth and stagnation: The decade of 2000-10

Things progressed, slowly but surely till 2000. The Asian financial crisis impacted India slightly, but not as much as it did the Asian Tiger economies. The build-up to the 2008 financial crisis was swift. Companies followed aggressive capital raising strategies to fuel the cocktail of inorganic growth and new business expansion. The crash of September 2008 hit India with high impact owing to the fact that the growth leading to it had been so swift.

The pace of growth in the M&E sector was picking up and the nation saw the advent of DTH technology in 2000. Media firms were amongst the quickest in consuming as much capital as possible. This was the decade in which many of today's leading Indian M&E firms (NDTV, ZMCL, Dish, TV Today, TV18, Sun TV, etc.) listed on public markets. In general, the M&E sector (2004-08 growth of 16.6 per cent) had been outperforming nominal GDP growth for the latter part of the decade (2004-08 growth of 14.48 per cent) and when the slowdown came, our sector was also as acutely affected. Consolidation replaced the popular buzzword 'expansion'.

The resurgent wave: 2010 onwards

The last five years have seen the resurgence of our country as well as our sector. There is a new confidence in the air and it's not frothy, as witnessed before. It seems substantial and sustainable. India's stock markets have outperformed almost all other emerging markets; our growth forecasts are bright, and we're back in the presentations of global boardrooms.

The M&E sector too seems to be on stronger footing. The market structure is moving towards a more mature industry. We're talking to each other more than we have before – there's a higher sense of shared existence. Broadcast Audience Research Council (BARC) – or the new ratings paradigm that has just been unveiled, is a shining example of this bonhomie. The Government too has taken note of our potential and is in the process of rolling out structural reform – whether with digitisation, convergence, IP management or other segments that have needed attention. Needless to add, the Indian consumer's optimism, too, is bound to rub off on our industry's growth.

This entire journey that I've just taken you through gives a sense of where our industry stands today, where it has come from, and where it's headed.

We understand that while the first 25 years or so of our existence have seen us evolve into a domestic powerhouse, our future lies in building global alliances. The world is smaller than it has ever been, and there is high potential for our cultural stories to become universal stories. Similarly, the average Indian has also become more outward looking in his outlook. Some studies (Tripadvisor) show that foreign travel has grown by almost 21 per cent in the first half of 2014 alone.

Take the organisation I lead, for instance: Viacom18 is a joint venture between Viacom Inc and the Network18 Group – a classic marriage of global and homegrown brands. It's a shining example of what global expertise, growth ambition and scale can achieve in a high-return market like India – or I should say in the high-return markets of India.

Also, these partnerships do not necessarily have to exist between entities with similar businesses. My own sense is that there is a lot to be gained from partnership between entities in spaces such as content, technology, online, carriage and so on. Our sector is undergoing metamorphosis on an almost daily basis. Business models merge and demerge – creating value – and are being rewarded for it.

The time is now for the cross pollination of ideas, formats and business models. We need to learn from what the world has learnt. We need to teach the world what we have learnt. Never before has the environment been so ripe for alliances and partnerships. Let conversations thrive, and the exchange would yield meaningful results.

(The views expressed here are the author's personal. The authored article is based on the speech that he gave on April 24, 2015 at the Global Exhibition of Services held at Pragati Maidan in Delhi.)

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