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Saturday, February 2, 2013

Part II: Digitization- Growth trends of the Film and Television Industry: comparative analysis

Posted on 9:16 PM by Unknown

Contrary to the fears of digitization viewed as the harbinger of doom to the film industry, the global film industry is intact and continues to churn out thousands of films annually. The report stated UNESCO’s finding of increase in feature film production from around 5,600 films in 2005 to 7,200 in 2009 and recorded a total of 31,519 feature films produced globally between 2005 and 2009.[1] Regionally, the US produced around 700 films both in 2005 and 2009, Germany produced 146 films in 2005 and 216 in 2009, Russian film production went from 161 to 253 between the same period and UK made 100 films in 2005 which increased to 130 in 2009.[2] Box office revenues have also been increasing in these countries – for example, the France box office saw a 4.7% increase in revenues, UK’s saw a 5.2% increase and Germany’s saw an increase of 4.1%.[3]

A slightly different growth pattern has been witnessed in India. India is home to the world’s largest film industry – Bollywood, which produces, as reports say, roughly twice the number of movies as the American film industry, and sells 2.5 times the number of box office tickets as the U.S market.  However, an overall study of the number of films produced by the Indian film industry shows that film production is sliding.  This evidenced from the following numbers - 1325 feature films were produced in 2008 but only 1255 films were produced in 2011, following a steady decline from 2009 (1288) and 2010 (1247).

The cause for this decline cannot be accurately ascertained but it pertinent to note that inspite of the decline in production, KPMG expects revenues from Indian cinema to grow from $ 2.3 billion in 2008 to $ 3.6 billion by 2013(here). This report also confirmed the that the Indian film industry grew by 11 % in 2010 to Rs 65,200 crore and is excepted to be worth Rs 1,27,500 crore by 2015.

Moreover, the sources of revenue for this industry (in India) have been increasing. A report by E&Y on the Media and Entertainment Industry, noted that though theatres were still the primary sources of revenue (60%), other revenue streams such as pre-selling satellite, home video rights and revenue from new media such as online rights and mobiles is increasing. However, the E&Y report also notes that the Indian film industry continues to lose around Rs. 50 billion per year due to piracy and is one of the top countries in peer-to-peer file sharing infringements worldwide.

Not only is the film industry flourishing despite digitization but also the television industry. As the report states, the European Audiovisual Observatory noted a significant increase in TV channels – growing from a few hundred in 1999 to 9,800 channels in 2010.[4] Similarly in India, according to reports (hereand here), the TRAI released data in its quarterly report with regard to number of TV channels in India till 31 Dec 2011 to be 825 channels. The report also stated that India has 44.21 million private DTH subscribers as of 31 December 2011.
This vast demand has also resulted in a significant increase in revenues of television production companies. As a report states – “Three years ago, it was impossible to find a television production company that had crossed the Rs 30-crore barrier, except, of course, Balaji Telefilms. Now there are more than half-a-dozen of them. Vikatan Televistas (Kolangal, Thirumathi Selvam), Optimystix (Comedy Circus, Saas Bina Sasural) and Hats Off Productions (Khichdi, Sarabhai vs Sarabhai) among others have just made it to the Rs 80-100 crore club. They will, in the coming year or two, cross the Rs 100-crore mark”.  

Conclusion

This analysis goes to show despite the emergence of digitization of content, the tide is still high for creativity, revenues and demand for videos and films in the entertainment and media industries worldwide. Opponents to digitization feared that new technology would primarily– threaten creativity, lead to exploitation of creators and would lead to a socio-economic crisis caused by loss of jobs, lowering of revenues etc. (here) However, digitization has brought to fore a large pool of talent that can and has contributed to enhancing the levels of creativity in these fields. Also, these industries by tapping into revenue streams of digitization have and can make whooping profits. Moreover, as many have argued (here), the issue of exploitation of creators may not be directly related to digitization of content and may be more appropriately addressed by ensuring balanced contracts. With regard to the socio-economic impact of digitization, the numbers clearly show that inspite of digitization, the entertainment industry is prospering and fears of loss of revenues and loss of jobs may not be well placed. Therefore, though the landscape for artists has changed due to the emergence of new technologies, the way forward is mould policies to tap into and adapt to these new technologies and methods.



[1] Michael Masnick Michael Ho, The Sky is Rising (Regional Study) on the Entertainment Industry, CCIA Floor 64., at p. 12 (Video Production).
[2] Id.
[3] Id., at p. 14.
[4] Id., at p. 13.
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