As the COVID-19 pandemic has brought in major disruptions in the M&E business model, it is high time for the sector to forego holding on to old ways of thinking and working, and prepare to engage with the world with a new set of rules to propel growth, says the latest edition of FICCI-EY Report on Indian M&E sector
The COVID-19 global pandemic presented unprecedented challenges to the media and entertainment industry worldwide. Faced with isolation, consumers actively sought alternatives to keep themselves entertained. Thus, 2020 saw demand patterns shift with acceleration in digital media adoption aided by the growth of digital infrastructure. The supply side transformed, too, as M&E companies took the opportunity to reinvent.
“This altered the M&E sector as we knew it. Every segment – TV, radio, print, digital, etc. – had video, audio, textual and experiential products and had begun to redefine itself across those verticals. What didn’t change, however, was the compelling content created around news and escapism, and the passion to build some of India’s most powerful brands,” says Ashish Pherwani, M&E Sector Leader, EY India.
EY India in collaboration with Federation of Indian Chambers of Commerce & Industry, has come out with the 2021 edition of the FICCI-EY report on the Indian media and entertainment (M&E) sector—‘Playing by New Rules’—that seeks to capture transformation of the country’s M&E sector and offer useful insights into the new rules of the game.
According to Pherwani, appointment viewing on news television, gamification on e-commerce apps, circulation transformation in print companies, short video on OTT platforms, interactivity and brand solutions from radio companies were some of the many strategic shifts that were seen in 2020.
Saying that India’s diversity and scale will continue to fuel the growth of traditional media, Sanjay Gupta Chairman, FICCI Media and Entertainment Committee, highlights the new and big opportunities for M&E businesses.
“Today content creation and storytelling are much more diverse and come from all parts of the country. New distribution models and monetization strategies are evolving across both large and small screens. Learning content and gaming have emerged as very large new opportunities. These changes are driving a shift in monetization of content investments and this opportunity is global,” says Gupta.
The report points out that the Indian M&E sector fell by 24% to INR1.38 trillion (US$18.9 billion), in effect taking revenues back to 2017 levels. However, there were some silver linings as well. “Several digital trends accelerated their trajectory, fed by growth in broadband, personal devices and smart televisions, and the time and inclination to try online services,” observes Gupta.
“Digital and online gaming were the only segments which grew in 2020 adding an aggregate of INR26 billion and consequently, their contribution to the M&E sector increased from 16% in 2019 to 23% in 2020,” the report says.
Online gaming continues to be the fastest growing segment of the M&E sector for the fourth year in a row, the segment grew 18% helped by work from home, school from home and increased trial of online multi-player games during the lockdown.
Online gamers grew 20% to reach 360 million in 2020. Transactionbased game revenues grew 21%, despite adverse regulation in certain states, while casual gaming revenues grew 7%.
2020 also saw 28 million Indians (up from 10.5 million in 2019) paying for 53 million OTT subscriptions leading to a 49% growth in digital subscription revenues, thus clearly indicating that subscription fared better than advertising revenues.
“Growth was led largely by Disney+Hotstar which put the IPL behind a paywall during the year, increased content investments by Netflix and Amazon Prime Video and launch of several regional language products. In addition, 284 million Indians consumed content which came bundled with their data plans,” says the report.
According to the FICCI-EY report, online gaming will continue to grow and reach 500 million gamers by 2025 to become the third largest segment of the Indian M&E sector. The segment will grow across all its verticals viz, esports, fantasy sport, casual gaming and other games of skill, but revenue growth will be led by mobile-based real-money gaming applications across these verticals.
It continues to say that the pandemic disrupted the already fast evolving M&E sector and new rules have been set in place to drive success of the sector.
It lists out some strategic priorities for the Indian M&E sector including Identifying the audiences that matter, building a multi-media and multi-community strategy, addressing community needs apart from just news and entertainment, make end-customer data and insights the core of operating priorities, building customer acquisition efficiency, enhancing speed of product development and change, and reinventing ad sales.
The report points out that globally the M&E industry is under renovation. “The steps taken by media and entertainment companies to streamline the cost base and optimize the operating model for efficiency and effectiveness will remain on center stage as the entire industry plots a course through disruption,” it says.
It also adds that major business conferences, which moved to virtual gatherings in 2020, will continue to utilize digital platforms to extend reach and include remote participants who remain wary of business travel.
Esports and video games will build on a fan and user base that multiplied in size during the pandemic, believes John Harrison, EY Americas Media & Entertainment Leader. “In 2021 and beyond, companies will be successful not because they are better at predicting the future but because they are better able to orchestrate a wideranging ecosystem of in-house talent and external partners, and pivot in a timely, confident manner,” says Harrison.
Although Indian television segment declined 13% in 2020, the report expects television advertising in 2021 to be close to 2019 levels, growing over 20% to reach INR304 billion. Digital segment, too, is expected to grow to INR424.5 billion by 2023 and digital advertising will outpace all other media with paid subscriptions doubling to over 100 million by 2023. According to Pherwani, in effect it will be the same game, but with totally new rules.
All hopes are not lost at a time when the world in general and M&E industry in particular is facing a tough time due to COVID-19. For, a future outlook, part of the FICCI-EY report of March 2021 titled ‘Playing By New Rules’, says the sector to rebound in 2021 and double to around Rs 2.68 trillion by 2025
Path To Recovery
The report said while it expects the M&E sector to rebound in 2021 and double to around Rs 2.68 trillion by 2025, the recovery of various segments will vary. “We expect that different segments will take different periods of time to regain their 2019 (pre-pandemic) revenue numbers.” Assuming no further setbacks, it will take one to two years for TV, film, music, two to three years for animation and VFX, events and beyond three years for print, radio, OOH.
Given that video, audio, text and experiences are available across almost all segments, the M&E sector is redefining itself across these 4 verticals: Video – TV, video OTT; Experiential – Online gaming, cinemas, events, OOH; Textual – print, online news; Audio – radio, music, audio OTT.
Premium consumers (comprising Digital only and tactical digital) will cross 100 million by 2023. The fastest growing segment will be the bundled digital consumer, growing to 399 million by 2023. The free consumer base will also grow as progress continues to spread amongst the 50 million homes today which do not have access to television.
Smart connected TVs will exceed 40 million by 2025, thereby ending the monopoly of broadcasters on the large screen and leading to around 30% of content consumed on large screens to be social, gaming, digital, etc.
Screen count will almost double to near a billion by 2025, of which around 220 million would be television screens and over 750 million would be smartphone screens. This could lead to a massive increase in content creation (news and entertainment) from the around 170,000 currently to over 250,000 hours, as personal consumption (as opposed to group consumption) increases to over 50% of total video time, across a wider set of genres and niche content types.
The share of regional content will increase to 60% of television consumption in 2025 from around 55%1 in 2020 and will increase to around 50% of OTT consumption from 30% in 2019. The need for dubbing, titling, formatting, etc. services to make content mobile will increase.
Online gaming will continue to grow and reach 500 million gamers by 2025 to become the third largest segment of the Indian M&E sector. The segment will grow across all its verticals viz, esports, fantasy sport, casual gaming and other games of skill, but revenue growth will be led by mobile-based real-money gaming applications across these verticals.
Split In Cinema Audience
While cinemas today largely cater to 100 million Indians, mostly top-end audiences, they will now begin to go deeper into India to cater to a wider audience base. Cinemas will continue to cater to top end multiplex audiences who watch movies for their spectacular experience and to enjoy an evening out with friends and family, comprising around over 100 million customers by 2025.
News Reach To Go Up
In 2020, Comscore data indicates that online news had a reach of 454 million as compared to 450 million for online entertainment.
Power of Newspaper
With the shift of premium customers to SVOD, print will increase in importance with respect to such audiences. Large news networks will focus on increasing the collection of regional news to create very strong regional products (print + digital) of extremely high relevance to audiences – news that national and large digital news aggregators may not be able to provide.
Reduced Ad Reliance
Cover price growth is critical for the print segment, in order to reduce the variable loss incurred on each newspaper printed by most print companies, and India could see a doubling of newspaper average cover prices by 2025.
More Focus On Margins
Continued focus on operating margins will be required and made possible by creating state-wide shared services across news gathering, production and distribution while print companies focus on their core capabilities of brand building, community management and editorial excellence.
Video & Audio
Content produced for the video OTT segment will begin to play a more important role in using and promoting music – akin to Bollywood’s link to music – and we could see a lot more music led innovation from this segment.
If YouTube continues to provide recent and video content-linked music for free, the paid OTT music sector will reach 5 million top-end users by 2023, and grow to INR2 billion in revenue, leading to consolidation in the music OTT segment; if not, paid subscribers could cross 50 million.
Radio, the most affordable of all media for consumers, will continue to exist and serve large portions of India through smart phone FM receivers, and play a vital role in retail advertising.
There is an increase in TV households of nearly 3.2 million in Urban India and 10.3 million in Rural India; TV sets in rural India took over urban India, while Hindi-speaking markets grew the highest in the country, says Broadcast Audience Research Council’s (BARC’s) TV Universe Estimates (UEs) 2020 study
Growth in TV viewership corresponds to the pattern of regional growth of the population, says a new study conducted by the Broadcast Audience Research Council (BARC) India suggesting higher growth in TV viewership in the Hindi-speaking markets when compared to southern states.
BARC is 60% owned by Indian Broadcasting Foundation, 20% by The Advertising Agencies Association of India (AAAI) and 20% by The Indian Society of Advertisers (ISA). Indian Broadcasting Foundation (IBF) is a unified representative body of the television broadcasters in India. BARC is the only rating currency in India that enables advertisers to decide on buying ads and broadcasters to design and curate programmes.
According to the TV Universe Estimates (UEs) 2020, TV Homes in India increased by 6.9% to 210 million from previous 197 million in 2018. TV viewing Individuals grew by 6.7%, effectively an increase of 56 million since the last study was conducted two years back.
The report adds that the growth of ownership of TV sets in rural India took over urban India, with rural TV markets growing at 9% compared to 4% in the urban markets.
“In absolute terms, there is an increase in TV households of nearly 3.2 Mn in Urban India and 10.3 Mn in Rural India. TV households grew in all town classes of Urban markets with megacities growing by 6%,” the study points out.
In terms of regional growth, the study finds out that TV households have increased in all reporting states/ state groups in 2020. “The growth in overall HSM states is relatively higher than the South states due to an already high TV penetration. Bihar/ Jharkhand, Assam/NE and Odisha have seen double digit growth in TV households,” it adds.
Among individual markets, the report indicates that the Hindi-speaking markets grew by 8%, the highest in the country. TV viewership in southern states, in comparison, grew by 5%.
This growth pattern has been found to be in line with the pattern of regional growth of the population. “Similarly, TV viewership of upper NCCS (A and B) has increased due to increase in population while lower NCCS profile (NCCS CDE) has seen a drop of around 12% at all India level.”
In terms of genres, few genres such as Hindi News, Sports, English Movies and Devotional/Spiritual show a doubledigit growth. “Viewership of Bhojpuri, Assamese and Oriya channels have grown significantly higher than other genres,” says the study.
Since the TV population increase is lower in the South market compared to HSM, viewership increase of Southern genres is also comparatively lower. Kannada Movies has dropped marginally, it adds.
The number of female TV owners increased by 7%, beating the male population by one percent. This trend was mainly driven by Rural India. On the other hand, the highest growth in numbers was seen in the population of kids (i.e., 2 to 14 years), where TV viewership grew at 9%, while 22 to 40-year-old TV viewers in rural India were found to be higher than other age groups.
The study also finds that HD viewership has grown by 15% at all India level with relatively higher growth observed in Bihar/ Jharkhand, Karnataka, Maharashtra and Rajasthan. Also, TV viewership has grown on free and pay platforms with higher growth observed on pay platforms. “The share of DD Free Dish has increased to 19% from 13% in 2018, and the share of Cable TV has decreased to 48%,” says the study.
The report also suggests that the socio-economic profile of the TV viewers has improved over the years with households in the highest socio-economic strata — A and B — increasing to 27% and 31% respectively, while those in the lower strata contracting to 9% of TV households in India.
“In the recent years, a limited number of media studies have been conducted (e.g., Indian Readership Survey – IRS). These studies have indicated that the NCCS profile of the Indian population is changing as people have been moving up on the socioeconomic pyramid. BARC India has also observed this change in the NCCS profile of TV panel households,” said BARC in a press statement.
“TV Universe Estimates (UEs) play an important role in the structuring of BARC India’s sample design, ensuring the panel reflects a true microcosm of India. Updated TV UEs ensure that the weighting and calibration systems properly, and accurately, project audience estimates to the population and are free of any bias,” BARC added.
Double Oscar winner Roberto Benigni, a renowned actor-filmmaker, will receive this year’s Golden Lion for Lifetime Achievement of the 78th Venice International Film Festival. The festival in physical format will take place from September 1-11, 2021. Right from his debut, marked by his innovative and irreverent approach to rules and traditions, Roberto Benigni stands out in the panorama of the Italian performing arts.
The decision was made by the board of La Biennale di Venezia, which embraced the proposal of the Festival’s Director, Alberto Barbera.
Alberto Barbera said, “Right from his debut, marked by his innovative and irreverent approach to rules and traditions, Roberto Benigni stands out in the panorama of the Italian performing arts as an unprecedented and unequaled figure of reference.
Juggling his appearances on theatrical stages, movie sets, and television studios, each time with surprising results, he shines in all of them thanks to his exuberance and impetuosity, his generous way with the public, and the passionate joyfulness that is perhaps the most original hallmark of his opus.”
He added: “With admirable eclecticism, and always true to form, he is one of the most extraordinary comedy actors in an admittedly rich gallery of Italian performers; a memorable director who makes enormously popular movies; and, his most recent transformation, one of the most esteemed performers and popularizers of Dante’s ‘Divine Comedy’.
Few artists have equaled his ability to combine explosive comic timing, which is often accompanied by irreverent satire, with his admirable talent as an actor – at the service of great directors such as Federico Fellini, Matteo Garrone, and Jim Jarmusch – and as an engaging and sophisticated literary exegete.”
Accepting the honour, Benigni said, “My heart is full of joy and gratitude. It is an immense honor to receive such an important recognition of my work from the Venice International Film Festival.”
Benigni was born in Misericordia (Castiglion Fiorentino, Arezzo) on October 27, 1952. He began his career in the early 1970s and soon became one of Italy’s most beloved and popular actors, directors, and screenwriters, well-known and appreciated throughout the world.
His film La vita è bella (Life is Beautiful, 1997), which he wrote and directed, received the 1998 Grand Prize of the Jury at the Cannes Film Festival and in 1999, of the seven Oscar nominations the movie received, it won Oscars for Best Foreign Language Film and Best Actor (as well as Best Music, awarded to Nicola Piovani). With the same film in 1999 he won the Screen Actor Guild and Bafta award as Best Actor. La vita è bella is Italian cinema’s most popular movie: 9.7 million spectators. And it goes down in the history of Italian cinema as the Italian movie that has totaled the highest number of spectators worldwide.
There has been a consensus among panel members to completely overhaul the Indian Copyright Act and make it contemporary to modern times and look at changing dynamics by embracing emerging digital ecosystem in the new provisions.
Titled ‘Digital India Copyright Act – Redefining the Future of Creative Works’, the panelists at the Fast Track Digital Series delved deep into the various aspects of the Copyright Act of 1957.
Moderating the session, Trevor Fernandes, Vice President, Govt. Affairs – Asia Pacific, MPA, emphasised the need to protect the intellectual property rights. Fernandes maintained that while revisiting an Act that was last reviewed in 2012 was justified, he cautioned that 2020 was not the time to rush changes without very careful deliberation and policy calibration.
“I think the Copyright Act needs to be overhauled in a substantive and significant manner. Starting off with the digital space, I’d like to see it written in simple language and have non ambiguous clauses and provisions, which make it easier,” said Ameet Datta, Partner – Sai Krishna Associates. “We should include modalities to fight digital piracy.”
Anil Lale, General Counsel, Viacom18, added that piracy needs to be tackled more stringently. “Pirates have no face and territorial boundaries because of the digital space that we are in,” stated Anil Lale.
Ritesh Khosla, Deputy General Counsel, Sony Pictures Networks India said piracy should be redefined in the new Copyright Act. “Piracy is at an industrial scale and it is eating legitimate revenues of the government. It is an economic offense,” Khosla stated.
Talking about the efforts of MPA and the Alliance for Creativity and Entertainment (ACE), Uday Singh, MD, MPA India, said, “The MPA and ACE has been set up as an answer to this multi-jurisdictional and shapeshifting problem. Multiple jurisdictions have tried to put voluntary measures in place and what we have been able to achieve with the Telegram Monitoring Project (TMP) is a very good step in that direction.”
Panelists also debated on ownership of copyrightable works created by artificial intelligence and machine learning. They called for an international convention for a global consensus on this subject.
Copyright is not a state or a national phenomenon. If a copyright is created, it will only be valid if the whole world gives it that protection
At a time when people are home streaming movies and TV shows during the global Coronavirus pandemic, Belinda Lui, President & Managing Director Asia Pacific, Motion Picture Association, emphasized the importance of Alliance for Creativity and Entertainment (ACE), the global coalition to reduce piracy and protect the legal marketplace for creative content.
“We’re proud of the program MPA continues to make in combating online piracy under the banner of the ACE,” said Lui addressing industry leaders at the 5th edition of Fast Track Digital, as part of the FICCI Knowledge Series. “MPA along with the ACE will continue to protect the copyright that protects all work through every form of distribution channel.”
“In just over three years ACE has grown to include 35 leading global media and entertainment companies with Apple TV plus, becoming ACE’s newest member. ACE remains proactive in addressing online piracy by disrupting and disabling access to the most egregious online websites. The research also shows that site blocking leads to increasing uptake of legitimate services,” said Lui.
She cited the recent closure of Tamilrockers, which traded off the theft of intellectual property (IP) as testament to the efforts of rights holders, in protecting the rights of all creators. “There is a strong will to support legitimate business and create the best possible playing field,” Lui stated.
Lui said that the entertainment industry is encouraged by spirit, ingenuity, and community displayed by those in the digital sector worldwide. “One sector that has led the charge in innovating to deliver the best possible experience for audiences is the Video On Demand (VoD) industry,” said Lui. “The incredibly dynamic nature of the Indian VoD industry led by highly talented professionals has helped deliver a very high standard of storytelling.
Over 40 Indian OTT services are vying for the audience’s attention for both the subscription and advertising models. The number of factors that contribute to positioning India as one of the fastest VoD markets in the world include the enthusiasm of fans who love their content, the range of viewing options available to the audience and the broadband connectivity.
Justice Pratibha M Singh, Judge, Delhi High Court has advocated the need for an independent adjudicatory mechanism for the converged media and entertainment industry. She was delivering the keynote at the Fast Track Digital series, as part of the FICCI Knowledge Series, on the role of the digital economy to revitalize economic growth.
The Government of India has recently brought in digital news and Over The Top (OTT) services under the ambit of the Ministry of Information & Broadcasting.
“The convergence of Free to Air Broadcasting, Pay TV, Direct to Home Television (DTH), OTT, VoD shows that there is a need for the creation of an independent adjudicatory mechanism, which is not consisting of functionaries of broadcasters. In order to lend credibility, transparency and fairness, the same, could be under the aegis of an independent service provider,” said Justice Pratibha M Singh.
“If media and content creators have to remain free and fair they ought to involve free and fair adjudicatory mechanisms, which are not coercive in nature.”
Elaborating further, Justice Singh said that apart from the creation of independent regulatory mechanisms, there needs to be a method where broadcasters are a part of the adjudicatory mechanisms to ensure the code of conduct is compulsorily applicable to all broadcasters without exception.
“OTT and VoD platforms and other creative content providers should also be a part of this mechanism. Such a system would also protect and preserve the rights guaranteed under the Constitution of India. This would also minimize the need for legislative and judicial interference in issues relating to content,” she added.
She further said the need for clarity in terms of the code of conduct that platforms ought to adhere to as unchecked growth could lead to sudden disruption, especially because there are local issues and sensitivities which could get affected.
“Sometimes the non dealing of issues with alacrity, could also lead to questions being raised about the integrity of these platforms. The digital world should ensure that it remains a medicine for all and poison to none,” she concluded.
During lockdown, both TV and smartphone video consumption surged as people spent more time at home. OTT continued its onward march, increasing its presence in Indian Tier 2-4 cities
Even as 2019 has been a tough year and businesses across the board have had challenges, Media and entertainment sector continues to be a strong contributor to the Indian economy, said Kanchan Samtani, Managing Director & Partner, Boston Consulting Group-India, while briefing about the CII BCG report on the state of Indian M&E sector that was released during the CII Big Picture Summit 2019.
The report, she said, “talks about what this year has looked like so far. And what are the expectations and what are some of the green shoots, we’re starting to see on the recovery front”. “Media and entertainment sector continues to be a strong contributor to the Indian economy. I think that fact has not changed. As we’ve been discussing over the last two or three big picture meetings, continue to be a set of imperatives, which have changed a little bit this year, on what all stakeholders have to do to continue to grow the sector and realize the full potential,” Samtani added.
Presenting an overview of the CII BCG report, the Managing Director & Partner of Boston Consulting Group-India said that from a consumption standpoint, this year, on the back of the COVID-19 crisis, the one thing that has changed positively for the sector, is there has actually been a spike in terms of the total consumption.
“This has been seen across platform, on digital or television broadcasting. And it’s been universally true, particularly at the start when people stayed home a lot more. But actually, a lot of that spike we expect will also continue going forward,” she said.
Speaking about major drivers of growth, she said that non-primetime viewership has actually been a major contributor to this growth. “OTT has been a major driver of growth, and has also actually seen a lot of growth in the rural and tier 2 and 3 cities from a consumption standpoint. And for the first time in India, on the digital platforms, we are actually starting to see a very meaningful inclination from consumers to pay for content directly on the digital platform.”
According to the report, the pay OTT models have actually started seeing as much as 50 to 60% growth in consumers who are willing to pay for subscription services online compared to the past.
India’s growth story on media and entertainment continues to be very unique, and multi modal, Samtani stated. “What I mean by multi modal is that different forms of media still have not been growing at the cost of necessarily the traditional media, I think what digital has done is added many more use cases for consumption, which didn’t exist in the pre odd pre digital days,” she observed.
Kanchan Samtani, Managing Director & Partner, Boston Consulting Group-India
According to the Managing Director & Partner of Boston Consulting Group-India, the growth rate in television consumption is actually continuing to grow in the range of 6-8 percent in some years, while they still continue to grow at more like 15%. “We’ll see other sectors have started to flatten a little bit. But I think overall, our expectation is that this will continue to be a high growth story across the board. And that’ll be multimodal in nature, in terms of the way that it actually takes off in other emerging markets like China, for example, where some of this has also played out in the past,” Samtani predicted.
She also thinks that the M&E Sector has had a tough time this year on the ad spend front, particularly in the first two quarters. However, given the recovery during the past crisis across the world, she is optimistic that the recovery will be faster. “Advertising, at least in the past crisis, has actually seen a V-shaped recovery. Of course, it’s linked to the GDP growth and growth of all the other sectors in the market. But I think the past crises give us some comfort that not just in India, but in other parts of the world as well, advertising has been closer to a V shaped recovery and we can hope to see that here as well.”
According to the CII BCG report, between July and October, Indian M&E sector actually saw 20% increase in AD volume. “Some sectors, particularly durables, food, and beverages, personal care and accessories, really saw a much sharper recovery in the month following the lockdown. Some sectors continue to be very resilient.”
One of the strong growth indicators, the report finds, is in the large number of advertisers utilizing both television and digital media platforms to expand their reach. “We’ve seen as many as 1,300 new advertisers coming up in the last couple of months, and a lot of these earlier have been from education and healthcare sectors,” Samtani said.
Another positive trend the report points out is that the digital advertising has accelerated in 2019. “Most published sources have reported that they expect digital advertising to be maybe 15% by 2022. But we have actually touched this figure and most people have revised their projections and start looking at more like 20% of growth over the next couple of years,” she pointed out.
Samtani attributes this shift to change in advertisers’ behavior. “Advertisers have wanted to target customers more specifically with improved analytics. They have been asking for return metrics and specific ROI calculations which digital has been able to offer to them. And I think that is what has accelerated the shift, along with the consumption shifts to digital platforms at a much faster rate.”
The report also talks about Indian M&E industry’s contribution to the Indian Economy. “It is well understood that the Indian M&E industry has actually been contributing both intangibly as well as tangibly to the Indian economy. The contribution in tangible terms and direct terms has been through employment generation and the contribution to GDP of which is almost 1%. If I take direct, indirect, as well as the induced figures, our estimate is that the contribution that the M&E industry is making to India’s GDP will be in the range of three to three and a half percent. Some of the sub sectors that have really grown faster have been OTT, gaming and digital,” the Managing Director & Partner of Boston Consulting Group-India said.
The Media and Entertainment sector, through the Confederation of Indian Industry (CII), has sought industry status for itself and infrastructure status for broadcasting, ahead of the Union Budget 2021 to be presented by the Finance Minister on February 1.
The M&E sector has been growing at an estimated gross annual rate of around 13.5% for the past several years and has shown the potential to reach $100 billion by 2030. But despite being one of the top revenue earners for the government and having expanded India’s soft power reach globally, the sector has been conspicuously absent from the list of focus sectors in the Union Budgets for over two decades now.
However, in the wake of Covid-19 pandemic, the M&E sector has been grappling with multiple problems owing to the economic lockdown and social distancing restrictions put in place. Now, through the CII, the sector has come up with a Pre-Budget Memorandum 2021-22 that recommends a number of changes to help it stand back on its feet.
“The sector has been growing at a gross annual rate of 13.5% for the past several years and has the potential to provide millions of jobs and boost India’s export performance. Getting industry status will help the sector get cohesive policies, special schemes and subsidies,” says the pre-budget memorandum.
It also adds that infrastructure status for broadcasting would give it the much needed support to get access to funds at a lower rate for laying cables, and building and maintenance of towers.
Under the direct tax recommendations, CII has sought a change in withholding on royalty payments towards non-theatrical rights. It said that non-theatrical rights of films such as those for digital and satellite platforms are currently subject to a 10% tax. The industry body is of the view that the rate of withholding tax on domestic royalty payments towards non-theatrical rights be brought down to 2% on a par with what is levied on earnings from sale, distribution and exhibition of cinematographic films. “This would come as a huge respite to the industry, particularly for small production houses, by addressing their cashflow issues for working capital requirement,” the pre-budget memorandum says.
“There is a huge shift in viewer preferences and the use of technology for consuming cinematographic films. A lot of films are directly released on satellite or digital platforms, which are becoming the more popular medium of content consumption among viewers. With the advent of technology and its fast growing pace, making a distinction between the medium is not in line with the current trend of consumption,” the memorandum adds.
Further, under its GST recommendations, the industry body has sought an alternative payment mode for discharging GST liability under Reverse Charge Mechanism (by way of utilizing ITC also). The rationale behind the proposed change, it says would address the problem of huge piling up of ITC in media service industry and resolve cash crunch. “Since credit ledger is already allowed for payment of output liability, extending the same for even RCM liability is a small favour to the entire business community in India in these stressed times,” the industry body urged the government.
The industry also wants removal of interest payable whilst reversing ITC availed, from Vendors whose invoices aren’t paid within six months. Citing the 28th GST Council meeting, held on 21st July 2018, which agreed to industry’s representation, the memorandum says, “By delaying the payment to the Vendor, the revenue has not been deprived of its tax due, as the Vendor has already deposited the tax to the Government. While the control to ensure bogus invoices aren’t in vogue is understandable, it is not just to demand further interest also from the recipient, after having got the taxes already from the Vendor.”
To eliminate the cascading effect of tax and thus reduce the tax burden on the end consumer, CII has recommended removal of sponsorship services from the list of services to attract GST under reverse charge mechanism (‘RCM’). Suggesting three alternatives to this change, the industry body says that either sponsorship services should be covered under forward charge “which will allow taxpayers to avail full credit of tax paid on procurements”, or sponsorship services provided by body corporate or partnership firm should be excluded from RCM. As a third alternative, “supplies made which are covered under RCM should be excluded from the value of exempted supply for the purpose of reversal of input tax credit,” says the memorandum.
It further adds that allowing GST input credit on certain regular business expenses like renting or hiring of motor vehicles used for business purposes or food and beverage purchased and outdoor catering services availed during the production of television content and movies will help bring down business expenses for TV programme producers, broadcasters & movie makers and be helpful mostly in case of in-house production. “Amount paid to makeup artist is part of giving creative life to a character in the content which is very important. Please remove the blocked credit for this industry for these items,” it says.
The industry also seeks an increase in the time limit of 24 hours for generating IRN on the NIC portal to 96 hours “for businesses to sufficiently comply with relevant provisions”.
Another issue, CII points out, is that credit notes after a merger or amalgamation is consummated, which is “causing business cost since the credit note with GST is not something the tax payer can upload in the GST portal, which mandates mentioning of the GSTIN & Invoice Number against which the credit note is tagged to.” The industry suggests an update in this regard on the GSTN portal to allow the option to choose Amalgamation as a reason and report Credit notes against invoices raised on earlier GSTIN.
The industry has asked the government to consider as a part of relief package allowing a one year time from the end of the financial year to avail ITC, as the time line of 6 months from end of FY for availing input credit for a financial year is too short given the Covid situation.
The royalty payments to literary Authors pursuant to Section 18 & 19 of Copyright Act 1957 read with Copyright Rules have to be explicitly evaluated at this point of time, says IP and Media advocate Shekhar Mennon
Remake rights acquisition of Cinematograph Films exists as common trade practice in the film industry since the invention of celluloid. On acquisition of Remake right, the primary copyright that gets assigned is the Original Literary, musical, dramatic and artistic work(s) and not the Cinematograph film work per-se of the old film producer because the film producer who is acquiring the remake right , he himself produces the new Cinematograph Film work which will be with him for the term till Copyright subsists and that’s for 60 years pursuant to Section 26 of Copyright Act 1957 and not in perpetuity !
Notwithstanding above, the interesting point that being discussed here is on the Royalty payments by the Producers to the Literary work Authors on film remake rights acquisition, post the Copyright Amendment 2012. Literary work authors of Cinematograph Film specifically considered herein are : Story writer, Dialogue writer, Dubbing language writer and subtitling writer of any language.
Its well known within the film industry that prior to June 2012, sharing of the proceeds with the literary work Author incorporated in Cinematograph Film work never happened because of the established copyright principle in reference to Indian Performing Rights Society Limited (IPRS) v. Eastern Indian Motion Pictures Association- AIR 1977 SC 1443 wherein the Producer is the first Owner, unless if there exists any contrary provisions, which rarely happened (exceptions may be there, but chances are remote).
However , post the Copyright Amendment 2012, in Section 18 & 19 of Copyright Act 1957, significant amendments got introduced wherein the literary and musical work(s) gets incorporated in the derivative rights of Cinematograph Film work and Sound recording work, the said literary and music authors cannot waive the right to receive the royalties to be shared on equal basis with the producer and tightened with further stringent legislation that if the royalty sharing on equal basis are waived off then the whole contract becomes void. Attached herein the link of Copyright Bare Act for quick reference https://copyright.gov.in/Documents/CopyrightRules1957.pdf
Please note that receiving royalties , equal sharing , utilisation of work in any form and void contract provisions of Section 18 of Copyright Act 1957 read with Copyright Rules 2013 is ONLY for literary and musical works incorporated in Cinematograph Film & Sound recording work(s) and NOT for Dramatic (screen play writers) and Artistic work Authors. But interestingly Section 19(8),(9) & (10) on mode of assignment it protects for ANY WORK which includes original Dramatic & Artistic works. Whatever the case may be , original Literary and Musical work(s) are undoubtedly protected u/s 18 & 19 of the Copyright Act 1957 without any iota of doubt but Dramatic & Artistic are in legal limbo for debates and arguments and it’s not the subject matter of this write up.
Now coming back to the moot question of this article ~ does the literary work Author(s) – Story writer, Dialogue writer, sub titling writer, dubbing writer etc get the equal sharing on royalty from the Film Producers, post the Copyright Amendment of 2102 on sale of re-make rights as provided under section 18 & 19 of the Copyright Act 1957, read with Copyright Rules 2013 ?
The answer is – probably NO, despite of having strict copyright legislation in place. From 2012 onwards thousands of remake film rights would have been concluded , but the situation of sharing of royalty with literary work Authors are doubtful. If it’s happening , the fraternity of Literary Authors would be proliferating with new IP creations and if not the intention of the copyright legislation will be buried in statute books only.
Thus, those Literary & Musical Authors who are getting royalty on equal share basis on the selling of remake rights by the Producers, the intention of the copyright statute being implemented properly and if not , then the limitation period for filing the suit is always open for the literary Authors / for the NextGen of the said literary Authors because of Section 22 of Copyright Act 1957 . Please note that the cause of action is continuous and it will remain till the Copyright term exists for the Literary Authors or to his legal heirs. Thus, anytime the present or future generation of Literary & Musical author can claim from the film producer which means the producers are always on potential contingent statutory liability.
For public limited company or closely held megalith media-entertainment conglomerates, the repercussions and ramifications will be more severe as it will seriously jeopardise the IP Valuations, stock market matrix, tax incidences (both direct and indirect taxes) etc in future date.
Thus , the royalty payments to literary Authors pursuant to Section 18 & 19 of Copyright Act 1957 read with Copyright Rules have to be explicitly evaluated at this point of time by the head honchos, CEO, Board members and principal officers or else in any future date, eroding of capital and net worth of producers and / or of companies are imminent on tabulating the royalty payments, damages, fines, penalties, statutory liabilities etc by the attorneys.
Shekhar Mennon, is an IP & Media Lawyer and has gained comprehensive exposure in legal, business and strategic functions from Entertainment industry, Copyright Societies and Broadcasting organisations. He bring forth the considerable experience from one of the largest media house – News Television India (presently STAR India) , where he held the position as Company Secretary & Sr. Legal Counsel and being the Board member in holding and subsidiary companies till 2001.Presently an Advocate practicing from 2002 at Bombay High Court as well as in Supreme Court of India.