Ernst and Young have released a report on the potential for Media and Entertainment business in emerging markets. Here are some of the key findings from the report:
- Emerging markets have 25% consumers who are less than 14 years of age compared to 16% in developed markets.
- Emerging markets, particularly India, Indonesia and Russia has seen 200% increase in shipment of smartphone devices.
- By 2016, the report predicts 2 Billion broadband connections in emerging markets, which is twice the number in developed markets.
- 268 million BRIC households have more than $10,000 in income which is more that the whole of USA and Eurozone combined.
- In terms of digital earning potential, mature markets top the charts with USA leading the list followed by Japan, Germany and UK in that order.
- China ranks fifth in top markets due to restrictions on foreign investment in M&E sector and is the highest ranked emerging markets. China places 2nd in the index in terms of benefits and 13th in cost attractiveness.
- India is the second highest ranked emerging market but challenging business environment ranks it only at number 9 among top markets.
- Brazil and Russia has high digital media consumption but investment is considered risky due to uncertain economic conditions.
- India has huge market potential but less monetization possibilities while China has huge monetization but heavy restrictions on foreign investment.
Comparing trends between the top four emerging markets:
China: “China has voracious Digital media consumption but heavy restrictions limit growth.”
- China has the highest GDP between 2010 and 2017 at an average of 7.1%
- The country has 534 million people between the age groups of 15 and 39.
- Internet user base has grown from 457 million in 2010 to 618 million in 2013 which mean 46% of total population is connected to the internet.
- 50% of internet users shop online which has increased the market by 19% since 2010.
- Between 2010 and 2013, China has seem 3.5 times more viewers on the internet that the USA.
- China has the most closed FDI norms which keeps many sectors away from the reach of foreign investors.
- Pathways to growth in China’s M&E industry: 1) build strong brands, 2) succeed in digital, 3) form and operate successful partnerships and 4) navigate the regulatory landscape.
India: “India has a huge market but less monetization potential”
- By 2020 India will have most population at an average age of 29 years and will be the youngest populated country. 64% of India’s population will be wage earners.
- Compared China, India is more open when it comes to FDI in M&E sector.
- India ranks 4th on the list of digital content consumption. It has the largest box office collection, 160 million pay TV households.
- Currently, broadband and smartphone penetration is low but on launching 4G service will be see huge broadband adoption.
- Advertiser revenue and consumer spending are very low in India. By 2016, India’s advertising market including mobile is forecasted to be a little more than 1 Billion USD while China’s at the same time will be around 23 Billion USD.
- Ease of doing business is very low in India. The country is ranked at 132 of 185 countries due to high level of fraud, corruption and complexity of owning a business.
- However, initiatives like Make In India and Digital India and the many other reforms by the new government have brought in hopes on improving this situation.
Russia: “High adoption of digital media but uncertain economy”
- Russia has large urban population and high consumer spending.
- 87% population in Russia has broadband connectivity while 50% smartphone penetration is also seen in the country.
- Russia has high consumption of both digital and traditional media.
- Issues in this country are majorly related to low political stability and high digital piracy.
- Geopolitical tensions like the Ukraine issue have dropped the country’s economy by 0.4% in 2014.
- Russia has favorable tax environment but new laws have brought in restriction on foreign ownership of mass media. The new laws have caused the country’s media FDI restrictiveness ranking to drop from 8th to 14th place.
Mexico: “Safe emerging market but low digital media penetration”
- Mexico has a stable consumer spending levels and government regulations.
- Per Capita Consumer spending is the highest in Mexico among emerging markets.
- Mexico has low political and regulatory risks and has business friendly environment which has resulted in increased cost attractiveness.
- The country has good consumption of traditional media – 5.75 hours of average television viewing a day.
- Smartphone penetration is however very low at 21% lagging behind other South American countries like Brazil and Argentina primarily due to high-priced plans and a less competitive market.
- The country is infamous for higher levels of fraud, corruption and bribery but is considered favorable in terms of ease of doing business.
The complete report can be downloaded here.