India will be an emerging and potentially high growth market for digital media companies over the coming five years, according to Frost & Sullivan, with high definition (HD) TV, digital asset management and over the top (OTT) broadcast representing areas of opportunity.
Only 5% of the channels broadcast in India currently are transmitted in HD, with around 30% of television householders able to access digital television services. However, India is at the cusp of a revolution in both digital delivery, with a government proposal to digitise the country's cable network by the end of 2014, and with it an increase in HD adoption.
"Fortunately, now, there is a general consensus amongst all the stakeholders, from broadcasters to cable operators, that digitisation is the need of the hour and that it should be implemented in a time-bound manner," Shri Arvind Kumar, former joint secretary of broadcasting, India's Ministry of Information and Broadcasting, told delegates at the recent Digital Media – India summit 2011, hosted by Frost & Sullivan.
"The Ministry in consultation with [the regulator] TRAI has now finalised a way forward which includes amendments to the Cable Act, timelines for a four phased transition, increase in FDI [foreign direct investment] limits and other incentives required to be given to the industry," he added.
The conference heard that as well as regulatory hurdles, the challenges faced by India's digital media sector include an inadequate drive among stakeholders to increase investments in digitisation, rapidly changing technologies that have slowed CAPEX decisions and a legacy of content on tape across various verticals.
"The Indian digital story is dichotomous. On one hand, there are some cable MSOs and large broadcasters who understand and absorb the benefits of complete digitisation. They lead the industry from the front, trying to orchestrate a digital makeover for India, creating successful businesses. On the other hand, there are tens of thousands of cable operators and hundreds of broadcasters who perceive digitization as a novel story with few returns," said Vidya S Nath, Global Industry Manager, Digital Media, Frost & Sullivan.
That said, she believes smaller cable companies are gradually waking up to understand the benefits of advanced digital technologies and solutions across India.
The move from tape based to digital asset management in India – like the rest of the world - also represents a significant growth market. According to Frost & Sullivan, the world digital asset management market is expected to cross $530 million in 2011 and grow at over 20% CAGR from 2011 to 2016. Cloud-based services are a fast-growing segment within this market, and Indian companies such as Tata Communications, Prime Focus Technologies, and Airtel are said to be eyeing future opportunities in this area.
Over the top (OTT) or multimedia video consumption is also set to catch on and 'change the dynamics of digital media' in India, according to Frost & Sullivan. There are over 100 million internet subscribers and about 900 million mobile subscribers in the South Asian nation currently, but OTT video delivery still requires efficient infrastructure and technology to provide seamless delivery.
Frost & Sullivan put the global video content delivery network market at over $540 million by the end of 2011 and say it is expected grow at a healthy CAGR of nearly 30% from 2011 to 2015. The online video advertising market is expected to cross $4 billion in 2011 and quadruple by 2015, globally, it says.
"The media industry in India is rapidly changing, and Tata Communications is happy to play its part in helping bring innovation to the changes that are sweeping the industry. New technologies are being deployed across the board – from media capture to media storage and management, to broadcasting global content to the Indian audience; the Internet is playing a pivotal role in changing the industry dynamics," said Julian Wheeler, Vice President of Global Media and Entertainment Services at Tata Communications.