Media owners should target BRICS: study

14 April 2010

MUMBAI: BRIC nations offer substantial opportunities to international media owners, but a nuanced understanding of local conditions is required for success, a study by Ernst & Young has argued.

The consultancy said that the recent economic growth enjoyed across Brazil, Russia, India and China means consumers have higher levels of purchasing power than ever before. (The full report is available here.)

Piracy and restrictions on foreign investment are problems almost across the board, with tight governmental regulation in China and inefficient distribution in India among more specific obstacles.

More positively, Ernst & Young said Brazil's sizeable population, which currently stands at an estimated 199 million people and has a median age of 28.6 years old, made it an attractive proposition.

There were 53 million television households in Brazil by the end of 2009, with a pay-TV audience of 6.6 million people, 174 million mobile phone owners and 36 million active online subscriptions.

The domestic media and entertainment industry was worth $17.1bn (€12.6bn; £11.1bn) last year, a figure that had increased by 6% from 2008.

Television took $9.1bn of this amount, with publishing on $3.6bn, films and entertainment on $2.7bn, advertising on $1.7bn and radio on $500m.

At present, however, six family-owned firms take 80% of all TV revenues, and one publisher owns seven of the country's top ten magazines, indicating it could be hard to break into these categories.

Compared with Brazil, Russia has suffered heavily in the downturn, with its GDP falling by 8.5% in 2009, although the media and entertainment sector's sales climbed by 4.5% to $13.9bn during this period.

Publishing revenues came in at $5.6bn, with advertising on $4.5bn, television on $1.9bn, the same level as film and entertainment, while radio generated returns of $300m.

The mobile user base now stands at 204.3 million people in Russia, operating alongside 30 million internet subscriptions, while the average family of four consumes 3.5 hours of TV content every day.

As well as housing 1.3 billion citizens, the advantages that India offered to media groups were said to include an average age of 25.3 years old, and a sizeable English-speaking population.

Television was the largest single channel in the country's $14.8bn media and entertainment segment last year, with revenues of $5bn in all.

Publishing delivered a total of $4.4bn, with film and entertainment generating takings of $2.5bn, falling to $200m for radio.

India had 500 million mobile phone users and 134 million TV households in 2009, but as 500 TV stations are also operational, and over 1,000 films are made a year, the market is also very cluttered.

China, the last of the countries assessed by Ernst & Young, was described as the "world's largest media market in terms of consumer volume".

It boasted 174 million TV households in 2009, a figure which was dwarfed by the total of 384 million netizens and 741 million mobile subscribers, and the country is now set to become a major force in shaping the future of digital media.

While the Chinese media and entertainment sector as a whole saw a slight slowdown in its rate of expansion last year, it still registered an improvement of 7.4% to $50.5bn overall.
Television recorded returns of $24.3bn in 2009, with publishing on $18.0bn, advertising on $7.1bn, movies and entertainment on $1.1bn and radio on $800m.

Data sourced from Ernst & Young; additional content by Warc staff