India continues to be in the throes of an entertainment revolution spawned by economic liberalisation and the subsequent advent of cable television. The players in the entertainment industry can be classified into three-link chain.

First are the studios (including the animation studios), which comprise the hardware part of the industry, the second are the content providers and the third link comprises the distribution segment, which include the cable and satellite channels as well as the multiplex theatres.

Industry Wish List Tax holiday for 10 years Scrapping of sales tax on software Removal of service tax 10-year exemption from import duty on hardware More animation-centric special economic zones  Budget over the years Budget 2004-05 Budget 2005-06 Budget 2006-07 Rate of service tax raised from 8% to 10%. Service tax imposed on TV or radio programme production. Service tax net to include Multi System Operators (MSO) apart from cable operators. Service tax exemption removed on broadcasting service provided by cable operators. Service tax on: Broadcasting services to include charges recovered by broadcasting agencies from MSOs and provision of DTH signals to customers. Sound recording to include recording of sound on any media and includes post-production services such as sound mixing or re-mixing. Video-tape production to include recording of any programme, event of function on any media and includes post production services. Service tax increased from 10% to 12%. Sale of space or time for advertisement service, excluding that in print media and that by broadcasting agency, brought under the service tax net. Sponsorship service, excluding sponsorship in relation to sports events, brought under the service tax net Sale of space for advertisement in print media left out of the ambit of service tax. Excise duty of 16% levied on set-top boxes and customs duty of 15% brought down to 'nil'. [Read more on Budget 2004-05] [Read more on Budget 2005-06] [Read more on Budget 2006-07]
Key Positives Going great guns: The Indian media sector has been amongst the fastest growing sectors in the country over the last decade, thanks to the strong economic growth, which has led to a rise in the overall income levels of Indian consumers. With the availability of higher disposable income, proportionately a higher amount is being spent on products and services related to the entertainment and leisure segment. Television at the forefront: Within the entertainment sector, television has taken the lead with cable and satellite television segment propelling the growth of the sector. Also, there is a significant transformation happening within the sector with content creators venturing into broadcasting and post-production. Helping hand: Support from the government has also aided the growth of the industry. The government has liberalised the up-linking policy and reduced the rate of basic customs duties on import of certain specified equipments for setting up an earth station to aid broadcasting from India. Further, abolishing of excise duties to fight music piracy is also another positive gesture from the government. Better technologies: Acceptability of DTH (Direct-To-Home) will curb the menace of under-declaration of subscribers by cable operators. Subscribers will then pay for only the channels of their choice. Greater choices: Emergence and acceptance of new entertainment avenues like movie multiplexes and radio have provided consumers with greater choices, which will aid the growth of the sector going forward. Widening ad base: FMCG companies, which have been key contributors to the total ad-spend of the industry, are increasingly concentrating towards rural markets. Broadcasters are launching regional channels to cater to a vast semi-urban/ rural population. Moreover, with new sectors opening up like telecom, healthcare and insurance, advertisements by these segments would also aid the adspend growth across media segments.		Key Negatives Increasing competition: Competition in the industry has been gathering steam, not just between different segments of the media and entertainment industry but also within the segments itself. This could lead to burgeoning costs of production for media companies in the form of higher compensation in order to retain talent and acquire properties/rights. Increasing number of options for advertisers to showcase their products and services could also cap the potential upside in ad realisations. Subscriber under-declaration: The revenue model for the cable and satellite companies is still skewed in favour of cable companies. Cable operators are in a commanding position. However, this industry is likely to face consolidation with Multi System Operators (MSOs) like Incablenet, Siticable, Asianet, Hathway Cable and Datacom buying over the small local cable operators (LCOs) and setting up their integrated network. Piracy menace: With the absence of any strict laws targeted at curbing piracy (films/music) in the country, significant revenues are getting lost to the unorganised sector.

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