INDIA- The Content Distribution Market …

Focus on Indian Film Industry…..

Indian Demographics- Population & Income

Over 55% young population Of under 30 years!!

Media and Entertainment – The India story

Media and Entertainment – The India story

Update on Indian Film Industry

• The Indian film industry produces around 1,050 films and sells around 4 billion movie tickets, each year.

• In 2008, the size of the Indian film industry was estimated to be USD 2.58 billion.

• While the domestic box office collections contributed as much as 60%, the home entertainment contributed a mere 6% to the total revenues, which is significantly lower as compared to developed countries.

• US Example:– There were 610 film releases and a total of 1.4 billion tickets sold in

2008. – In the same year, the revenues from the film industry were around

USD35 billion, of which the domestic box office contributed 28% and the largest share of 54% came from the home entertainment segment.(E&Y,Apr-2009)

Key Catalysts of Growth- Movies at Home

India C&S Market Future Forecast

•Source: Media Partners Asia Report 2007

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Terrestrial IPTV DTH Cable

Film Industry- India Distribution Platforms- Size

Source: KPMG-FICCI report 2009

Size of Indian Film Industry -Revenues

Indian film industry expected to grow at CAGR of 11.2% over next 5 years[compared to over 15% CAGR growth before economic downturn]

Current size of Indian film industry estimated around Rs 109.2 billion in 2008 which is expected to grow at a CAGR of 12.2% to reach Rs168.6 billion by 2013.

Source: KPMG-FICCI report 2009

Indian film industry is dominated by individual directors and local theatre owners

Film production in India is characterized by the presence of large number of small privately held, family‐owned production houses

Highly fragmented distribution segment

The country is geographically divided into six territories. There are usually 50‐75 distributors for each territory, while only 8‐10 distributors operate on an all‐India basis. Distributors generally sell rights to sub‐distributors who cover certain sections in a territory

Major impact of digitalization of film prints leading to increase of number of prints in market on the first day of a movie

The industry had been deriving approximately 75% of its revenues from domestic box‐office ticket sales but over the years this is expected to fall in the range of 60%, while the rest will come from sale of overseas rights , sale of cable and satellite television rights, home video sales, music sales and in‐cinema product placements

Foreign direct investment (FDI) of 100% is permitted in all film‐related activities such as film financing, production, distribution, exhibition and marketing

Key characteristics of Indian Film Industry

Corporatization of the industry

Growth in multiplexes

Digital cinema

Increasing collections from overseas market

Co‐production

Improved models of financing films

High Growth in home video market

Increase in marketing spends

India is in talks with several countries for treaties and agreements in the domain of entertainment and media

Varied unique subjects

Foreign films in India

Market for niche and Hollywood content

Improved State of Art post production facilities

Key factors in the film industry impacting the future

THE MEDIA COMPANIES OF HINDUJA GROUP

INDUSIND MEDIA & COMMUNICATIONS LIMITED(A SUBSIDIARY OF HINDUJA VENTURES LIMITED)

www.hindujagroup.com

May 2009

One of India’s premier transnational conglomerates

Been in existence for over 90 years

Present in 10 business sectors

Present in 32 countries

Employs over 35,000 personnel

Major Companies Listed in Stock Exchanges -India

Turnover of the Group is several billion dollars

The Hinduja Group : Introduction

The Hinduja Group

1901-1971

“My dharma (duty) is to work, so I can give” Work to Give

Word is a Bond

Act Local; Think Global

AdvanceFearlessly

Partnership for Growth

Guiding Principles of the GROUPFounder- Parmanand D Hinduja

Business Activities

InternationalTrading

InternationalTrading

InvestmentBanking

InvestmentBanking

GlobalInvestments

GlobalInvestments

Philanthropic ActivitiesPhilanthropic Activities

Worldwide Locations

Major Centres and Establishments :Europe : London, Paris, Geneva, Moscow, SpainUnited States : New York, WashingtonIndia : Mumbai, Delhi, Chennai, Bangalore, HyderabadMiddle East : Tehran, UAE, Saudi ArabiaSouth East Asia : China, Philippines, JakartaAfrica : Johannesburg, Cairo, MauritiusS. America : Argentina (Buenos Aires)

Hinduja Group in India has a national footprint reaching to over 6 million people through

customers, cable operators, employees, dealers, branches and suppliers of it’s companies

Hinduja Group – Overview

The Financial Services Group operates amongst the leading banks in Switzerland and India with specialization in Corporate, Retail, Private Banking, Trust Services and Merchant Banking

The Global Investments Group has eight investment divisions. Each of these, in turn, has individual companies within the defined area of business.

InformationTechnology

TransportBanking & Finance

Chemical & Agricultural Business

Healthcare

Energy

Project Development

Media &Communication

Hinduja Bank (Switzerland) Ltd

About us…. In Films…

A glorious chapter in the history of Indian Cinema, a chapter scripted in the early years by Hinduja Group’s initiative to finance, trade and distribute movies globally

The group tapped and exploited its role as a distributor of Indian films in both traditional and non-traditional territories. Realizing its role as the cultural ambassador of India, the Hinduja Group set up Ashoka Co. Ltd. In Iran in 1958

The first Indian movies to hit the Iranian screens were Raj Kapoor’s Shri 420 and the Dev Anand’s Baazi. In less than a year, the group set up offices in Istanbul, Egypt, Bangkok, Tel Aviv, Beirut, Jordan, London, Singapore, Jakarta, Mauritius, Madagascar to name a few

Ever the trend-setter, the Hinduja group broke new grounds by adding value to these movies in the form of dubbing, sub-titling, etc. The group formed a number of joint ventures with leading distributors globally to enhance the reach of Indian cinema into the hearts of millions around the world

Over the years, the Hinduja group associated with the leading Indian film makers to from partnership that heralded some of the greatest hits to ever hit the Indian screens. These movies would then transgress geographical boundaries thanks to the extensive distribution network of this group

Today Group’s Media Businesses are metamorphosed into “IndusInd Media & Communications Limited” (IMCL), an integrated media power house with service offerings in the content, access and commerce segments directly and through its various subsidiaries.

INDUSIND MEDIA & COMMUNICATIONS LTD. (Hinduja Group)

The Market: What has changed

• Under-declaration

• Last mile control

• Collection

• Funding & Exit Strategies

Addressability is a reality now .Solves the problem of under-declaration through the government order that forced the upgradation of networks & purchase of over 3 million boxes by the MSOs

Digital migration & DTH competition are destabilizing forces to the LCO monopoly. These forces will shift the balance of power in favor of the MSO

In an addressable environment the utilization of a prepaid model will eliminate delinquent accounts. This model is a success

An exponential increase in the number and types of institutional investors interested in India and the switch from traditional asset backed lending to financing secured by cash flow.

ChangesHistorical Challenges

The India Content Distribution Opportunity

Market and Legislation have changed to enable broadcasters to exploit content in an organized and transparent manner

Legacy issues of under -declaration of subscribers, income leakage, lack of bandwidth, piracy would soon disappear

Deployment of Digital set Top Boxes, DTH, IPTV etc offers an opportunity for offering niche/ customized channels to a large and young population

STBs would pave for services such as Pay per View, Video on demand etc enabling the broadcasters , film companies and studios to exploit library and fresh content

IndusInd Media & Communications- A Hinduja Ventures Company- (Restructured)

PublicHinduja Group Institutions

IndusInd Media and Communications Ltd. (IMCL)(Cable TV, Movie Channel, Broadband Internet)

Hinduja VenturesReal Estate, Cash,

Media, New Ventures

Subsidiaries/Associates(Planet E Shop,-Shop 24/7-USN, UMN Networks)

New Networks

65.81% 19.19% 15%

IndusInd Media & Communications Limited (IMCL)

Effective Shareholding Pattern: IMCL

Hinduja Venture’s effective stake in IMCL:

59% plus 51% of Grant’s 6 % Stake = 63%

(ICL-Mauritius)

59%

INDUSIND MEDIA AND COMMUNICATIONS LTD

Cable TV Services

Content BroadbandInternet

Analog Cable

Digital Cable

Movie Library Licencing

Hindi Movie Channel

Planet E Shop Holdings India Ltd.( Associate)

Internet on cable

VOIP/Internet Telephony

Foreign Channels Aggregation

IMCL: Divisions and Businesses

IMCL Platform utilises best technology from global leaders

Subscriber Management System(SMS)

CAS System

Set top Boxes

Other technology partners

IMCL has invested in developing a strong technical foundation partnering with global cable TV and convergence leaders like Magna Quest, NAGRAVISION, Motorola etc. which provides them a differentiator in quality and scalability of operations

IMCL ( Incablenet)Today: Assets

Pioneer and leading multi-system Cable & Broadband operator in India

Present in 24 cities, of which 15 are main cities , 5 are neighborhood satellite cities including new expansions in 8 cities. In key cities - over 40% market share .

Only MSO to have extensive intra-city fiber networks 6,300 km of trunk and access HFC networks—80% of which is 2-way

enabled Digital systems implemented in 11 cities and STB box roll out

commenced Over 1000 employees 2,400 affiliated local cable operators—LCO LCO averages 6 employees = effective service network 14,440

Infrastructure in Place:

IMCL – Geography

AHMEDABAD

NEW DELHI

NAGPUR

BANGALORE

MYSORE

BELGAUM

MUMBAINASIK

VADODARA

Main Cities

THANE

NOIDA

Fardibad

NAVI MUMBAI

INDORE

Network Spread :

24 centres, out of which 15 are main

cities

12 digital Cable cities : Mumbai,

Delhi,Bangalore,Thane,Navi

Mumbai,NOIDA,Ahmedabad, Vadodra,

Belgaum, Nagpur,Sholapur and Kolhapur

Estimated subscribers in analogue :

over 6.5 million homes

Digital Cable subscribers: around

300,000 , Exponential growth expected

when regulations are implemented

GOANizamabad

SURAT

ALLEPY

UDAIPUR

AHMEDNAGAR

14 Broadband cities

HyderabadBaramati

Gulbarga New Cities

Satellite Cities

IMCL Today: Assets

We own and operate our own head-ends

We have the largest number of employees

We have our own technical and field staff

We design and implement our own plant

Only MSO with fiber optic infrastructure in our locations

We operate out of one head with redundancy in almost all locations

Our Differentiators:

Content – TV channels

MOVIE and Thematic In House CHANNELS:

CVO, the number 1, premier Cable Movie Channel, over 1000 titles

CVO’s Movie library can be utilized for Digital Cable through PPV

Indigital Premium Movie channel , which is ad free

Indigital Music channel ( ad free)

Indigital Classic Movies Channel ( ad free)

Multiple Thematic Movie Channels

CHANNEL AGGREGATION:

IMCL associate (PESHIL) receives permission for down linking Foreign channels

Satellite Channels with exclusive tie ups for Marketing and Distribution in INDIA

ARIRANG TV ( Global English language, Korean Channel)

MIRACLENET ( English Language Spiritual Channel of USA )

Radio RNW ( Radio Netherlands) tie up for “Indigital”

Tie ups and at advanced discussions with more International TV channels and Content Groups

Foreign Channel Distribution and Marketing

Content - Rights

Negative Rights - 29 Movies ( including the following): Baghbaan- Amitabh/Hema Boom-Amitabh/Jackie Pitaah- SanjayDutt/Jackie Shroff

Mard/Coolie/Naseeb/Toofan- Amitabh

Asia Satellite Rights- 22 Movies

Cable Rights ( India)- 1000 Movies

Content-Film Financing ,Movie Production/ JVs-

Film Financing of select movies IMCL in association with “Serendipity Films” ( Of “Being Cyrus” Fame)

has commissioned a New Movie – “Teen Patti” Starring: Amitabh Bachchan , Sir Ben Kingsley and Madhavan

Expected Release : July- 2009

In dialogue with other Directors / Production Houses for new Projects Co- Production and JV’s with Studios Digital Cinema Distribution opportunities- Satellite based, Broadband

based for National and International

Regulatory- TRAI’s Recent recommendations on Restructuring of Cable Industry

Greater emphasis laid on network digitization, increased addressability and to encourage voluntary CAS

Incentives prescribed to Multi System Operators (MSOs) to introduce total digitized networks

The registration for cable TV operator to be replaced by a comprehensive and supportive licensing framework

Separate licensing frameworks for Cable TV operators (LCOs) and Multi System Operators (MSOs)

Eligibility criterion made specific to identify the entities who can act as LCOs and MSOs

Option and flexibility to choose Service area given both to LCOs and MSOs

What Media Group can Provide

Full Management of TV Channels ( uplinked from Abroad) ,including exclusive rights for Distribution and Marketing in India

Niche Program Contents for Digital Video (PPV) or utilisation in any video digital channel of Media Distribution Company

Feature Films, Documentaries and other content aggregation for digital distribution

Distribution of Indian Content in International Markets Co-production of Movies National/International Tie ups for Main line Distribution of Indian Films overseas with various

Studios/Sales Agents/Distributors

Other Innovative Opportunities in Digital Cable,IPTV platform - India Server based city specific channels in India with content aggregation in

Digital Cable platform Events and live contents, location wise New Movies and niche content which can be utilized in digital

platforms of Cable, IPTV, Mobile TV

Why Partner with IMCL

We can offer full solution through the use of our platform. Guaranteed wide distribution through a well respected distribution

player Guaranteed distribution with IMC on our digital tier. Packaging options in analogue and digital distribution. Nationwide distribution to all platforms ( e.g.: Cable, Terrestrial, DTH,

IPTV, Mobile etc) through Content aggregation Company/Division

Providing an easy access of new channels, new movies and niche contents to the Indian market by providing ready made solutions

Provide statistical information on all digital distribution Provide an on-the-ground marketing force to maximize distribution Provide ongoing compliance and information for channels and

contents regarding all changes and developments Liaisoning and coordinating with all Government and Regulatory

bodies

The best value proposition for operating in the Indian marketplace

Film Distribution – Key Success ParametersHinduja Media Group Strategy

Maximize Returns from the Satellite Market:

With the spurt in the number of Television channels, there is an increase in demand for movie content

Players can take advantage of this situation and enter into innovative arrangements with the channels. PPV’s ,VoDs,PVR’s are all possible in digital addressable systems

Digital Cable with addressability has options for launching films citywise and regional /segment wise

Instead of sale of satellite rights for a specific period, companies can enter into revenue arrangements based on number of screenings with satellite channels

This way the players need not get tied up for a specific number of years and also can sell these rights to multiple number of channels.

Film Distribution – Key Success ParametersHinduja Media Group Strategy

Focus on Innovative marketing and packaging of content :

Today the theatrical windows in India are being greatly compressed

It has now become imperative to package ones product innovatively that could get the audience into the theaters in the opening week itself and sustain it self post that with word of mouth and second rung of promotional activity

In today’s age of clutter, it is as important to package and present your product cleverly as much as focusing on the right content

Companies need to focus on maximizing their revenue from alternate revenue streams ,mainly on the addressable digital TV distribution stream

With the Video on Demand services on Digital Cable, DTH and IPTV expected to pick up in future, players need to build up a strong and diverse content library to capitalize on content demand as well as mitigate their risks.

www.hindujagroup.com www.hindujaventures.com

Email: ravi.mansukhani@gmail.com subhashish.mazumdar@incablenet.net