Assignment of

Business
environment
Department: - LIM
Course No.: MGT511

Course Title: Business Environment

Class: MBA

Semester: I

Submitted to: - Submitted by:-

Mr. Bhavdeep S Kochar shailendar kumar

Reg
i no- 11006651

Roll
. No. B32
 Sect
ion: - T1001

PESTLE ANALYSIS OF
ENTERTAINMENT INDUSTRY

Introduction
ENTERTAINMENT INDUSTRY:-

The Indian entertainment and media (E&M) industry has out-performed

the Indian economy and is one of the fastest growing sectors in India. One such
recent sector is interactive entertainment, along with information and
communication technologies (ICTs). The liberalization efforts by the Indian
government have resulted in the emergence of numerous sectors, which offer
great possibilities for India’s development. This paper examines the growth and
development of the interactive entertainment industry in India. The E&M
industry generally tends to grow faster when the economy is expanding. The
Indian levels too have been experiencing a high growth rate. Entertainment
industry is known as the star performer of the Indian economy. Advertising
revenue is the main source of industry. It has an immense potential to grow. The
main reasons behind it growth is the allowance of foreign direct investment (FDI)
in many sectors like print media. Radio Films television have already opened for
FDI.
The Global film and entertainment industry is expanding fast.
Today, animation products are increasingly used in films, TV programmes,
commercials, games and online education. The most significant entry was of the
TATA group through a subsidiary Vides sanshar Nigam Limited (VSNL).
KEY GROWTH DRIVERS:

TELEVISION:-

High revenues have attained in television sector and are attaining at a very
large rate in present time .The reasons behind attain the high revenue is because
the TV’s are in home to home .these are both in rural areas as well as urban areas
and most of the companies want to advertise his product through TV channels
and as a result helps to generate the revenue of the entertainment industry.

FILMED ENTERTAINMENT:-

India is the country who likes to watch movies. And advancements in

technology are helping the Indian film industry in all the spheres – film
production, film exhibition and marketing. The industry is increasingly getting
more corporatized. Several film production, distribution and exhibition
companies are coming out with public issues.

PRINT MEDIA:-

A booming Indian economy, growing need for content and government

initiatives that have opened up the sector to foreign investment are driving
growth in the print media. With the literate population on the rise, more people in
rural and urban areas are reading newspapers and magazines today. Also, there is
more interest in India amongst the global investor community. This leads to
demand for more Indian content from India. Foreign media too is evincing
interest in investing in Indian publications. And the internet today offers a new
avenue to generate more advertising revenues.

RADIO:-

The cheapest and oldest form of entertainment in the country, which was
hitherto dominated by the AIR, is going to witness a sea-change very shortly. In
2005, the government opened up the sector to foreign investment – and this is the
key factor that will drive growth in this sector. As many as 338 licenses are being
given out by the Indian government for FM radio channels in 91 big and small
towns and cities. This deluge of radio stations will result in rising need for
content and professionals. New concepts like satellite, internet and community
radio have also begun to hit the market. Increasingly, radio is making a comeback
in the lifestyles of Indians.
PESTLE ANALYSIS OF
ENTERTAINMENT INDUSTRY
Political Analysis:-

The main political factor which enables company to make its benefits high
is given below.

• Government Support:-

Mr. Kapil Sibal, Minister of State for Science and Technology, identified
animation or entertainment industry as one of the important sectors for India’s
export oriented growth.10 however, compared to governments in other countries;
efforts by the Indian government to encourage the sector have been very
minimal. The government of South Korea funds animation ventures on a
partnership basis.11Bangladesh has a World Bank-funded support programmer
for the animation industry. In contrast, there have not been many initiatives from
the Indian government to promote the animation industry, at least till the past one
year.

• New government Initiatives:-

The commerce ministry is said to have approved the creation of the SEZ
within the Film and video park (FV Park) set up by the Kerala Industrial
Infrastructure Development Corporation near Thiruvananthapuram. The
state government is said to have created a 15000sq meters animation
facility to welcome animation houses to create their bases.

• The liberalization policy of govt. helps a lot to the entertainment industry;

it provides a conducive environment to this industry. Govt. Allows most
foreign direct investment (FDI) in most of the segments of entertainment
industry.-In print media govt. allows 100%FDI in non-news publications
&26% in news publications.FM radio was allowed 20% for (FDI).

Economic Analysis:
 The Indian economy continues to perform strongly and one of the key
sectors that benefits from this fast economic growth is the E&M industry.
This is because the E&M industry is a cyclical industry that grows faster
when the economy is expanding.
It also grows faster than other economic sectors due to its income
elasticity wherein when incomes rise; more resources get spent on
entertainment tools and less on necessities. Further, consumption will
increase due to rising disposable incomes on account of sustained growth
in income levels, and this also builds the case for a strong bullish growth in
the sector.
The cost of producing a 30-minute 3D animation programmer in India is
US$60,000 compared to US$250,000-400,000 in the United States and
Canada. India has a cost advantage compared to the Philippines, which is
another low cost producer of animations. The average monthly salary of an
animation professional in India is US$600 compared to US$1,000-
US$1,200 in the Philippines.

FACTOR THAT AFFECTING THE ECONOMIC

GROWTH OF FILM AND ANIMATION
INDUSTRY:-
• Lack of Finance:- Indian entertainment industry cannot match
their western counterparts in financial strength. It is pointed out that state
support in the form of tax holidays is crucial for success in the animation
business. The long gestation period before fruition of projects discourages
potential investors. This can be major hurdle, and it has in fact led to the
stoppage of a few production ventures.
Social analysis:-
Media penetration varies across socio-economic classes. Though media
penetration is poor in lower socio-economic classes, the absolute numbers are
much higher for these classes. Hence, efforts to increase the penetration even
slightly in these lower socio-economic classes are likely to deliver much higher
results, simply due to the higher base. Entertainment combines visual and audio
effects and is less demanding of the cognitive skills of the user. Almost 35% of
India’s over 1billion population is illiterate. There is great demand from this
segment of Indian population for an innovative medium that facilitate
communication and information sharing, while at the same time, being easily
accessible to the masses via the television.
Technological analysis:-
 It is true that the entertainment industry is growing a very large speed. The
reasons behind is that the adaptation of new technology. The new concepts like
satellite, internet, community radio, have also begun to hit the market.
• DTH & IPTV technology have also benefited a lot to generate the revenue
of entertainment industry.

• Broadband access and Internet Protocol (IP) will be the technology

enablers that will help a lot to the new breed consumers also.

Legal analysis:-
• Legal analysis constitutes of how a company operates, its costs, and the
demand for its products. It has a sole aim to conserve its customers from
the indiscrimination of its suppliers. In entertainment industry govt. have
made restrictions on broadcasting of such programs which will create
political unstability in country.

• Not undertaking any broadcasting from Indian soil without government

approval is also a law made by govt. in order to regulate the entertainment
industry.

Environmental analysis:-

Environmental analysis constitutes how the industry is taken steps towards

the maintenance of good environment. Entertainment industry provides a
conducive atmosphere towards the persons who are concerned with the industry.
It provides relative information regarding environment by different media like
TV, Radio and Internet. Indian firms are facing a talent shortage which affects
their ability to scale up their operations based on client demands. This also affects
the client’s confidence in offshoring large chunks of work. Though Indian
companies have put in place huge expansion plans, these are often marred by
various reasons. Tie-ups with educational institutes are helping overcome this
difficulty.

Opportunities in Collaborations

Indian companies are trying to improve quality and making attempts to

compete globally with the market leaders in the industry. It is said that the year
2004 is a watershed for the Indian animation and gaming industry (according to
the Federation of Indian Chambers of Commerce and Industry [FICCI] report on
the (Entertainment Industry).

The year was marked by increased use of animation in the Bollywood

segment. According to the FICCI report, the increasing demand for downloads of
games on mobile phones will enhance the opportunities for gaming companies
and bring in new entrants.

OPPURTUNITIES AND THREATS OF

ENTERTAINMENT INDUSTRY
Opportunities:-
•The main opportunity of entertainment industry is the govt. is allowing in
foreign direct investment in many sectors which is helping them to grow at
a large scale.
• Sustainable increase in disposable income, increase in Indian economy will
also provide a big platform for this industry in future. People want to get
entertain rather than basic necessities in life.
• The entry of reliance group in film segment &radio segment &and also the
entry of(VSNL) Videsh Sanchar Nigam Limited Will also help a lot of
entertainment industry in different sec

• Consumer needs are expanding beyond the mass media and segmented media
to ‘Lifestyle Media’ consumer needs something different in limited time. This
approach presents many opportunities for the industry to create new avenues
to generate revenue.

• Significant technology will be needed to capture analyses and standardize

consumer activity data across platforms.
 THREATS OF THE INDUSTRY
• The piracy is the main threat of the company in India which will affect the
various segments of the entertainment industry especially music, films &
television.
• The sector currently lacks uniformity in media policy in foreign investment
also highlights the main threat of the company.

Lack of empowered regulators:-

At present, the government has appointed an independent regulator – TRAI

– for only television and radio. Here too, the role of the regulator has been
restricted to providing recommendations on segment issues to the
government; as a result the government has still not acted upon several
recommendations by the regulator.
CONCLUSION:-

The Indian interactive entertainment industry has seen tremendous

growth in the last year or so. It is fast emerging from being an outsourcing
destination for western animation companies to develop and showcase its
own capabilities and potentials. The emergence of various industry-related
organizations and companies, and the availability of affordable and
talented expertise, point to tremendous potential this sector has to offer.
While there are internal challenges to the Indian interactive media and
animation industry, given the efforts being undertaken by the government
and like-minded organizations, it will be sooner rather than later, that India
lays a strong claim as a major international player in this industry. It is thus
opportune for Singapore and countries in the region to identify.