INDIA- The Content Distribution Market Focus on

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

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 USD 35 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

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 Rs 168. 6 billion by 2013. Source: KPMG-FICCI report 2009

Key characteristics of Indian Film Industry Ø Indian film industry is dominated by individual directors and local theatre owners Ø Film production in India is characterized by the presence of large number of small privately held, family‐owned production houses Ø Highly fragmented distribution segment Ø 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 Ø Major impact of digitalization of film prints leading to increase of number of prints in market on the first day of a movie Ø 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 Ø Foreign direct investment (FDI) of 100% is permitted in all film‐related activities such as film financing, production, distribution, exhibition and marketing

Key factors in the film industry impacting the future Ø Corporatization of the industry Ø Growth in multiplexes Ø Digital cinema Ø Increasing collections from overseas market Ø Co‐production Ø Improved models of financing films Ø High Growth in home video market Ø Increase in marketing spends Ø India is in talks with several countries for treaties and agreements in the domain of entertainment and media Ø Varied unique subjects Ø Foreign films in India Ø Market for niche and Hollywood content Ø Improved State of Art post production facilities

THE MEDIA COMPANIES OF HINDUJA GROUP INDUSIND MEDIA & COMMUNICATIONS LIMITED (A SUBSIDIARY OF HINDUJA VENTURES LIMITED) www. hindujagroup. com May 2009

The Hinduja Group : Introduction Ø One of India’s premier transnational conglomerates Ø Been in existence for over 90 years Ø Present in 10 business sectors Ø Present in 32 countries Ø Employs over 35, 000 personnel Ø Major Companies Listed in Stock Exchanges -India Ø Turnover of the Group is several billion dollars

The Hinduja Group Founder- Parmanand D Hinduja Guiding Principles of the GROUP “My dharma (duty) is to work, so I can give” Work to Give Word is a Bond Act Local; Think Global 1901 -1971 Partnership for Growth Advance Fearlessly

Business Activities Investment Banking Global Investments International Trading Philanthropic Activities

Worldwide Locations 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 Major Centres and Establishments : Europe : London, Paris, Geneva, Moscow, Spain United States : New York, Washington India : Mumbai, Delhi, Chennai, Bangalore, Hyderabad Middle East : Tehran, UAE, Saudi Arabia South East Asia : China, Philippines, Jakarta Africa : Johannesburg, Cairo, Mauritius S. America : Argentina (Buenos Aires)

Hinduja Group – Overview ØThe Financial Services Group operates amongst the leading banks in Switzerland India with specialization in Corporate, Retail, Private Banking, Trust Services and Merchant Banking ØThe Global Investments Group has eight investment divisions. Each of these, in turn, has individual companies within the defined area of business. Media & Communication Transport Banking & Finance Hinduja Bank (Switzerland) Ltd Information Technology Chemical & Agricultural Business Project Development Healthcare Energy

About us…. In Films… Ø 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 Ø 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 Ø 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 Ø 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 Ø 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 Ø Today Group’s Media Businesses are metamorphosed into “Indus. Ind 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 Historical Challenges Changes ØAddressability is a reality now. Solves the problem of underdeclaration through the government order that forced the upgradation of networks & purchase of over 3 million boxes by the MSOs • Under-declaration • Last mile control • Collection ØIn an addressable environment the utilization of a prepaid model will eliminate delinquent accounts. This model is a success • Funding & Exit Strategies ØAn 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. ØDigital migration & DTH competition are destabilizing forces to the LCO monopoly. These forces will shift the balance of power in favor of the MSO

The India Content Distribution Opportunity Ø Market and Legislation have changed to enable broadcasters to exploit content in an organized and transparent manner Ø Legacy issues of under -declaration of subscribers, income leakage, lack of bandwidth, piracy would soon disappear Ø Deployment of Digital set Top Boxes, DTH, IPTV etc offers an opportunity for offering niche/ customized channels to a large and young population Ø 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

Indus. Ind Media & Communications. A Hinduja Ventures Company- (Restructured) 65. 81% Hinduja Group 19. 19% Institutions 15% Public Hinduja Ventures Real Estate, Cash, Media, New Ventures Indus. Ind Media and Communications Ltd. (IMCL) (Cable TV, Movie Channel, Broadband Internet) Subsidiaries/Associates (Planet E Shop, -Shop 24/7 -USN, UMN Networks) New Networks

Indus. Ind Media & Communications Limited (IMCL) Effective Shareholding Pattern: IMCL 59% (ICL-Mauritius) Hinduja Venture’s effective stake in IMCL: 59% plus 51% of Grant’s 6 % Stake = 63%

IMCL: Divisions and Businesses INDUSIND MEDIA AND COMMUNICATIONS LTD Cable TV Services Content Broadband Internet Analog Cable Movie Library Licencing Internet on cable Hindi Movie Channel VOIP/Internet Telephony Digital Cable Foreign Channels Aggregation Planet E Shop Holdings India Ltd. ( Associate)

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 Infrastructure in Place: Ø Pioneer and leading multi-system Cable & Broadband operator in India Ø 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. Ø Only MSO to have extensive intra-city fiber networks Ø 6, 300 km of trunk and access HFC networks— 80% of which is 2 -way enabled Ø Digital systems implemented in 11 cities and STB box roll out commenced Ø Over 1000 employees Ø 2, 400 affiliated local cable operators—LCO Ø LCO averages 6 employees = effective service network 14, 440

IMCL – Geography Network Spread : Ø 24 centres, out of which 15 are main cities Ø 12 digital Cable cities : Mumbai, Delhi, Bangalore, Thane, Navi Mumbai, NOIDA, Ahmedabad, Vadodra, Fardibad NEW DELHI Belgaum, Nagpur, Sholapur and Kolhapur NOIDA ØEstimated subscribers in analogue : over 6. 5 million homes ØDigital Cable subscribers: around 300, 000 , Exponential growth expected when regulations are implemented UDAIPUR AHMEDABAD INDORE SURAT THANE MUMBAI VADODARA NAGPUR NASIK AHMEDNAGAR NAVI MUMBAI Baramati BELGAUM GOA Gulbarga BANGALORE MYSORE 14 Broadband cities ALLEPY Hyderabad Nizamabad Main Cities New Cities Satellite Cities

IMCL Today: Assets Our Differentiators: Ø We own and operate our own head-ends Ø We have the largest number of employees Ø We have our own technical and field staff Ø We design and implement our own plant Ø Only MSO with fiber optic infrastructure in our locations Ø We operate out of one head with redundancy in almost all locations

Content – TV channels MOVIE and Thematic In House CHANNELS: Ø CVO, the number 1, premier Cable Movie Channel, over 1000 titles Ø CVO’s Movie library can be utilized for Digital Cable through PPV Ø Indigital Premium Movie channel , which is ad free Ø Indigital Music channel ( ad free) Ø Indigital Classic Movies Channel ( ad free) Ø Multiple Thematic Movie Channels CHANNEL AGGREGATION: Ø IMCL associate (PESHIL) receives permission for down linking Foreign channels Ø Satellite Channels with exclusive tie ups for Marketing and Distribution in INDIA Ø ARIRANG TV ( Global English language, Korean Channel) Ø MIRACLENET ( English Language Spiritual Channel of USA ) Ø Radio RNW ( Radio Netherlands) tie up for “Indigital” Ø Tie ups and at advanced discussions with more International TV channels and Content Groups

Foreign Channel Distribution and Marketing

Content - Rights Ø Negative Rights - 29 Movies ( including the following): Ø Baghbaan- Amitabh/Hema Ø Boom-Amitabh/Jackie Ø Pitaah- Sanjay. Dutt/Jackie Shroff Ø Mard/Coolie/Naseeb/Toofan- Amitabh Ø Asia Satellite Rights- 22 Movies Ø Cable Rights ( India)- 1000 Movies

Content-Film Financing , Movie Production/ JVsØ Film Financing of select movies Ø IMCL in association with “Serendipity Films” ( Of “Being Cyrus” Fame) has commissioned a New Movie – “Teen Patti” Ø Starring: Amitabh Bachchan , Sir Ben Kingsley and Madhavan Ø Expected Release : July- 2009 Ø In dialogue with other Directors / Production Houses for new Projects Ø Co- Production and JV’s with Studios Ø Digital Cinema Distribution opportunities- Satellite based, Broadband based for National and International

Regulatory- TRAI’s Recent recommendations on Restructuring of Cable Industry Ø Greater emphasis laid on network digitization, increased addressability and to encourage voluntary CAS Ø Incentives prescribed to Multi System Operators (MSOs) to introduce total digitized networks Ø The registration for cable TV operator to be replaced by a comprehensive and supportive licensing framework Ø Separate licensing frameworks for Cable TV operators (LCOs) and Multi System Operators (MSOs) Ø Eligibility criterion made specific to identify the entities who can act as LCOs and MSOs Ø Option and flexibility to choose Service area given both to LCOs and MSOs

What Media Group can Provide Ø Full Management of TV Channels ( uplinked from Abroad) , including exclusive rights for Distribution and Marketing in India Ø Niche Program Contents for Digital Video (PPV) or utilisation in any video digital channel of Media Distribution Company Ø Feature Films, Documentaries and other content aggregation for digital distribution Ø Distribution of Indian Content in International Markets Ø Co-production of Movies National/International Ø 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 Ø Server based city specific channels in India with content aggregation in Digital Cable platform Ø Events and live contents, location wise Ø New Movies and niche content which can be utilized in digital platforms of Cable, IPTV, Mobile TV

Why Partner with IMCL Ø We can offer full solution through the use of our platform. Ø Guaranteed wide distribution through a well respected distribution player Ø Guaranteed distribution with IMC on our digital tier. Ø Packaging options in analogue and digital distribution. Ø Nationwide distribution to all platforms ( e. g. : Cable, Terrestrial, DTH, IPTV, Mobile etc) through Content aggregation Company/Division Ø Providing an easy access of new channels, new movies and niche contents to the Indian market by providing ready made solutions Ø Provide statistical information on all digital distribution Ø Provide an on-the-ground marketing force to maximize distribution Ø Provide ongoing compliance and information for channels and contents regarding all changes and developments Ø Liaisoning and coordinating with all Government and Regulatory bodies The best value proposition for operating in the Indian marketplace

Film Distribution – Key Success Parameters Hinduja Media Group Strategy Maximize Returns from the Satellite Market: Ø With the spurt in the number of Television channels, there is an increase in demand for movie content Ø Players can take advantage of this situation and enter into innovative arrangements with the channels. PPV’s , Vo. Ds, PVR’s are all possible in digital addressable systems Ø Digital Cable with addressability has options for launching films citywise and regional /segment wise Ø Instead of sale of satellite rights for a specific period, companies can enter into revenue arrangements based on number of screenings with satellite channels Ø 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 Parameters Hinduja Media Group Strategy Focus on Innovative marketing and packaging of content : Ø Today theatrical windows in India are being greatly compressed Ø It has now become imperative to package ones product innovatively that could get the audience into theaters in the opening week itself and sustain it self post that with word of mouth and second rung of promotional activity Ø 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 Ø Companies need to focus on maximizing their revenue from alternate revenue streams , mainly on the addressable digital TV distribution stream Ø 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