India's media and entertainment industry is close to a "large-scale, game-changing evolution" due to the use of digital technology, growth of home entertainment, new distribution media like Internet and IPTV, and the growing global appeal of Indian movies, says a new report released here.

The Confederation of Indian Industry (CII) had commissioned international management consultants A.T. Kearney to provide insights on "actual business models that will emerge" within the media and entertainment sector.

Kearney's report says the Indian economy's growth and the new factors could result "in the (media and entertainment) industry ranking high among the fastest growing sectors in India and the fastest growing media and entertainment industry in the world".

"From the existing size of $11 billion, reports have estimated the industry to grow at a compound annual growth rate (CAGR) of 18 percent to reach $25 billion by 2011," says the report, which was released Thursday by the CII on the eve of the International Film Festival of India in Goa.

TV, print and film will "continue their dominance in the next five years", says the report, while noting that new segments like gaming and radio were emerging.

"The (Indian) public fascination with films explains why the Indian film industry produces the maximum number of movies in the world -- over 1,000 annually," says the report.

India's film industry was estimated to be worth $1.8 billion overall in 2006. Kearney estimates it would be worth $4.4-5.1 billion by 2011.

It stresses that digitisation of films and changing consumer preferences are going to "fundamentally change the landscape of the Indian film industry".

Digitisation would eliminate the cost of physical prints (Rs.50,000-60,000 per copy) and enable the release of a movie across multiple locations simultaneously, minimising losses due to piracy and "negative word-of-mouth". This could make theatres in smaller towns more viable.

In Tier II and III towns of India, there is an estimated potential for 2,000-3,000 high-quality screens, it suggests.

But it warns the emergence of large multiplex changes will "significantly balance the power equation between the producer-distributor and the exhibitors, which has traditionally been largely skewed towards the former."

It warns that the domestic box office will face growing competition from the international box office, home video and some other new media forms.

The report threw up some interesting figures:

-- Up to 97 percent of urban youth prefer to watch movies in multiplexes, in contrast to over 75 percent of non-urban population preferring to watch movies at home.

-- Bollywood movies in the recent past have tasted success in the international arena, with a fe7 recent hits collecting over 50 percent of their overall gross from global box office collections.

-- Movies made by persons of Indian origin have raked up to two to three times the international revenues of national bestsellers.

-- India's home video earns just eight percent of overall movie revenues, compared to over 40 percent in some developed markets. This share could touch 14 percent by 2010. DVD players are growing and original DVD prices are dropping to combat piracy.

-- TV has reached 60 percent households, and 13 percent of TV revenues come from film content, meaning a significant population relies on TV to view movie content.

-- The last few years have seen satellite rights grow at 25-30 percent from Rs.30-50 million three years ago for a blockbuster to Rs.80-100 million now.

-- Mobile use is seen as showing "significant growth", with subscribers doubling year on year to cross the 250 million mark today.

"Unfortunately for the music aggregators and service providers, a significant portion, 70-80 percent, of these revenues is retained by the operators," says the study.

Internet penetration in India remains low, and IPTV, which is growing globally, is still at a "nascent stage" in India as IPTV uses Internet protocol and high-speed broadband networks are needed to view TV content.