MUMBAI, 12 March 2019: The Indian Media and Entertainment (M&E) sector reached INR1.67 trillion (US$23.9 billion) in 2018, a growth of 13.4% over 2017, states the FICCI-EY report, ‘A billion screens of opportunity,’ launched today at the FICCI FRAMES 2019 in Mumbai.
With its current trajectory, the M&E sector in India is expected to cross INR2.35 trillion (US$33.6 billion) by 2021, at a CAGR of 11.6%. While television retained its position as the largest segment, growth is expected to come from digital which will overtake filmed entertainment in 2019 and print by 2021. The report captures key insights from the exciting and fast-growing Indian M&E sector.
The sector continues to grow at a rate faster than the GDP, reflecting the increasing disposable income and economic growth. India has the second highest number of internet users after China with 570 million internet subscribers growing at 13% annually. The report estimates that approximately 2.5 million consumers in India today are digital only and would not normally use traditional media. It is expected that this customer base will to grow to 5 million by 2021.
Traditional media companies spent 2018 building their customer data through second-screen interactive propositions, polls, house-to-house surveys, integration of third-party data, etc. Digital consumption will grow, and monetization avenues will see great innovation to cater to the new Indian customer segments. Telco bundling will drive consumption for a majority of Indian OTT audience. Advertising growth outpaced subscription growth and is expected to comprise 52% of the total pie by 2021.
Mr. Uday Shankar, Vice President, FICCI and Chair, FICCI Media and Entertainment Division, said, “The M&E sector is poised to kickstart a new era of growth. Technological disruptions are creating new opportunities for the sector. New age digital media with direct-to-customer (D2C) capabilities are on an upward trajectory making Indian M&E ever more vibrant, against the backdrop of already popular broadcast TV and films. The sector’s incumbents need to innovate, transform and increase their relevance to mass and individual consumers.”
According to Mr. Ashish Pherwani, Partner and Media & Entertainment Leader, EY India, “The M&E sector has a significant opportunity given India’s young demographics. The growth of digital infrastructure is further enabling Indians to fulfil the need for personal content consumption, across languages and genre. There is a large shift in consumer behaviour from mass produced content to specific content defined to audience segments. The sector has an opportunity to serve a billion screens in India and globally.”
The following are the key segmental findings of the report:
The TV industry grew from INR 660 billion to INR 740 billion in 2018, a growth of 12%. TV advertising grew 14% to INR 305 billion while subscription grew 11% to INR 435 billion. Television viewing households increased to 197 million, which is a 7.5% increase over 2016. Regional advertising growth outpaced national adverting growth on the back of national brands spending more to develop non-metro markets where GST created a level playing field between national and regional brands. Seventy seven per cent of the time spent on television was on general entertainment content and film channels.
Print accounted for the second largest share of the Indian M&E sector, despite being static and growing at 0.7% to reach INR 305.5 billion in 2018. Advertising revenues stood at INR 217 billion and subscription revenues grew marginally by 1.2% to INR 88.3 billion in 2018. Newspaper advertising de-grew 1% while magazine advertising fell 10%. The fall in advertising is due to both reduced ad volumes as well as pressure on effective rates. Hindi newspaper publications continued to lead with 37% of total ad volumes, while the share of English publications stood at 25%. Rising newsprint prices and a depreciation in the value of the Indian Rupee led to pressure on print sector margins in 2018.
The Indian film segment grew 12.2% in 2018 to reach INR 174.5 billion driven by the growth in digital/ OTT rights and overseas theatricals. All sub-segments, except home video grew. Domestic film revenues crossed INR 100 billion with Net Box Office collections for Hindi films at INR 32.5 billion – the highest ever for Hindi theatricals. Overseas theatricals grew to INR 30 billion from INR 25 billion in 2017 where China became the largest international market for Indian content. 98 Hollywood films were released in 2018 as compared to 105 in 2017. The box office collections of Hollywood films in India (inclusive of all their Indian language dubbed versions) was INR 9.21 billion. Multiplexes drove up the screen count to 9,601, though single screens continued to reduce.
In 2018, digital media grew 42% to reach INR 169 billion. Infrastructure propelled the growth in digital consumption. Digital ad spends grew 34% to INR 154 billion and now contribute around 21% of the ad market. Digital subscription grew 262% to reach INR 14 billion. Video subscription revenues almost grew three times in 2018 to reach INR 13.4 billion, on the back of new and relaunched video streaming platforms, growth of smartphones, spread of affordable broadband, regional language content, exclusive content and live streaming of major cricket and other impact properties.
Mergers and Acquisitions:
The India M&E sector witnessed an interesting mix of deal activity in 2018 both on the traditional as well as the new media front. The number of deals in M&E in 2018 remained the same at around 40 though the deal value more than doubled in 2018 to US$2.8 billion from US$1.3 billion in 2017. 41% of deals were in the digital segment in 2018, compared to 30% of deals in 2017 while deals in the gaming segment came next with 20% of the deals. The digital segment has been at the forefront of deal activity as India’s demographic dividend in the form of smartphone users, internet penetration and improving bandwidth continues to grow exponentially. The consolidation wave in the M&E sector is expected to accelerate and continue as large media corporates strengthen their presence for achieving scale, reach and relevance. The sector is also gaining huge interest from global strategic players who want to be part of the rapid growth in this sector, on the back of greater availability of data.