Media and entertainment sector expected to reach INR 2.23 trillion by 2023: FICCI-EY Report 2021

The Indian media and entertainment (M&E) sector has degrown by 24% to INR 1.38 trillion in 2020, and is expected to grow by 25% in 2021, to reach INR 1.73 trillion, says the recent FICCI – EY report 2021 titled ‘Playing by new rules’.

According to the study, television continued to remain the largest segment in 2020, whereas digital media and online gaming overtook print and the filmed entertainment segment respectively.

The report also stated that digital media and online gaming were the only segments that grew in 2020, adding an aggregate of INR 26 billion, while most segments de-grew by an aggregate of INR 467 billion.

While the sector fell three times to India’s nominal GDP, subscription revenues fared better than advertising revenues.

However, the Indian M&E sector is expected to reach INR 2.23 trillion by 2023, at a CAGR of 17%.

Key findings:

Television: Growth will be driven by connected TVs which could cross 40 million homes by 2025 and free television could cross 50 million homes, thereby making core television a more massified product. The smart television will usher in an era of connected viewing which will enable viewers to interact with each other, as well as the broadcaster, through the content. The importance of regional and sports programming will increase, driving up both, ad rates as well as end-consumer package pricing, subject to regulatory action.

Digital media: Digital advertising is expected to outpace all other ad media by 2024 or 2025. The metrics will change from monthly active users to daily active users, leading to platforms focusing on segmented audiences and community ownership. Newspaper digital products will increasingly go behind paywalls and it is expected to generate subscription revenues of INR 4 billion by 2023. It is estimated that demand for original content will double by 2023. The share of regional language consumption on OTT platforms will cross 50% of total time spent by 2025.

Print: Print will need to focus on growing its reach in existing markets through a combination of identifying new micro-markets which are underpenetrated, as well as forging bundle deals with direct to consumer aggregator. More industry-level shared services initiatives are expected to ensure cost efficiencies. Publishers can also implement process automation for productivity improvement across key business processes. The focus will remain on strengthening the print segment’s core capability to building communities, with a wider scope of offerings to them apart from just news.

Online Gaming: The segment is expected to become the third largest segment of the Indian M&E sector. Gaming will become all pervasive and will proliferate across lives. The segment will grow across all its verticals, but revenue growth will be led by mobile-based real-money gaming applications across these verticals. A nodal agency is required to bring clarity in regulations and implement responsible gaming guidelines and monitor sensitive areas.

Mergers and Acquisitions in M&E: Although the number of deals increased from 64 in 2019 to 77 in 2020, deal value reduced to INR 68 billion in 2020, from INR 101 billion in 2019. This was largely due to the absence of big-ticket deals with only two deals crossing the US$100 million threshold as compared to four such deals in 2019. In line with the trend of the past three years, new media contributed to majority of the deals in terms of volume. Its share increased in terms of deal value from 37% in 2019 to 92% in 2020.

Sanjay Gupta, chairman, FICCI media & entertainment committee, said, “Digital is fuelling an unprecedented growth in content creation and consumption in almost every Indian language, creating new economic opportunities for both, the media and entertainment industry and creative professionals across the country. We need to capitalise on this and unlock the full potential of India’s creative ability to power India’s economic engine.”

Added Ashish Pherwani, partner and media & entertainment leader, EY India, “The M&E sector witnessed a shift in demand patterns, as consumers actively sought alternatives and had the time to try new things. Consumption patterns shifted and increased across online news, gaming and entertainment. The supply side too transformed, as companies took the opportunity to reinvent themselves. Every segment redefined itself across verticals by becoming medium agnostic and embedded video, audio, textual and experiential products to enhance their offerings. However, the compelling content created around news and escapism, and the passion to build some of India’s most powerful brands remained resolute.”

You can view the complete report here.