New Delhi: The Indian media and entertainment (M&E) industry is expected to grow at a compounded annual growth rate (CAGR) of 14% to touch Rs2.41 trillion by 2021 with advertising revenue expected to grow at 15.3% during the same period to reach Rs1.07 trillion.
In 2016, the M&E sector grew at 9.1%, while overall advertising grew at 11.2% over 2015.
Growth for television advertising is projected at a CAGR of 14.7% between 2016 and 2021, while print media is expected to grow at 7.3%, according to a report by consulting firm KPMG and lobby group Ficci (Federation of Indian Chambers of Commerce and Industry).
Titled Media for the masses: The promise unfolds, the report was unveiled at the annual media and entertainment industry event Ficci Frames in Mumbai on Tuesday.
Among traditional media, radio will see the fastest growth of 16.1%, while new media or digital advertising is slated for a 31% growth during the period between 2016 and 2021, the report said.
The segment for films is expected to bounce back and is predicted to grow at a CAGR of 7.7% for the next five years, as the revenue streams broaden, driven by the growing depth of regional content, expansion in overseas markets and higher contribution of digital revenue streams.
However, slow growth in screen count, along with inconsistency in content quality would act as the primary limiting factors. The segment for films grew 3% in 2016 to reach Rs 0.14 trillion.
The estimated growth of 7.3% in print media is largely on the back of continued growth in readership in vernacular markets and advertisers’confidence in the medium, especially in the tier II and tier-III cities. Print advertising revenue is expected to grow at a CAGR of 8% over the next five years.
Radio will be see the fastest growth with the operationalization of new stations in both existing and new cities, introduction of new genres and radio transitioning into a reach medium, the report stated.
Meanwhile, in digital advertising as digital infrastructure continues to develop and data costs are driven down, digital consumption is likely to become more frequent and more mainstream. The resultant growth in investment by advertisers supported by evolution of the audience measurement technology are likely to drive growth over the next five years.
The OTT Video on Demand (VoD) services have also seen an upsurge in the last one year. The year saw the entry of global OTT video leaders, such as Netflix and Amazon Prime, as well as the launch of major broadcast network backed platforms, such as VOOT (Viacom 18) and OZee (Zee TV). Other platforms—Hotstar and Sony Liv—consolidated their offerings by launching premium services and a dedicated kids channel,respectively. Telecommunication platforms also joined OTT game with syndicated content offerings on the likes of Jio Apps, Airtel Wynk, etc.
However, monetization models are currently limited and economic models are still evolving. Further, the absence of a credible measurement model is also hampering advertiser confidence.
Last year, the impact of demonetisation was felt across the M&E industry. Advertising revenues across television, print and radio suffered while the attendance at cinema halls, particularly single screens, and live events, was also impacted.
It is estimated that the annual advertising growth rates for television, print and radio were adversely impacted by about 1.5 to 2.5 %.
However since January 2017, there has been an upswing in consumption and advertising demand, although spend levels continue to remain lower than the same period in the previous year. It is expected that the spend level would be back to usual by second quarter 2017.
In conclusion, digital media continues to be the biggest transformation in the media and entertainment sector. While M&E organisations are looking to build out digital strategies, the economic and business models required to succeed in the digital landscape are challenging and would require a significant shift in mindset and approach.
Further,dramatic changes in the regulatory environment is also impacting business models. In this changing paradigm, M&E organisations would need to be nimble and flexible and operate with a long term integrated strategy to build out sustainable businesses, stated the report.
Commenting on the industry’s performance and way forward, Uday Shankar, chairman, FICCI M&E committee and chairman & CEO of Star India, said, “The industry has gulped down the bitter pill of demonetisation trusting its long-term benefits and yet is set to bounce back to a steady growth, thanks to strong fundamentals. Building solid infrastructure and continued government support will help the industry reach the tremendous potential it holds for employment and creating socio-economic value for the country. A commitment towards a quick transition to digitisation will ensure growth for all stakeholders.”
Girish Menon, director, media and entertainment, KPMG in India, said, “2016 was a mixed bag for the industry with digital media making its way to the centre stage rapidly from being just an additional medium. It is compelling existing players to rethink their business models. To accelerate growth, M&E organisations must rebuild their strategies to fit and thrive in the changing, digitally-oriented landscape. Nimbleness and flexibility will be at the core of sustainable businesses.”