Home / Industry / Media, entertainment industry to hit $40 billion by 2020: PwC

The Indian media and entertainment sector grew 12% to reach $25.13 billion ( 1.68 trillion) in 2015, according to PricewaterhouseCoopers (PwC)’s Global Entertainment and Media Outlook 2016-20.

The industry is expected to exceed $40 billion by 2020, growing at an average annual rate of 10.3% between 2016 and 2020, said the report released on Wednesday.

“Given India’s overall growth in GDP (gross domestic product) and PCI (per capita income), it is not surprising that India is amongst the top 10 markets for growth in the sector. Although, in India, traditional media like newspaper publishing and cinema has always shown strong growth, we expect that even in terms of absolute total spend, it should get into the top 10 in the early part of the next decade," said Frank D’Souza, partner and leader, entertainment and media, PwC India.

“What would be more interesting, however, is how rapidly India would catch up with global trends, where traditional media is finding it hard to remain relevant, and the digital sector is leading the growth trajectory and consequently bringing in continuous disruptions. That will all depend on how quickly the Indian digital/broadband ecosystem matures, and how the Indian players adapt and drive business models in what would be a rapidly changing environment for consumption of data/content fashioned largely by India’s under-35 population," he added.

While in terms of admissions, India currently rules the roost as the largest cinema market in the world, and is expected to remain so till 2020, China is inching close and is expected to overtake India in about four years. In 2015, admissions stood at an estimated 2.04 billion, and in 2020 are predicted to rise to 2.8 billion, a annual average growth rate of 6.6%.

Box office revenue in India stood at an estimated $1.64 billion in 2015 and will rise to $2.74 billion in 2020, growing at an average rate of 10.9%.

In terms of multiplexes, India remains underserved. At the end of 2014, there were around 11,200 screens in the country as a whole—a small number given the population and the appetite for cinema, said the report.

“This will continue to be a challenge. Issues such as a high tax structure, where multiplexes pay approximately 45% of revenue in tax, and exorbitant real estate prices will slow down growth in this area," said D’Souza. Moreover, the thousands of single-screen cinemas that traditionally dominated this industry have disappeared as a result of the multiplex boom, making it even more challenging.

Indian television advertising revenue grew consistently throughout the global recession. According to the report, India is likely to be one of only seven countries to achieve double-digit growth over the forecast period at an annual pace of 11.7%. This will generate revenue of $5.54 billion in 2020, compared with $3.19 billion in 2015.

The growth in television audience reach had resulted in a shift in overall advertising budgets towards television.

Paid-search Internet advertising revenue is, and will continue to be, India’s largest Internet advertising subcomponent over the forecast period, according to the study. Paid search grew 26.7% in 2015 from the previous year, reaching a revenue of $211 million. With a forecast 18.5% compound annual growth rate over the next five years, paid-search Internet advertising revenue is expected to rise to $492 million by 2020. Online spending on display ads in India has witnessed strong growth in the historic period and revenue has almost tripled since 2011, reaching $200 million in 2015.

As far as the Indian print industry is concerned, it managed to buck the global trend. Globally, magazine, book and newspaper publishing combined registered a near flat or negative growth. However, Indian publishing remained one of the fastest growing the world, on the back of factors such as demographics, increasing literacy rates, educational needs and a strong desire to consume news and content in local languages, combined with nascent digital/broadband penetration. These factors were expected to fuel growth and keep it relevant over the 2016-20 period. In 2015, the overall publishing revenues were at $6.13 billion, an increase of $302 million over 2014.

Beyond the data on key sectors, the report also looked into major trends that would have an impact on the media and entertainment industry globally. “Our analysis of national entertainment and media markets globally reveals an almost perfect correlation between the relative size of the under-35 population and growth in entertainment and media spending—confirming that younger consumers are now the primary drivers of global growth," said D’Souza, explaining that this trend seemed to debunk the age versus wealth argument when it came to content consumption.

“Despite having more wealth and disposable income, an older person has limited time to consume content," he explained.

According to the findings, countries with young populations such as India, Brazil, Pakistan and Indonesia, among others, are likely to grow three times faster as compared to other countries.

Content will continue to be king and drive growth in this sector. While it is easy to assume that content is becoming more globally homogeneous, with the launch and adoption of services such as Netflix, experts maintain that the reality is that content is being redefined by consumers who also want local content.

Moreover, globally, the ability of consumers to design and curate their own media diet has been one of the most powerful trends to emerge in the industry. But the bundle is far from dead, with video and cable incumbents—initially slow off the mark—now fighting back by offering their content on an integrated omni-channel basis, on TV, laptops, tablets, and smartphones, said D’Souza.

The other major trend reported by the study was the emergence of hybrid business models. Where the entertainment and media market would also include technology companies racing to become hybrid content companies, and traditional publishers evolving the other way to emerge as hybrid technology companies.

“This underlines how the growth of technology and digitization is acting as a centripetal force—breaking up existing relationships; pushing large, generalist entities to give way to smaller specialists; and allowing smaller, nimble competitors to beat out incumbents," said the report.

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