Digital advertising set to overtake TV by FY21: KPMG

Owing to the dismal first quarter of this financial year when broadcasters were making only 15-20% of their last year's earnings, TV ad revenue will see a huge drop from the ₹26,200 crore figure of FY20. These are numbers from professional services network KPMG's report 'A Year off Script' that looks at growth or decline in various segments of the media and entertainment industry, including advertising for digital, print, TV, radio, films, out-of-home entertainment, among others.

Incidentally, an earlier report by Edelweiss had pegged TV ads to grow by 6.5% to touch ₹34,100 this year. But the KPMG report projects the same to shrink, building on a Group-M report earlier in the year that had already forecast the share of digital to grow by 3% as compared to a 1% decline for TV.

As businesses scrimp on their discretionary spends, there is likely to be a reallocation within marketing budgets and a diversion away from traditional media segments of TV, print, radio and out-of-home to digital in accordance with consumer preferences, the report said.

Further, the media and entertainment (M&E) sector in India is projected to see a significant decline of 20% in total revenues in FY21, with deep cuts in print (38%) and films (67%), followed by television (9%), on account of covid-19 disruption.

The digital consumption segments such as over-the-top video streaming platforms that will see a rise of 17% and online gaming at 10% will be the silver linings.

“It is important to understand that covid did not create problems (for certain segments) but may have accelerated them," said Girish Menon, partner and head, media and entertainment at KPMG. “It has been a watershed year for digital while traditional businesses have felt the impact much more and recovery for them will simply mean going back to pre-covid levels which were already depressed."

The covid-19 pandemic accelerated a lot of trends that would have otherwise taken longer to materialize, according to the report.

With the fierce need for social distancing, schools, offices, shops, entertainment all having moved online to hasten the progress of India’s digital trajectory. Time spent on smartphones increased considerably from 3 hours 22 minutes pre-covid to 3 hours 54 minutes in April 2020 and stabilized to 3 hours 37 minutes with the first phase of unlocking. Video streaming has penetrated into 96% of India’s metros and mini-metros and 97% of its tier-one and tier-two towns. The OTT market in India alone is expected to grow by 32% over FY21 to reach Rs. 6,900 crore with 486 million online video viewers, of which 40 million will be paid subscribers. Mobile payment, on the other hand, has reached 73% of the metros and min-metros and 75% of the tier-one and tier-two towns.

On the other hand, the pandemic has had an adverse impact on television like most forms of traditional media, especially with no fresh content available mid-April onwards and NTO 2.0 further disrupting prices and consumer choices. The first quarter of the year saw a 50-80% decline in ad revenues for the Hindi GEC genre, as an example. The overall TV segment will see a 17% decline in ad revenue this year but will bounce back with 19% growth in FY22 over FY21.

“TV may have lost 50% of the year but there are no long-term concerns for the segment given its significant penetration and user engagement. It should wipe off its losses over the next two to three years," Menon said.

Covid-19 has also proven to be a huge setback for the print industry with revenues expected to decline by 38.4% in FY21, taking the segment at least three years back from its growth trajectory. However, over the next two years, with global and domestic economic conditions on the mend, the segment hopes to recover to FY19 levels by FY23, the report said. Overall, print will witness 57.4% growth in FY22 over the previous year.

The spurt in online video viewing has directly hit the theatrical movie market in India that has remained shut for over six months now and is expected to decline by 67% in FY21. Even though major streaming players like Netflix, Amazon Prime Video and Disney+ Hotstar acquire big and medium-budget films, the industry believes India has too strong a theatre-going culture to give up on that. The market is expected to bounce back with 196% growth in FY22.