M&E sector shrinks 24% in 2020 despite last-quarter recovery

  • Digital advertising was stable, led by increased allocation from traditional advertisers who accelerated their investments in digital channels. Twenty eight million Indians paid for 53 million streaming app subscriptions in 2020, up from 10.5 million a year ago, leading to a 49% growth in revenues

Lata Jha
First Published26 Mar 2021, 11:54 AM IST
Television, the largest segment, saw a 22% fall in advertising revenues on account of highly discounted ad rates during the lockdown. (Photo: Mint)
Television, the largest segment, saw a 22% fall in advertising revenues on account of highly discounted ad rates during the lockdown. (Photo: Mint)

NEW DELHI: The coronavirus pandemic hit India’s media and entertainment (M&E) sector, which shrank 24% to Rs1.38 trillion in 2020, with revenues akin to levels seen in 2017. The contraction came despite a recovery in the last quarter.

According to a joint report by the Federation of Indian Chambers of Commerce and Industry (Ficci) and consulting firm EY, the sector is expected to expand 25% to touch Rs1.73 trillion in 2021, and grow at a CAGR (compound annual growth rate) of 13.7% to Rs2.23 trillion by 2023.

Also Read | The great financial crunch: How the pandemic sank Indian states

The pandemic showed the resilience of subscription models against ad-based models. Across streaming apps, print and television, the share of subscriptions in total revenues rose to 51.5% in 2020 from 49.7% in 2019 , said the report titled Playing by new rules, India’s media and entertainment sector reboots in 2020.

While advertising revenues fell 25% to Rs19,900 crore, subscriptions fell 20% to Rs15,400 crore. Digital advertising was unchanged, with the steepest falls seen in print (Rs8,400 crore) and television (Rs6,900 crore) advertising.

Digital and online gaming were the only segments which grew in 2020, adding an aggregate of Rs2,600 crore, and their contribution to the M&E sector rose from 16% in 2019 to 23% in 2020.

Other segments fell by an aggregate of Rs46,500 crore. The biggest contributors to the drop was filmed entertainment segment (Rs11,900 crore) as film theatres remained shut for most of the year. Print saw a decline of Rs10,600 crore due to a huge hit to advertising and circulation in the early part of the lockdown. Television, meanwhile, dropped by Rs10,200 crore, as daily production was stalled and large sporting events got delayed.

“We’re going into a medium-agnostic future where there has to be integrated offerings for all audiences,” said Ashish Pherwani, M&E sector leader at EY. No company can define itself as just TV, or radio, or print anymore, but will have to look at multi-media opportunities, he added.

Several digital trends accelerated their trajectory, fed by growth in broadband, personal devices and smart televisions, and the time and inclination to try online services, said Sanjay Gupta, chairman, Ficci media and entertainment committee. “New distribution models and monetization strategies are evolving across both large and small screens. These changes are driving a shift in monetization of content investments and this opportunity is global,” Gupta added.

Television, the largest segment, saw a 22% fall in advertising revenues on account of highly discounted ad rates during the lockdown even as ad volumes declined only 3%. In addition, it also witnessed a 7% fall in subscription income, led by the continued growth of free television (the number of channels on DD Free Dish rose from 120 to 200), reverse migration (connected TV could reach 40-50 million sets by 2025) and a reduction in ARPUs (average revenue per user) due to part implementation of NTO (new tariff order) 2.0 that called for individual pricing of channels and did away with bouquets offered by broadcasters earlier.

TV advertising, however, is expected to be close to 2019 levels in 2021, growing over 20% on the back of a line-up of fresh sports content, regional channel rate increases and continued growth of free television. Subscription income too would grow 5% to reach Rs.45,600 crore.

Digital advertising was stable, led by increased allocation from traditional advertisers who accelerated their investments in digital channels. Twenty-eight million Indians paid for 53 million streaming app subscriptions in 2020, up from 10.5 million a year ago, leading to a 49% growth in revenues. Growth was led largely by Disney+ Hotstar which put the cricket’s Indian Premier League behind a paywall, increased content investments by foreign OTTs like Netflix and Amazon Prime Video and the launch of several regional language products.

In addition, 284 million Indians consumed content which came bundled with their data plans. At 4.6 hours per day, Indians ranked third in the world, for the most amount of time spent on phones in 2020, after Indonesia and Brazil. Overall, video viewers increased 15% to reach 468 million, which is around 96% of smartphone owners. The report estimates that the digital segment will grow to Rs. 42,450 crore by 2023, at a 22% CAGR.

Remaining the fastest growing segment of the M&E sector for the fourth consecutive year, online gaming rose 18% helped by work and school from home and increased trial of online multi-player games during the lockdown. Online gamers grew 20% to reach 360 million last year, while games remained the most downloaded app category under entertainment. The segment is expected to reach 15,500 crore by 2023 at a CAGR of 27%.

While theatrical revenues slumped to less than a quarter of their 2019 levels, a portion of this loss was made up through higher digital rights revenues which almost doubled during 2020 to Rs3,500 crore with many producers premiering their films directly on streaming platforms like Netflix and Amazon. Subject to continued recovery from the pandemic and rollout of an effective vaccination programme, the pent-up slate of films waiting for release can lead the segment to recover to Rs15,320 crore in 2021.

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First Published:26 Mar 2021, 11:54 AM IST
HomeIndustryMediaM&E sector shrinks 24% in 2020 despite last-quarter recovery

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