KPMG in India today launched the 11th edition of its Media and Entertainment (M&E) report, titled ‘India’s Digital Future: Mass of Niches’ that examines the evolution of India’s digital demography till 2030. It also covers the industry’s performance across segments, along with the key underlying themes and growth drivers.
The M&E industry in India posted a solid growth of 13 per cent during FY19 to reach a size of Rs 1631 billion with a CAGR of 11.5 per cent over FY15-FY19. Digital has been a recurring theme across all segments of M&E causing disruption in TV and print and fuelling growth in digital advertising and gaming. The digital market is poised to become the second largest segment in India after TV, and also attract the maximum advertising spend by FY22.
Smartphone penetration and low data cost have increased digital access among users. That, combined with investment in original and regional digital content will contribute to driving online content consumption.
The investment in regional content is an outcome of the growing importance of regional language markets in India - another key theme of the report this year. By 2030, it’s estimated that 500 million users will access the internet in a local language. The 500 million new users by 2030 present digital businesses with an unparalleled market opportunity but not without some complexity.
Segmentation will become important as the market evolves into a ‘mass of niches’. The report examines major consumer archetypes and provides a framework to better understand the socio-economic profile and M&E consumption patterns and preferences of the projected billion internet users.
The growth of the M&E industry in India is expected to post a CAGR of 13.5 per cent over FY19-FY24 and eventually reached a size of Rs 3.07 trillion. Girish Menon, partner and head, Media & Entertainment, KPMG in India, said, “The theme of the report this year is India’s digital future – and although the term ‘digital revolution’ has become something of a cliché, there is no other way to explain the extent of digital integration in our lives today. With no major constraining factors, digital is expected to be a dominant force going forward and in FY23, it is likely to be the second largest segment after TV and attract the highest marketing spend among all media formats. In 2019, as digital behaviour evolves, there seems to be a growing consensus that in the future, subscription models will have a greater role in the monetisation of digital platforms. Further, evolving technologies also present opportunities for companies in the media and entertainment industry to achieve greater operational efficiencies.”
Satya Easwaran, Partner & Head Technology, Media and Telecom, KPMG in India, said, “By 2030, we estimate that there will be a billion people in India who are connected to the internet. Our initial hypothesis is that the user will be a non-English speaking, mobile phone user, from a developed rural area/non-metro urban setting. He/she is increasingly willing to pay for content online.
The digital disruption has forced a change in business models in M&E from an erstwhile B2B2C (Business to business to consumer) model to a D2C (direct to consumer) one. So consumer segmentation, and profiling – both demographic and psychographic will become important.”
Media and Entertainment: Segment Highlights
The digital segment continues to be strong; enabling factors encouraging greater consumption of content on the internet in India. It is reflected in the growth in broadband internet subscribers at 37 per cent for FY 2019, which beats overall growth in internet users at 29 per cent. Today, internet access is also more equitable and the growth in rural users is almost three times that of urban users.
The television segment had a good year for the first three quarters of FY2019, but the challenges in implementation of the New Tariff Order (NTO) and the resultant uncertainty around viewership and subscription renewals affected both the advertisement and subscription revenues in the last three months of FY19. The market size this year includes advertisement revenues of Rs 251 billion and subscription revenues of Rs 463 billion.
The print media industry survived ups and downs over a period of FY2018. It witnessed a rough patch due to disruptions caused by the implementation of the new GST regime, RERA regulations and demonetisation resulting in the lowest growth in a decade at 3.4 per cent. Globally the print industry is declining - with newspapers’ share of global advertising spend falling from 37 per cent in CY08 to 12 per cent in CY18. However, the Indian print industry continued to buck trends and grew at 5.6 per cent CAGR from FY15 to FY193.
It was a groundbreaking year at the Indian box office, which delivered its best box office performance in the past decade. Content took centre-stage with movies of diverse budgets succeeding at the box office. A key ongoing change has been the growing contribution of digital rights, which has grown by 30 per cent in FY19 in line with the previous year. The demand for digital rights has also been driven by heavy demand by OTT platforms who consider new movies as a key content differentiator. In FY2019, domestic box office collections grew by 14.7 per cent.
Gaming, Animation, VFX and postproduction
The digital revolution has been the primary contributor to the remarkable growth of online gaming in India. Indian gaming industry estimates indicate a growth of 26.4 per cent in the CAGR of 2015 – 2019.
Out of home
OOH (Out of Home) is a versatile advertising medium on account of various advantages it offers over other forms of media. These advantages include high coverage in terms of area, better brand positioning, given the larger size of image and higher target audience reach of almost 80 per cent. The OOH industry has witnessed close to 11 per cent CAGR over the last five years, growing from INR 20 billion in FY14 to INR 34 billion in FY19.
Radio and Music
This industry saw impetus coming from the increase in spends due to elections. While the real estate sector (a sector that traditionally advertises heavily on radio) continued to face slowdown, the sector’s spends on radio continued to liquidate existing inventory. The growth during the FY19 has remained weak at of 6.17 per cent.
KEY THEMES OF 2019
Post the new regulatory framework for broadcasting and cable services introduced by the Telecom Regulatory Authority of India (TRAI), viewership is likely to be concentrated across fewer channels aiding large broadcasters and channels with appealing content. They stand to benefit from higher subscription revenue as well as gain greater pricing power. Further, some of the large broadcasters have also taken a strategic call to move the Free-to-air (FTA) variants of their popular General Entertainment Channels to the Pay regime, with a view to ensure that subscribers pay for the content they wish to watch.
In FY19, the growth in advertising revenue for regional channels has been around 16-17 per cent. The large audience size combined with their preference to consume content in regional languages has led to media platforms expanding their portfolios to offer dedicated regional language content. Consumers are also spending 35-43 per cent of time watching regional videos on digital platforms.
Owing to the digital disruption, the world of media and entertainment is changing with a new composition in the workforce. This shift requires constant upscaling and upskilling of the workforce. The traditional job roles have either completely changed or have totally ceased to exist with a decrease of 8 per cent in online media, 9 per cent in print and 5 per cent in broadcast media.
Digital privacy and content:
In today’s marketplace, customised environment and recommendations are the norm and it provides organisations an edge over their competition. They are using Content Delivery Networks (CDN) to speed up content delivery on websites with high traffic based on location. In order to provide such services, media companies are now monetizing by collecting huge amounts of data to create customer profiles in a new and unique way.
5G will increase media usage immensely. The revenue forecast over the next decade (2019-2028) is pegged at approximately USD 3 trillion which the M&E companies will be vying for and the revenue opportunity enabled by 5G networks will be approximately USD1.3 trillion. The year 2025 is expected to be the year when the industry will reach critical mass wherein 57 per cent of global wireless media revenues will be generated on the back of superfast 5G networks and devices. One of the key metrics of 5G performance is latency and since the technology promises latency of <1Ms live streaming and large downloads will happen at supersonic speeds.
Read the full report below: