7 minute read 27 Mar 2020
People playing holi together

How will the M&E sector navigate the era of consumer A.R.T.?

By

Ashish Pherwani

EY India Media & Entertainment Leader

EY India M&E sector leader with more than 20 years of experience, serving companies in all the M&E sub-sectors. A mentor and coach to teams.

7 minute read 27 Mar 2020

The Indian M&E sector reached INR1.82 trillion in 2019, a growth of ~9% over 2018.

The M&E sector witnessed a surge in content consumption as digital infrastructure, quantum of content produced and per-capita income all increased in 2019.  Consequently, driven by the ability to create direct-to-customer relationships, the sector firmly pivoted towards a B2C operating model, changing the way it measured itself.  Digital advertising continued to outpace traditional ad spends during the year, while certain traditional segments witnessed a fall in ad revenues.

While the economy felt the effects of a slowdown during the second half of 2019, the M&E sector continued to grow at a faster pace than India’s GDP, driven primarily by growth in subscription revenues.

Driven by the ability to create direct-to-customer relationships, the sector firmly pivoted towards a B2C operating model, changing the way it measured itself.
Ashish Pherwani
EY India Media & Entertainment Leader

As entertainment and information options grew and choice increased for consumers, success was increasingly driven by abilities around consumers Acquisition, Retention and Transaction (ART). Technology was increasingly applied to support and monetize creativity better, at a global level.

The current situation around the coronavirus will, unfortunately, impact the 2020 estimates we have provided in this report, and we will update the same as soon as we can reasonably estimate its impact.

M&E: Key trends in 2019

Growth was driven by direct-to-customer segments

Online gaming: Continued as the fastest growing segment on the back of transaction-based games, mainly fantasy sports, and a 31% growth in online gamers

Digital advertising: Aggregated the largest share of marketers’ incremental and performance-driven advertising investments, growing 24% in 2019 to command a highest-ever share of 24% of total advertising revenues, up from 20% in 2018

Digital subscription: Grew over 100% in 2019 as sports and quality video content went behind a paywall and telcos paid more to bundle content with their data packs

Animation and VFX: This segment benefited due to increased demand from domestic content companies as well as international content companies producing ever larger amounts of content for both developed and growth markets

Live events: Continued to entertain India in 2019, with a growth in the number of event IPs launched, international formats coming into India, growth in ticketed events and digital activation

Filmed entertainment: This segment saw its best ever domestic theatrical revenues (a record 17 Bollywood films crossed INR100 crore) and growth in value of digital rights, though overseas revenues fell slightly

Music: Grew on the back of digital streamers reaching around 200 million due to the launch of a number of audio streaming platforms in 2019 and better implementation of performance rights collection mechanisms

Television: Advertising saw 5% growth in 2019 due to large impact properties like the ICC World Cup and the general elections, while subscription grew 7.5% due to increase in end-customer prices

OOH: In this, the growth in 2019 was led by airport advertising, metro station naming rights and Indian Railways’ push to increase non-fare revenues

Print: Readership fell marginally in 2019 and consequently witnessed 3% revenue degrowth, with advertising revenues falling 5% but subscription revenues increasing 2%

Radio: The segment witnessed 7.5% decline in revenue on account of the slowdown in economic activity, which impacted ad spends from retail advertisers in the second half of 2019

While television and print retained their positions as the two largest segments, digital media overtook filmed entertainment in 2019 to become the third largest segment of the M&E sector. Digital subscription revenues more than doubled from 2018 levels and digital advertising revenues grew to command 24% of total advertising spend.

The M&E sector grew 9% in 2019 to reach INR1.82 trillion

  • The Indian M&E sector reached INR1.82 trillion (US$25.7 billion), a growth of 9% over 2018
  • We expect it to reach INR2.42 trillion (US$34 billion) by 2022 at a CAGR of 10%
  • Digital media overtook filmed entertainment in 2019 to become the third largest segment of the M&E sector; we expect it to overtake print by 2021

(2020 estimates have been created prior to the advent of the coronavirus and we will update the same once we are in a position to quantify its impact)

Summary

The sector continues to grow at a rate faster than the GDP, driven primarily by growth in subscription-based business models and India’s attractiveness as a content production and post production destination.

About this article

By

Ashish Pherwani

EY India Media & Entertainment Leader

EY India M&E sector leader with more than 20 years of experience, serving companies in all the M&E sub-sectors. A mentor and coach to teams.