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Scaling Digital Heights

The media and entertainment industry grew by almost 13% in 2017 to reach INR 1.5 trillion, according to the FICCI – EY report 2018

he Indian media and entertainment (M&E) sector reached almost INR1.5 trillion ($22.7 billion) in 2017, a growth of around 13% over 2016. With its current trajectory, it is expect to cross INR 2 trillion ($31 billion) by 2020, at a CAGR of 11.6%.
The digital segment led growth, demonstrating that advertising budgets are in line with the changing content consumption patterns. The FICCI-EY report, ‘Re-imagining India’s M&E sector,’ launched at FICCI Frames 2018 in Mumbai, captured some key insights from this exciting and fast growing Indian M&E sector.
One of this was that the M&E sector continues to grow at a rate faster than the GDP growth rate, reflecting the growing disposable income led by stable economic growth and changing demographics. Subscription growth outpaced advertising growth in 2017 but advertising will continue to grow till 2020 led by digital advertising.
At FICCI Frames 2018, Sanjay Gupta, MD, Star India, challenged the present attendees to lift their standards of quality, change the way they use technology and increase its investments to bring India’s stories to more consumers around the world to help the INR 1,47,000 crore M&E industry prosper.
“Digital is unleashing the power of new screens. Ours is a country that has always been constrained by screens. There are only 9,000 theatres in the country. Then came TV, which grew phenomenally over three decades and today, there are 16 crore TV screens and we add more than one crore new screens every year. But, with the power of connectivity and low cost of data, in almost a click, over 35 crore more screens across the country have been lit up. And this journey has just begun,” he said.
Network18 Digital’s CEO, Manish Maheshwari, said that the data explosion in the past two years has changed the scenario of video consumption in India. The launch of Reliance Jio a year and half ago, especially, led to widespread adoption of 4G technology.
With more affordable smartphones coming to the market, Gupta stated that more than one crore new smart screens are added every month. “By the end of 2018, we would have added another 16 crore screens. This means that we will have 51 crore new screens on which us Indians will be engaging with all kinds of stories be it drama or sports, films or news. Within 24 months, we have moved up from 16 crore TV screens and 9,000 cinema halls to 67 crore screens. This is set to explode how we engage with stories – the time we spend, what we like, how deeply we follow them, and above all, how to have a two-way conversation with both stories and storytellers,” Gupta noted.
Minister Irani, too, felt that there was a need to highlight local and regional movies that can swatch through audiences across the country. “We don’t really talk about the capacity of our regional language films. How many countries can say that I have a Marathi box office hit like ‘Sairat’ or Prosenjit doing films that cut across India or we have had a legend like Sridevi who did films in 5 languages and was a superstar not only in Delhi, Mumbai but the entire nation? The more the expanse of content, the more the opportunities for local languages and local talent to come to the forefront. The beauty of our industry is that we are everywhere,” she emphasised.

GROWING DIGITAL AUDIENCE
The report estimates that approximately 1.5 million consumers in India today are digital only and would not normally use traditional media. It is expected that this customer base will to grow to ~4 million by 2020 generating significant digital subscription revenues of approximately 20 billion.
Going forward, micropayments, enabled through the Unified Payment Interface (UPI) and Bharat Interface for Money (BHIM) platforms developed by the National Payments Corporation of India (NPCI) will further accelerate subscription revenues for entertainment content.
FICCI president, Rashesh Shah said that the Indian M&E industry has been hitting new milestones and has stepped onto a matured phase at a growth rate of 11.6% CAGR. “The need is to promote India as an entertainment hub to the world, facilitate policy change for the betterment of the Indian M&E industry as well as create and encourage platform for business-to-business interface and dialogue,” he added.
Farokh Balsara, partner and M&E leader, EY India, stated, “Indian M&E sector reached INR 1.5 trillion in 2017 led by digital. With digital subscribers expected to reach 20 million by 2020, has Indian M&E reached its digital tipping point? We now need to re-imagine the future of Indian M&E sector.”
Ashish Pherwani, Partner and M&E Advisor Leader, EY India, “Growth in 2017 was led by the digital, film and animation as well as VFX segments. We expect sectors like digital and gaming to grow between two to three times by 2020.”

IDIOT BOX NO MORE
As per the FICCI and EY report, the TV and broadcast industry has a lot to cheer for. The TV industry grew from INR 594 billion to INR 660 billion in 2017, a growth of 11.2% (9.8% net of taxes). Advertising grew to INR 267 billion while distribution grew to INR 393 billion. It comprised 40% of revenues, while distribution was 60% of total revenues.
At a broadcaster level, subscription revenues (including international subscription) made up approximately 28% of revenues. Some key insights in this segment are that while advertising is 41% of the total revenues today, the report expects it to grow to 43% by 2020. There are over 30% households in India that are yet to get television screens, but being at the bottom of the pyramid, these households will tend to move towards first towards free and sachet products.
At FICCI-Frames 2018, there was an interesting panel discussion on the ‘Future of TV in India’, which included Raj Nayak, COO, Viacom18; Partho Dasgupta, CEO, BARC India; Ajit Mohan, CEO, Hotstar; MK Anand, MD and CEO, Times Network; Anuj Gandhi, CEO Indiacast; Ashish Pherwani, Partner EY; media veteran, Amit Khanna with senior M&E professional, Paritosh Joshi, moderating the session.
Nayak was optimistic about the medium’s future in India as the younger generation still is a TV consumer. “Cord cutting is actually a myth,” he said. “Viewers also consume the TV-type long-form content as much on larger screens as they do on digital platforms.”
Giving an example about the ease of doing broadcast business in India, Anand reminisced about the time when Mirror Now was launched and how Times Network had spent only 55 percent of what a normal channel launch would cost. “That would not have been possible three years ago. The digital growth has empowered broadcast businesses today by providing quality bandwidth and better connectivity among other things,” he added.
Dasgupta pointed out that a whopping 87 percent of urban Indians consume TV programming, while the number is only 57 per cent in rural parts of the country. He estimated that about 780 million people accessed TV regularly, which is set to rise.
While Mohan was representing a digital platform, he felt that TV content was a lot more effective. At the same time, he felt that digital offers better reach for TV-type content on digital. “A good number of people access TV content on digital platforms. “This proves that if the content is good, people are willing to pay for it,” he stated.
Talking about the distribution fraternity, Anuj Gandhi mentioned that ultimately content drives distribution and the consumer today is platform-agnostic. “Viewers will consume TV content and this consumption will grow; the pipe through which this content is distributed to them could be linear TV, digital, YouTube, Facebook or any other technology that might be developed later on,” he said.

LET’S GO DIGITAL
Digital media has grown significantly over the past few years, and continues to lead the growth charts on advertising. Subscription revenues are emerging and are expected to make their presence felt by 2020. In 2017, digital media grew 29.4% (27.8% net of the impact of GST) on the back of a 28.8% growth in advertising and a 50% growth in subscription. Subscription, which was just 3.3% of total digital revenues in 2016, is expected to grow to 9% by 2020.


250 million people viewed videos online in 2017 and expected to double to 500 million by 2020. Around 40% of total mobile traffic came from the consumption of video services in 2015. This figure is expected to touch 72% by 2020. 93% of time spent on digital videos is in Hindi and other regional languages. OTT subscription in India is expected to touch INR 20 billion by 2020.
While there is frenzy around digital content creation, the question that is topmost on most companies’ agendas is whether there is a sustainable business model around it. The currency that is used in digital is usually subscribers, users, download, monthly average users, and this is reflected in many trends in the world.
At the same time, if one were to look towards the West, 59% of the subscribers pay for the content they view, as compared to India where the number is around 3%. That again gives rise to the question is there merit in digital platforms as a business, since these calls for heavy investment.
When Karan Bajaj joined Discovery Communications as senior VP, APAC, last year, he recalled how there was pressure to launch an OTT platform. “Globally, many interesting models emerged in the digital world, but a lot of media attention is on aggregators, who aggregate content to become the top destination for viewers. They have to buy the most expensive TV content; including the most popular movies and popular sports shows,” he said.
He said that Discovery decided to adopt the other model, which was of a niche destination for people who are passionate for that nature of content. “That is why we launched Veer on our digital platform in February 2018 and I am happy that few people know about it, because I want only viewers who are love military content to watch it,” Bajaj stated.
New-age platforms are finding their footing in the constantly evolving media landscape, and learning to co-exist with traditional players. At the same time, as the business flourishes, it will have to contend with issues like piracy, lack of regulation, adoption of the latest deployment, etc. Different media companies are experimenting with a variety of business strategies, since a one-size-fits-all model is unlikely to work.

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