The media and entertainment sector grew at about 13% in 2017, and is expected to cross Rs 2 trillion by 2020, at an annual growth rate of 11.6%, according to a report from the Federation of Indian Chambers of Commerce Industry and EY. The report was released at the 2018 edition of FICCI Frames, an annual conference for the media and entertainment industry.

The growth was driven by the digital segment helped by a 50% jump in subscriptions, the availability of cheap data and an increase in internet penetration. In 2017, digital media grew 29.4%, the fastest among other media like film, TV, and print. The share of digital subscription in the total digital revenues, was about 3.3% in 2017 and is expected to grow to 9% by 2020.

The report on the media and entertainment industry released every year by FICCI has been titled ‘Re-imagining India's M&E sector’ in 2018. It estimates that approximately 1.5 million consumers in India today are digital only and don’t normally use traditional media. These consumers are expected to grow to 4 million.

The report finds that both audio and video digital subscriptions increased 50% to Rs 3.9 billion, in 2017.

It also says that there are over 30 video Over The Top (OTT) platforms currently in India. OTT platforms, which don’t require a pay-TV or traditional cable subscription, are riding the digital wave as Indians spend 30% of their total app time on entertainment. And, both global and local companies are battling it out to tap this segment.

Last month, Zee media launched ZEE5 while Reliance Industries acquired a stake in Eros Now and Alt Balaji to expand their digital footprint. Global giants like Amazon and Netflix are also aggressively trying to capture consumers in India.

About 250 million people viewed videos online in 2017, and the number is expected to double to 500 million by 2020, the reports notes.

As Tier 2 and Tier 3 cities will drive the growth, OTT players are moving towards regional language content to acquire a firm foothold in the market. Alt Balaji, for instance, is planning to launch shows in regional languages, while Amazon and Netflix are also offering localized content by partnering with Indian content providers.

But with the growth of broadband, pirated content may increase as well, impacting subscription revenue potential for OTT providers, the report notes. While, other challenges like poor Internet speed, infrastructure and a complex IP regime persist for the digital segment.