The crisis caused by the novel coronavirus is likely to speed up structural shifts in the media and entertainment (M&E) industry, according to a report by research agency India Ratings and Research (Ind-Ra).
Broadcasters, movie exhibitors, and print media will be most impacted where as multiple system operators (MSOs), broadband players and electronic media will stay strong due to shifting consumer preferences, says the report.
The report further says that over-the-top and digital platforms are set to see their market shares rising. With broadcasters being unable to telecast new content, OTT platforms such as Netflix, Amazon, Hotstar, Voot, etc., primarily used by the young urban population, could make inroads into higher age-group audiences and audiences in tier-2 and tier-3 cities.
“Ind-Ra expects the penetration of over-the-top (OTT) platforms (against TV base) and digital platforms (against print media) to gradually rise, albeit not challenging the supremacy of traditional platforms such as TV and print media,” it said.
As footfall in multiplexes is likely to take a long time to normalize, small producers may increasingly consider releasing movies directly on OTT platforms, says the report. A gradual recovery for movie exhibitors is expected in the second half of the current financial year, but this view holds only if there is no escalation of cases and extension to the lockdown.
The agency expects the space to see consolidation with single screens closing due to financial stress, benefiting multiplexes.
A weak outlook on ad revenue is also set to hurt both broadcasters and movie exhibitors. Ind-Ra estimates that about “21% of traditional ad-revenue (TV, print, outdoor advertising) comes from the high risk sectors (automobiles, real estate & construction, travel & tourism and durable goods), with the exposure being highest for outdoor advertising (38%) and lowest for TV advertising (16%)”. Hence, recovery will be prolonged for them in FY21 even after the lockdown is lifted.
When it comes to print media, Ind-Ra says that the circulation has been impacted significantly, because of which some subscribers may shift permanently to digital media, negatively impacting circulation revenues (typically 30% of overall revenues). Also, news-print sourcing could take some time to normalise. “As such, volatile news-print cost remains a key source of operating risk,” it says. As much as 25% of total advertising spend in print media in FY20 is attributable to high-risk sectors, Ind-Ra estimates. “However, the actual adverse impact on advertising spends might be sharply higher, because of limited circulation in 1HFY21,” Ind-Ra says in its analysis.