The Indian media and entertainment (M&E) sector fell 24% in 2020. According to a new report released on Friday—which is jointly published by the industry body FICCI and the multinational professional services firm Ernst & Young (EY)—India’s M&E sector fell to ₹1.38 trillion and is expected to grow to ₹1.72 trillion in 2021.
The ₹436 billion fall, however, comes on the back of diminishing revenues from the filmed entertainment, print, and television segments. The only two segments that witnessed growth were digital and online gaming. Their contribution to the M&E sector increased from 16% in 2019 to 23% last year and they added a whopping ₹26 billion to the industry.
“While television remained the largest segment, digital media overtook print, and online gaming overtook a disrupted filmed entertainment segment in 2020,” the report said.
Sanjay Gupta, chairman, FICCI Media and Entertainment Committee, pointed out that India’s diversity and scale will continue to fuel the growth of traditional media, but equally exciting is the fact that there are a number of new and big opportunities for M&E businesses. “And we’re already seeing the industry embrace these changes and chart a new growth path. Today, content creation and storytelling are much more diverse and come from all parts of the country. New distribution models and monetisation strategies are evolving across both large and small screens,” he says.
When it comes to the key segments, television—which is the largest one—saw a 22% fall in advertising revenues due to highly discounted ad rates during the lockdown months. The segment also witnessed a 7% fall in subscription income, led by the continued growth of free television, reverse migration, and a reduction in ARPUs (average revenue per user) due to part implementation of NTO (New tariff order) 2.0. The NTO 2.0 seeks to protect consumers by capping tariffs for channel bouquets, price composition of the NCF, etc. A similar cap for the over-the-top (OTT) platforms do not exist yet, although it is to be seen what will happen to these platforms now that they have been brought under the ambit of the information and broadcasting ministry.
Digital subscription, on the other hand, grew immensely. Last year, 28 million Indians paid for 53 million OTT subscriptions, leading to a 49% growth in digital subscription revenues. The subscriber number in 2019 was 10.5 million. “Growth was led largely by Disney+ Hotstar which put the IPL behind a paywall during the year, increased content investments by Netflix and Amazon Prime Video, and launch of several regional language products. In addition, 284 million Indians consumed content which came bundled with their data plans,” the report said.
The print industry’s revenue decline was led by a 41% fall in advertising, along with a 24% fall in circulation revenues. English language newspapers were hit harder and struggled to get back their circulation post the pandemic, particularly in metros, while regional language newspapers recovered a larger portion of their lost circulation, according to the report. “The segment saw the establishment of a new lower-cost operating benchmark, with most print companies reducing costs by over 25%,” it added.
“This is the time for the sector to forego holding on to old ways of thinking and working, and its sense of complacency about what’s possible in the future. The opportunity is discontinuous. The answer to what we can do is nonlinear—we need to disrupt our old business models, our approach, our solutions, our marketing, and our distribution, and collaborate more closely with the government to harness the true potential of M&E and arrive at the necessary impetus and support,” Gupta argues.
One of the worst segments to be hit by the pandemic were films. “While theatrical revenues plummeted to less than a quarter of their 2019 levels, a portion of this loss was made up through higher digital rights revenues, which almost doubled during 2020 to ₹5 billion. However, the stoppage in production for over six months had its impact, which will now only recover once a healthy slate of films is made ready for release and the fear of stepping into crowded places subsides,” the report said. While the trend for direct-to-digital releases will continue, producers realised the importance of theatrical releases for large scale film productions, it added.
While the M&E sector usually grows faster than the GDP, it also falls more than GDP degrowth, given the discretionary nature of advertising. In 2020, when the GDP fell by 8%, advertising fell by over 25%, while the sector overall fell by 24%, according to the report.
However, the report also expects the M&E sector to rebound in 2021 and double to around ₹2.68 trillion by 2025. The report argued that different segments will take different periods of time to regain their 2019 (pre-pandemic) revenue numbers. For example, it could take one-two years for the TV, film, and music industry; two-three years for animation, VFX, and events; and more than three years for the print, radio and, out-of-home (OOH) segment to recover.
“[The year] 2020 saw demand patterns shift as consumers actively sought alternatives and had the time to try new things. Aided by the growth of digital infrastructure, digital media adoption accelerated. Consequently, consumption patterns shifted and increased across online news, gaming and entertainment. The supply side transformed as M&E companies took the opportunity to reinvent themselves,” says Ashish Pherwani, M&E sector leader, EY.
According to Pherwani, appointment viewing on news television, gamification on e-commerce apps, circulation transformation in print companies, short video on OTT platforms, interactivity, and brand solutions from radio companies were some of the many strategic shifts that were seen in 2020.