Two years ago, consulting firm PwC’s annual report on media and entertainment did not make a mention of OTT (over-the-top) video as a potential revenue stream. Its latest report, Global Entertainment & Media Outlook 2019-2023 estimates that the Indian OTT market for companies like Netflix, ALT Balaji and Hotstar will grow from ₹4,464 crore in 2018 to ₹11,976 crore in 2023, a CAGR of 21.8%. During that period, India is also slated to be the eight biggest OTT market overtaking South Korea.
The annual report, in its 20th edition, estimates that the overall Indian entertainment and media industry that counts everything from cinema, radio, Internet advertising, print media, TV and home video, advertising, video games and e-sports to grow to ₹421,373 crore, growing at a CAGR of 11.28% between 2018 and 2023. For a comparison, the overall revenue of the sector was only ₹91,800 crore in 2013, with 40% of the revenue coming from television and a quarter from the print media.
Apart from OTT, strong growth is expected in internet advertising, which grew to ₹8,150 crore in 2018, a 40% jump over the previous year. The Cricket World Cup and the election in 2019 is expected to give further momentum to this stream of revenue, growing to ₹18,845 crore by 2023. Revenues from music which had stagnated over the years, is finally expected to show some traction as paid streaming services like Gaana and Spotify gain traction. In fact, for the first time in over a decade, revenue from music is expected to grow faster than the overall industry. By 2023, music revenue are expected to hit ₹10,858 crore in revenue, growing by 13.5% CAGR.
The report says, as consumer change their consumption habits, four priorities are largely shaping the strategy of companies in the sector. Firstly, companies are realising that one size does not fit all as more and more consumers want not just personalised content but also different options for payment. Secondly, with the internet, the number of consumer touch points is expanding and this is forcing content creators and distributors to devise ways to meet consumers at the point of consumption.
Thirdly, as technological innovation introduces a new era of personalised computing, companies want to leverage artificial intelligence to understand individual tastes and consumption habits. The outlook forecasts that VR (virtual reality) will be the fastest-growing segment overall. Finally, as personal data hygiene becomes key, trust and regulation will remain pivotal. To ensure an healthy ecosystem, it would be necessary for companies to go beyond regulatory compliance and build trust by being transparently and responsibly with customers’ data.
However, India would continue to remain a “traditional” market in several key areas. For example, in 2023, globally internet advertising is expected to account for 54.7% of all advertising, in India it’s share will be only 22%. Again, while OTT is expected to grow fast, it is expected to account only 8% of the revenues and TV will account for 81%, nearly the same it is today. OTT’s increased share will at the cost of cinema, which loose a bit of ground in the revenue sweepstakes.