M&E Industry To Reach Rs 2 Trillion By 2020: FICCI - EY Report
According to the report, 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
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The 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 Rs 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.
These are some of the findings of thee FICC-EY report 'Re-imagining India's M&E sector,' which was launched at FICCI Frames 2018 in Mumbai..
According to the report, 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. The report states that subscription growth outpaced advertising growth in 2017 but advertising will continue to grow till 2020n led by digital advertising. 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.
Farokh Balsara, Partner and M&E Leader, EY India, stated, "Indian M&E sector reached INR1.5 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."
"Growth in 2017 was led by the digital, film & animation & VFX segments. We expect sectors like digital and gaming to grow between 2 to 3 times by 2020", added Ashish Pherwani, Partner and M&E Advisor Leader, EY India.
As per the report, the TV industry grew from INR594 billion to INR660 billion in 2017, a growth of 11.2% (9.8% net of taxes). Advertising grew to INR267 billion while distribution grew to INR393 billion. Advertising comprised 40% of revenues, while distribution was 60% of total revenues. At a broadcaster level, however, subscription revenues (including international subscription) made up approximately 28% of revenues.
As far as Print is concerned, the report states that Print accounted for the second largest share of the Indian M&E sector, growing at 3% to reach INR303 billion in 2017. Print media is estimated to grow at an overall CAGR of approximately 7% till 2020 with vernacular at 8%-9% and English slightly slower. This growth is expected despite the FDI limit remaining unchanged at 26% and therefore, restricting access to foreign print players and the imposition of GST at 5% on the advertising revenues of the print industry for the first time in history. While magazines contributed 4.3% to the total print segment, the segment was at largely status quo with not many significant new launches in 2017.
As per the report, the Indian film segment grew 27% in 2017 on the back of box office growth - both domestic and international - coupled with increased revenues from sale of satellite and digital rights. All sub-segments, with the exception of home video grew and the film segment reached INR156 billion in 2017. The Hindi films comprise the majority component of the Indian film segment. They contribute almost 40% of the net domestic box office (BO) collections annually, despite comprising only 17% of the films made. Films in 29 other Indian languages account for approximately 75% of the films released but they contribute approximately 50% to the annual domestic box office collections. Hollywood and international films comprise the balance. The top 50 films contributed approximately 97.75% of the total net box office collection. Box office collections of the top 50 films grew by 11.60% in 2017.
The FICCI-EY report also states that 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.