Expectations of the media and entertainment sector

‘Nobody Knows Nothing’ – While this has always been quoted in a different context about hitting the bull’s eye at the box office of feature films, it couldn’t be truer for the media and entertainment industry currently reeling from the coronavirus pandemic. The film industry had barely managed to find its footing with 50% occupancy in cinemas just recently, buoyed by some good releases since Diwali and a solid lineup of films in 2022 that looked promising. The third wave of the highly transmissible omicron variant has again been a hurdle for the entertainment industry.
Industry reports note that market size has shrunk in each of the sectors with the negative growth in FY20-21. And now FY21-22 with some sectors hit harder than others, with the exception of the streaming and online gaming industry, which have seen phenomenal growth even during shutdowns.

Although the motion picture industry is a torchbearer of the media and entertainment industry and enjoys the maximum media coverage due to popular opinion, everyone’s business contribution to the sector is in descending order below –

  • Broadcasting
  • To print
  • Games
  • Digital
  • audio
  • Filmed entertainment
  • Animation VFX and post-gaming comics
  • Rooms/live shows
  • Last year’s budget left the media and entertainment sector devoid of any major relief or action, as our industry is not seen as a strong competitor contributing to national growth, especially in business inherited or traditional in decline in the media. It is high time that the contribution of the indirect impact of the media and entertainment sector on other sectors like tourism and its showcase of the soft power of Brand India is well harnessed internationally like our American counterparts and Chinese. We have a long way to go.

    However, AR and VR startups that promote the use of technology in media companies could see growth from investments and funding made in 2021.

    The VFX and post-production business largely depends on live action and animation in films and OTT/broadcast projects. Visual effects and postal services studios have managed to quickly switch to working from home via the cloud to ensure content reaches homes directly via streaming services while still shooting with a small crew and security measures. VFX and post installs have recovered slightly in 2021 after the 2020 washout, with increased demand for high-end VFX in movies and digital shows.

    As theaters have started to recover again, the current pandemic situation has forced them back into survival mode. Since movie theater revenues for big budget productions like RRR, Lal Singh Chadda cannot be fully monetized through the burgeoning digital/OTT streaming platforms and exhibition/distribution ecosystem has need for tentpole content as the third wave subsides and rebuilds pent-up audience demand.

    The entertainment industry generally depends on the general sentiment of the public. Going to movies, spending on family entertainment happens when the overall economy grows.

    Likewise, the entertainment sector is usually at the bottom of the government’s list of budgetary priorities, the main objective of which is to ensure livelihoods followed by recovery and growth after two devastating years of the pandemic. Our sector directly and indirectly employs livelihoods and the budget must ensure that it at least protects the livelihoods of those cogs involved in turning the now stuck wheels.

    With major consolidation in the broadcast space with Disney and Foxstar, Sony and Zee and among Hollywood’s major international studio networks, there is a gradual changing of the guard with traditional film and media companies being put challenged by The New Order with the likes of Netflix, Amazon, Google, and Facebook.

    With a lot of catching up to do to overcome the negative growth, the budget will have to tackle the weak spots in the industry for the badly affected sectors. Some important addressable pointers could be –

    — High rates of GST levied on shows and theater tickets

    — Relaxation of the percentage of GST taxes for a brief period until the industry catches up to its pre-pandemic performance,

    – AVGC industry recognition as an entertainment infrastructure construction company that contributes to Brand India

    — Support for local and regional content to encourage local and regional brands

    — Support for the film production and cinema exhibition sectors, as both have been hit hard during the pandemic

    In summary, it is probably more prudent for general industry sentiment to focus on facilitating policy changes for the entertainment sector throughout the year rather than pinning all hopes on the annual budget where l he main objective of the government is to focus on livelihoods to build and maintain the economy and the growth of the country, which ultimately helps spending in our sector.

    —The author, Nishit Shetty is the Director of Business Development at Red Chillies VFX. Opinions expressed are personal

    (Edited by : Ajay Vaishnav)

    First post: STI