Indian Media and Entertainment Industry to See 27% Revenue Growth in FY22: Crisil

NEW DELHI : India’s media and entertainment (M&E) sector is expected to experience strong revenue growth of 27% to around ??1.37 lakh crore in 2021-2022, after contracting 26% this year, according to the rating agency Crisil.

Segments such as digital and television (TV) will have a relatively shorter time to rebound to pre-pandemic levels, while print, film, outdoor and radio would take longer.

Crisil Ratings Ltd director Nitesh Jain said advertising and subscription revenues contribute almost equally to overall M&E industry revenue, but since the former is strongly correlated with economic growth, the pandemic had a bigger impact on this one.

“Next fiscal year, with a strong economic rebound in cards, ad revenue is expected to grow 31% year-over-year and subscription revenue by around 24%,” Jain added.

The television segment – which contributes roughly half of the industry’s revenue – has made a full recovery and will show healthy growth over the next fiscal year. Advertising revenue contracted sharply initially, but recovered quickly thereafter, aided by the spread of new content, sporting events such as the Indian Premier League and a vibrant holiday season, Crisil Ratings Ltd said in a statement.

“When it comes to subscriptions, television held up even during the peak of the pandemic because people stayed inside,” he added.

The printing segment, which accounts for one-fifth of M&E turnover, is recovering, albeit at a much slower pace, and should only be able to fully rebound at the end of next fiscal year, a- he added.

“Print is losing advertising revenue share mainly to the digital segment. Circulation too, especially for the English language, could experience a loss of 8-10%, due to an increased preference for electronic papers in the subways. However, printing companies are restarting their cost structure and accelerating digital adoption to stay relevant, ”the rating agency added.

Declaring that digital has become the medium of choice, Crisil Ratings Ltd associate director Rakshit Kachhal said the pandemic has accelerated the adoption of over-the-top (OTT) platforms, online games, retail electronic, online learning, electronic and online papers. information platforms.

“This means that the attention of advertisers has shifted from traditional media to digital media. We expect digital segment revenues to grow 14-16% per year over the medium term. Its share of M&E revenues is expected to double to around 20% by the year. 2024 compared to last fiscal year, ”Kachhal added.

Credit profiles of large media companies would not be affected due to strong balance sheets, liquidity and rebounding income, while medium and small businesses could be under strain, Crisil Ratings citing analysis of more than 80 of them. they rated by the agency.

According to Crisil Ratings, the films segment, which contributes one sixth to the sector’s turnover, is one of the most affected segments, but the occupancy rate in theaters should improve with the deployment of the vaccination and a strong content pipeline.

“However, this segment will likely remain affected even into the next fiscal year due to standards of social distancing and fear of closed spaces,” he said, adding that other mainstream media, such as radio and the outside, experience persistent pain and are likely to take much longer. to recover.

Indeed, travel as well as advertising budgets for micro, small and medium-sized businesses – the main drivers of these segments – will remain limited even in fiscal year 2022, he said.

The rating agency said the credit profiles of small and medium-sized media companies have weakened and cash pressure could intensify for them if the recovery in advertising revenue is delayed.

However, Crisil said M&E firms have adopted aggressive cost rationalization initiatives. In addition, the change in consumer behavior brought about by the pandemic has accelerated the monetization opportunities for these players through the integration of digital media into their traditional businesses.

“Some of these aspects can lead to structural changes in the business models of the long-term monitoring and evaluation industry,” he said.

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