Media and entertainment sector expected to grow by 11.6% to reach Rs 2 trillion by 2020

The M&E sector reached around Rs 1.5 trillion in 2017, a growth of around 13% from 2016, according to a report by lobby group Federation of Indian Chambers of Commerce and Industry (Ficci). and the consulting firm EY.

The report was launched at the annual media and entertainment industry event Ficci Frames in Mumbai on Sunday.

Undoubtedly, this is a growth driven by digital media which recorded the highest and most phenomenal figures of the year, with a growth of 29.4% in 2017. This includes a growth of 28.8% advertising and 50% growth in subscriptions. The latter, which represented only 3.3% of total digital revenues in 2016, is expected to reach 9% by 2020.

“The Indian M&E sector reached Rs 1.5 trillion in 2017, driven by digital,” said Farokh Balsara, Partner and Head of M&E, EY India in a statement. its digital tipping point? We must now rethink the future of India’s M&E sector. »

Subscription over-the-top (OTT) streaming services have flooded the Indian market over the past two years with around 30 players vying for the public’s attention. These include both US services like Amazon Prime Video and Netflix as well as a host of local platforms like Balaji Telefilms’ ALTBalaji and those owned by broadcast networks like Star India’s Hotstar and Sony Entertainment Television’s SonyLIV.

OTT subscription in India is expected to hit Rs2,000 crore by 2020. And recent investments from companies such as Reliance Jio, which already has stakes in Network18, ALT and film studio Eros International, will make media convergence a reality. With more than 300 million cell phones connected to the Internet and falling prices, the presence of digital media in the country is only expected to grow.

Around 250 million people watched online videos in 2017 and these figures are expected to double to 500 million by 2020. Around 40% of total mobile traffic came from video service consumption in 2015 and this figure is expected to reach 72% by 2020. Ninety-three percent of digital video time is in Hindi and other regional languages.

Among traditional forms of entertainment, movies grew by the largest share – 27% in 2017 to global figures of Rs 15,600 crore with box office collections of top 50 movies growing by 11.6% .

The report attributes the growth to domestic and international box office revenue, and the latter can be attributed to the phenomenal success of films like Dangal which grossed around Rs 2,000 crore worldwide, of which Rs 1,200 crore alone in China.

This was accompanied by an increase in returns from ancillary streams such as satellite TV and digital, with home video remaining the only segment not to show growth. While regional cinema has driven growth in terms of number of releases, Hindi films continue to make up the majority of the Indian film segment, contributing nearly 40% of net domestic box office revenue each year, although they represent only 17% of the films made. .

The number of Hindi films crossing the Rs 100 crore mark was the highest in 2017 for the past five years. Films in 29 other Indian languages, while accounting for 75% of total films released, together contributed only 50% to annual domestic box office receipts. The number of screens, an age-old challenge for the Indian film industry, increased slightly from 9,481 in 2016 to 9,530 in 2017.

Television, meanwhile, grew by 11.2% from Rs 59,400 crore to Rs 66,000 crore in 2017, with advertising reaching Rs 267 billion and accounting for 40% of revenue and distribution reaching Rs 39,300 crore and constituting the remaining 60%. . At the broadcaster level, however, subscription revenues (including international subscriptions) accounted for approximately 28% of revenues.

The report predicts that advertising will reach 43% of total revenue by 2020 from its current contribution of 41%.

Print remained largely static, growing 3% to Rs 30,300 crore in 2017. India’s reader base stands at 395 million, or 38% of the population, after growing by 110 million over the past three years. The rural reader base (52%) is higher than urban (48%). Print media is estimated to grow at an overall CAGR of around 7% through 2020 with vernacular publications at 8%-9% and English at slightly slower rates.

This growth is expected despite the maintenance of the 26% limit on foreign direct investment (FDI), restricting access to foreign printers and the imposition of a 5% GST on advertising revenue from the printing industry. the printing press.

India’s M&E sector has seen a relatively new trend in deal activity with emerging segments such as gaming and digital gaining traction, while deal activity in traditional media segments has slowed down, says The report.

The slowdown can be partially attributed to the challenges facing the advertising segments of the industry due to demonetization and the GST which was implemented in July last year. Overall, the number of deals in the M&E sector decreased from 56 deals in 2016 to 40 in 2017. Additionally, the total deal value was also less at $1.26 billion in 2017 compared to to $2.86 billion in 2016.

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