Media and Entertainment Industry

Introduction

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making significant strides. Proving its resilience to the world, Indian M&E industry is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenue. According to a FICCI-EY report, the advertising to GDP ratio is expected to reach 0.4% by 2025 from 0.38% in 2019.

Market Dynamics

According to the FICCI-EY report 2021, the media and entertainment business is estimated to grow 25% to reach Rs. 1.73 trillion (US$ 23.29 billion) in 2021.

According to an EY report, the Indian media and entertainment (M&E) sector stood at Rs. 1.38 trillion (~US$ 19 billion) in 2020 and is estimated at Rs. 1.73 trillion (~US$ 23.7 billion) in 2021. Further, it is projected to grow to Rs. 2.23 trillion (~US$ 30.6 billion) by 2023 due to acceleration of digital adoption among users across geographies.

Television would account for 40% of the Indian media market in 2024, followed by print media (13%), digital advertising (12%), cinema (9%), and the OTT and gaming industries (8%).

The market is projected to increase at a CAGR of 17% between 2020 and 2023.

In FY20, digital and online added revenue stood at Rs. 26 billion in the M&E sector and their contribution to the sector increased to 23% in 2020 from 16% in 2019.

Within the M&E sector, Animation, Visual Effects, Gaming and Comic (AVGC) sector is growing at a rate of ~29%, while the audiovisual sector and services is rising at the rate ~25%; is recognised as of one of the champion sectors by the Government of India. The AVGC sector is estimated to grow at ~9% to reach ~Rs. 3 lakh crore (US$ 43.93 billion) by 2024, stated Union Minister of Commerce & Industry, Consumer Affairs & Food & Public Distribution and Textiles, Mr. Piyush Goyal.

Advertising revenue in India is projected to reach Rs. 915 billion (US$ 12.98 billion) in 2023, from Rs. 596 billion (US$ 8.46 billion) in 2020.

India’s subscription revenue is projected to reach Rs. 940 billion (US$ 13.34 billion) in 2023, from Rs. 631 billion (US$ 8.95 billion) in 2020.

According to 'India: Online Video Trends and Omdia Consumer Research Highlights' report published by Omdia (published in 2021), the Indian SVOD market, with OTT video subscriptions, reached ~62 million in 2020 from ~32 million in 2019. According to EY-Parthenon, India’s publishing industry is likely to reach Rs. 80,000 crore (US$ 10.74 billion) by 2024.

Key growth drivers included rising demand for content among users and affordable subscription packages.

The Indian gaming industry stood at US$ 930 million in 2020 and is expected to reach US$ 3.8 billion by 2024. The online gaming market in India is projected to reach Rs. 155 billion (US$ 2.12 billion) by 2023, from Rs. 76 billion (US$ 1.08 billion) in 2020, due to rapid increase in consumption.

The music industry is expected to reach Rs. 23 billion (US$ 330 million) by 2023, from Rs. 15 billion (US$ 210 million) in 2020 at a CAGR of 15% between 2020 and 2023. According to a study conducted by Kantar and VTION, an audience measurement and analytics company, Gaana, the streaming service owned by Times Internet Ltd., had 30% market share, followed by JioSaavn (24%), Wynk Music (15%), Spotify (15%), Google Play Music (10%), and others (6%) in 2020.

Growth of the sector is attributable to the trend of platform such as YouTube that continues to offer recent and video content-linked music for free, which is expected to drive the paid OTT music sector reaching ~5 million end-users by 2023, generating revenue of ~Rs. 2 billion (US$ 27 million).

By 2025, the number of connected smart televisions are expected to reach ~40-50 million. 30% of the content viewed on these screens will be gaming, social media, short video and content items produced exclusively for this audience by television, print and radio brands. In the second quarter of 2021, smart TV shipments from India increased by 65% YoY, due to rising expansion activities adopted by original equipment manufacturers (OEMs) for their smart TV portfolios.

According to the FICCI-EY media and entertainment industry survey, those who watch online videos through bundled packages (online video services bundled with mobile and broadband connections) will account for half of all online video viewers (399 million) by 2023, up from 284 million in 2020.

As of 2020, India registered ~803 million online video viewers, including streaming services and videos on free platforms such as YouTube. Mobile video viewers stood at 356 million in 2020, driven by rising number of users preferring video content over the last few years.

OTT video services market (video-on-demand and live) in India is likely to post a CAGR of 29.52% to reach US$ 5.12 billion by FY26, driven by rapid developments in online platforms and increased demand for quality content among users.

Recent development/Investments

• In the second quarter of 2021, smart TV shipments from India increased by 65% YoY, due to rising expansion activities adopted by original equipment manufacturers (OEMs) for their smart TV portfolios.
• In September 2021, Zee Entertainment Enterprises (ZEEL) announced a plan to merge with Sony Pictures Networks India. As part of this agreement, Sony plans to invest US$ 1.57 billion in the merged entity.
• In September 2021, Netflix India signed a multi-year agreement with Excel Entertainment to strengthen its original series share in India.
• In September 2021, Reliance Entertainment signed a 10-film agreement with T-Series at a transaction value of Rs. 1,000 crore (US$ 135.61 million).
• In July 2021, WinZO, a leading gaming and entertainment platform, secured US$ 6 million in a Series C investment round that was headed by Griffin Gaming Partners of California, bringing the company's total capital raised to US$ 90 million.
• In July 2021, the Maharashtra Film, Stage and Cultural Development Corporation (MFSCDC), also known as the Dadasaheb Phalke Chitranagari or Film City in Mumbai's Goregaon, issued an invitation for expressions of interest (EoI) to develop infrastructure on its premises.
• In June 2021, Netflix announced its plan to open its first live-action, post-production facility in Mumbai. The facility—with 40 offline editing rooms that will be used by showrunners, directors, editors and sound designers—will become fully operational by June 2022.
• In June 2021, Fujifilm India and Insight Print Communications (Insight Group) joined forces to innovate and expand top-of-the-class solutions for the graphic arts portfolio.
• In May 2021, Kwalee, a UK-based game developer, announced to invest funds worth US$ 30 million, over the next five years, in its operations to expand in the Indian market.
• In May 2021, Mediabrands launched Mediabrands Content Studio (MBCS) in India. The company integrated its content division with MBCS India to cater to clients more efficiently.
• In May 2021, MBCS signed a production partnership with VICE Media, to strengthen its capabilities and position in India.
• In May 2021, Amazon India launched miniTV, a new video streaming service for its users to further strengthen its position in the country.
• In May 2021, HOTOTT Entertainment announced its plan to launch ‘HOTOTT’, a streaming service app, by mid-June 2021 to expand in the country.
• In April 2021, Zee Entertainment signed a deal with Tokyo Broadcasting System Television (TBS) in Japan to produce diverse content for India and Japan and the global market.
• In April 2021, InMobi Exchange launched in-game ads to target premium mobile users with advertisements such as electronic advertisement boards, in-game sports stadium, e-sports arena, hyper-casual gaming room, etc.

Government Initiatives

The Telecom Regulatory Authority of India (TRAI) is set to approach the Ministry of Information and Broadcasting, Government of India, with a request to Fastrack the recommendations on broadcasting, in an attempt to boost reforms in the broadcasting sector. The Government of India has agreed to set up National Centre of Excellence for Animation, Gaming, Visual Effects and Comics industry in Mumbai. The Indian and Canadian Government have signed an audio-visual co-production deal to enable producers from both the countries exchange and explore their culture and creativity, respectively.

In June 2021, the Union Ministry of Information and Broadcasting notified the Cable Television Network (Amendment) Rules, 2021, which aims to establish a three-layer statutory mechanism for citizens to raise grievances with respect to broadcasted content.

As part of the expansion to include all digital platforms and digital (OTT) players under a single roof, in May 2021, the Indian Broadcasting Foundation (IBF) announced the move to be renamed as the Indian Broadcasting and Digital Foundation (IBDF).

As per the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, IBDF would also form a self-regulatory body (SRB) soon.

On February 25, 2021, the government outlined the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021 to establish a progressive institutional mechanism and a three-tier grievance redressal framework for news publishers and OTT platforms on the digital media.

In February 2021, the digital entertainment committee of the Internet and Mobile Association of India (IAMAI) finalised a code of conduct to form the basis for self-regulation code for OTT content. The code has been endorsed by 17 OTT platforms including Netflix, Amazon Prime Video, Disney+ Hotstar, ZEE5 and Voot.

In February 2021, Prasar Bharati (India) and PSM (the official State Media of Maldives) inked an agreement to facilitate collaboration and capacity building in the field of broadcasting.

Digital audio–visual content including films and web shows on over-the-top (OTT) streaming platforms, as well as news and current affairs on online platforms, have been brought under the Ministry of Information and Broadcasting in November 2020.

Road Ahead

Indian M&E industry is on an impressive growth path. The industry is expected to grow at a much faster rate than the global average rate.

Growth is expected in retail advertisement on the back of several players entering the food and beverages segment, E-commerce gaining more popularity in the country, and domestic companies testing out the waters. Rural region is also a potentially profitable target.

Note: Conversion rate used for September 2021 is Rs. 1 = US$ 0.014

References: Media Reports, Press Releases, Press Information Bureau, Department for Promotion of Industry and Internal Trade (DPIIT), Crisil report

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.