Digital Likely To Propel Media & Entertainment’s Growth To Rs3 Tn By 2026

Online gaming is expected to reach INR388 billion by 2026; The FICCI-EY report titled '#Reinvent: India's media & entertainment sector is innovating for the future', launched at the FICCI FRAMES 2024, revealed that the Indian M&E sector grew by 8% in 2023, reaching INR2.3 trillion (US$27.9 billion)

Kevin Vaz, Chairman, FICCI Media and Entertainment Committee and Chief Executive Officer - Broadcast Entertainment, Viacom 18

Ashish Pherwani, Partner and Media & Entertainment Leader, EY India

FinTech BizNews Service   

Mumbai, March 5, 2024: The latest FICCI-EY report titled ‘#Reinvent: India’s media & entertainment sector is innovating for the future’, launched at the FICCI FRAMES 2024 in Mumbai, revealed that the Indian M&E sector grew by 8% in 2023, reaching INR2.3 trillion (Tn), 21% above its pre-pandemic levels in 2019.

New media, comprising digital and online gaming, emerged as the frontrunner in growth, contributing INR 122 billion of the overall increase of INR 173 billion, and consequently, increased its contribution to the M&E sector from 20% in 2019 to 38% in 2023.

Experiential (outside the home and interactive) segments continued their strong growth in 2023, and consequently, online gaming, filmed entertainment, live events, and OOH media segments grew at a combined 18%, contributing 48% of the total growth. With the exception of television, which experienced a marginal decline of 2%, all other segments experienced positive growth in 2023.

Mr Kevin Vaz, Chairman, FICCI Media and Entertainment Committee and Chief Executive Officer - Broadcast Entertainment, Viacom 18 said, “India is a unique market where the M&E sector distinguishes itself through a harmonious fusion of tradition and innovation. Here, technology-enhanced entertainment channels, OTT platforms, AI-powered newsreaders, traditional print media, flagship films, and short-form content not only coexist but thrive together, showcasing the vibrant diversity and dynamic growth of our industry. The Government of India’s thrust on improving digital infrastructure in the country combined with our ambition to be at the forefront of the next big technological thrust in media and entertainment, our sector is primed for a massive transformation.”

Mr Ashish Pherwani, Partner and Media & Entertainment Leader, EY India said, “I believe the M&E sector is at the “inflection point” we foresaw in 2018, with the dominance of digital channels over traditional media. In 2023, new media comprised 52% of total advertising revenues, yet, unlike in many other countries, Indian traditional media also grew. This underscores the unique Indian market where while we are witnessing a seismic shift towards digital consumption, there is still adequate headroom for traditional media to grow.”

Key highlights:

Indian advertising reached INR1.1 trillion:

Digital advertising grew 15% in 2023 and surpassed traditional advertising for the first time. Social, sports, e-commerce and SME advertisers will continue to drive the growth in the sector moving forward.

A billion screens by 2030:

India is expected to have almost a billion active screens by 2030. Of these, around 240 million will be large (TV, laptop, PC), while the remaining will be small (mobile phones, phablets). Pay TV, Free TV, and Connected TV are expected to emerge as significant markets, each comprising between 60 to 80 million homes. The 3:1 ratio in favour of mobile phones will sustain the demand for short videos and social commerce.

Online gaming is expected to reach INR388 billion by 2026:

The segment will see growth across all its verticals, including esports, fantasy sports, casual gaming, and other games of skill to reach an estimated 150 million daily users. Revenue growth will be led by mobile-based real-money gaming and casual gaming.

Segmental performance in 2023

• Television: Linear viewership increased by 2% over 2022, the number of smart TVs connected to the internet each week rose to 19 to 20 million, up from around 10 million in 2022. Television advertising declined by 6.5% due to a slowdown in spending by gaming and D2C brands, impacting revenues for premium properties. The Hindi speaking market (HSM) experienced softness, resulting in a 3% overall ad volume de-growth. However, subscription revenue saw growth after three years of decline, driven by price increases, despite a decrease of two million pay TV homes.
• Digital advertising: Digital advertising grew 15% to reach INR 576 billion, constituting 51% of total advertising revenues. This figure includes advertising by SME and long-tail advertisers totalling over INR 200 billion, and advertising earned by e-commerce platforms amounting to INR 86 billion.
• Digital subscription: Digital subscription grew 9% to reach INR 78 billion accounting for a third of 2022’s 27% growth, as premium cricket properties were moved in front of paywalls. Paid video subscriptions decreased by two million in 2023 to 97 million, across 43 million households in India. However, paid music subscriptions grew from 5 million to 8 million, generating INR 3 billion, while online news subscriptions generated INR 2 billion.
• Print: Contrary to the global trend, print media continued to thrive in India, with advertising revenues growing by 4% in 2023. Notably, there was significant growth in premium ad formats, as print remained a preferred medium for affluent metro and non-metro audiences. Subscription revenues also grew by 3% due to rising cover prices.
• Online gaming: The segment’s growth slowed to 22% in 2023, reaching INR 220 billion. It surpassed filmed entertainment to become the fourth largest segment. India saw over 450 million online gamers, with approximately 100 million playing daily. Over 90 million gamers paid to play, with real money gaming comprising 83% of segment revenues. Larger players absorbed the impact of a higher GST levy, hurting their margins but safeguarding growth.
• Film: The segment grew 14% to reach INR 197 billion in 2023. Over 1,796 films were released in 2023, and theatrical revenues reached an all-time high of INR 120 billion. The number of screens grew 4%. 339 Indian films were released overseas.
• Animation and VFX: The Hollywood writers’ strike impacted global supply chains, and consequently, the segment grew just 6% in 2023. Potential mergers and falling ad revenues also reduced the slate of animated content produced for broadcast in India. A revival in demand in the second half of the year led to growth, boosted by the trend of using more VFX in Indian content.
• Live events: The organized segment grew 20% exceeding pre-pandemic levels. Growth was driven by government events, personal events, weddings, and ticketed events, including several international formats and acts which came to India.
• OOH: OOH media grew by 13% in 2023, surpassing its 2019 levels. Growth was led by premium properties and locations.  Active digital OOH screens crossed 1,00,000 contributing 9% of total segment revenues.
• Music: The Indian music segment grew by 10% to reach INR 24 billion in 2023, slower than previous years as certain music OTT platforms went pay and stopped or reduced their free services. 87% of revenues were earned through digital means, though most of it was advertising led on YouTube, there being around only 8 million paying subscribers despite music streaming’s reach of 185 million.
• Radio: Radio segment revenues grew by 10% in 2023 reaching INR23 billion. This growth was driven by increased retail and local advertising, as well as alternate revenue streams. Ad volumes increased by 19% in 2023 as compared to the previous year, although ad rates remained below their 2019 levels.

According to Kevin Vaz, Chairman, FICCI Media and Entertainment Committee, In 2024, digital media is poised for explosive growth, potentially overtaking television to become the leading segment of the M&E sector. This surge in digital media is forecasted to propel the M&E sector’s growth to a 10% annual rate, crossing INR3 trillion ($37.1 billion) by 2026. This growth is buoyed by a robust digital infrastructure, widespread adoption of OTT platforms, significant growth in the gaming segment, and the availability of cost-effective options for consumers.

Despite this digital boom, traditional media is also experiencing steady growth and thus India is a “Linear and Digital Market” rather than “Linear or Digital Market”. This resilience also serves as evidence of the enduring relevance of print, radio, out-of-home advertising, and regional television, illustrating India’s diverse media consumption habits.

India produces a staggering 200,000 hours of content annually. This includes over 1,700 films, 3,000 hours of premium OTT content, and 20,000 songs. It is noteworthy to acknowledge that Indian content has crossed international boundaries, captivating audiences in more than 160 countries and topping streaming charts on global platforms. Even within India the traditional boundaries separating regional and national content are increasingly becoming indistinct. This shift indicates a new era where local flavors and stories are showcasing the universal appeal of Indian storytelling.

The democratisation of content consumption will be further strengthened through supportive developments in the all-critical triad of infrastructure readiness, consumer market growth, and enabling public policies. India’s burgeoning talent pool in content creation which includes post-production, VFX, animation, and gaming, is transforming it as a hub for creative the industry. As we navigate towards a billion active screens by 2030, with mobile screens comprising over 75% of them, the need to innovate content creation, distribution, and monetization strategies becomes paramount.

The 2024 Report encapsulates the spirit of resilience, innovation, and collaboration that are the hallmarks of our M&E sector. As we navigate towards a bright and dynamic future, it is crucial to leverage the synergy of creativity and technology with forward-looking policy and regulatory regimes. This can position India as the content hub of the world - bringing its unique stories, rich culture, and diverse perspectives to the global stage.

According to Ashish Pherwani, M&E Sector Leader, Ernst & Young LLP: Consumption trends continued to favor digital media, social media, video and audio streaming and online gaming. Yet traditional media – regional television, print, radio, OOH and cinema – also grew and were profitable.

Although phone prices increased, India added over 30 million more smartphone users. I believe we are at that “inflection point” we have been speaking of since 2018, when digital finally overtakes traditional media. In 2023, new media comprised 52% of total advertising revenues, and digital subscription, if corresponding data charges are included, would also comprise a majority of

subscription revenues. 70% of the M&E sector’s growth in 2023 was driven by new media.

This report aims to understand the quality of change and tries to paint a picture of the next three years. We have included over a hundred ideas for businesses to consider, taking advantage of the many trends and opportunities we expect to see.