India’s media and entertainment (M&E) industry was growing steadily at a CAGR of 11.5% between FY15 – FY19 and was valued at INR 1,631 billion in FY19. Economic slowdown and the impact of Covid-19 pandemic has thrown the M&E sector from its growth trajectory and slowed down its growth rate to 7.4% in FY20, according to a KPMG report.
Extended lockdowns and declining consumer consumption created a material adverse impact on India’s M&E sector leading to its contraction by 20% points in FY21. Decline in major segments like print, TV, films, events and outdoor entertainment has driven the negative growth, while accelerated growth in digital and gaming segments brought in some positivity.
The report also predicts that the M&E sector will bounce back with a growth of 33.1% (over FY21) in FY22 to be valued at INR 1.86 trillion, riding on the swelling success of digital and gaming segments. Considering the fall in India’s GDP, these numbers are not very disheartening and with the future projections, the industry outlook appears to be quite bright.
M&E during Covid times
With the onset of Covid-19, the country-wide lockdowns kicked in, theatres were shut down and all production of films, TV serials and OTT content were frozen, drying up content supply chains. Further, advertising expenditure declined as most businesses were themselves battling internal business crises, as per other reports.
However, in the third quarter of 2020, theatres are expected to open up and with the festive season advertisement spends are also expected to rise along with increasing consumption. Production of content in all segments has also begun, albeit gradually. TV is expected to bounce back soon with a fast recovery of viewership and advertisements.
Urban and rural India has developed an insatiable taste for OTT content and with the increasing penetration of the internet, the segment growth is expected to rise in the long term. Gaming is another fastest growing segment that is expected to stay in its high growth trajectory even after normalcy is restored. Films, print and outdoor media is expected to take longer to revive given the current circumstances of increasing Covid cases in the country.
Emerging themes in the M&E industry
Gaming is expected to become a vital cog in the digital ecology. Since gaming has proven to be an effective “direct to consumer” platform many digital businesses are expected to tap into the gaming experience to drive higher customer engagement. Players like Paytm, MX Player, Flipkart and Amazon are already considering using gaming to drive user acquisition, targeted advertising and to develop a better understanding of consumer behavior.
Consumption of news, content for kids and edutainment programs has increased considerably after Covid-19. Dearth of general entertainment drove people towards news channels, while kids were locked up in homes with limited avenues for distraction. Given the rising interest in educational content, media companies are expected to put more emphasis on developing interactive educational content – for both kids and adults, to increase their customer base and enhance user engagement.
M&E sector is expected to enhance leveraging technological innovation across the industry. Media businesses are already witnessing large scale tech integration as it upgrades the user experience and also has the potential to simplify operations and creatives processes. Artificial reality, virtual production, artificial intelligence, are some of the technologies that are being used in the industry and are further expected to intensify.
Looking back at the past year we can see the disruption shocks and the subsequent revenue cuts troubling the M&E sector, but the silver lining of increased digital penetration cannot be overlooked. Like all other sectors, it is time for the M&E sector to reflect and recalibrate a befitting strategy to bounce back and flourish in the “next normal”.
