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Media & entertainment sector: Windows of opportunity?

Epics, fables, fantasies — storytelling has been an intrinsic part of the Indian way of life for ages. Over the years, the Indian media and entertainment industry has taken this legacy forward and evolved to create content that is now resonating globally. Here are 4 charts, sourced from FICCI-EY M&E 2023 report, that put the spotlight on the Indian media and entertainment (M&E) sector.

Size of M&E sector
The sphere of influence wielded by Indian media and entertainment (M&E) globally is phenomenal, whether it’s Naatu Naatu and Elephant Whisperers bringing home the Oscars or the explosion of content from across our country’s diverse and multi-cultural M&E landscape.

The perennial pillars of the sector are content, commerce, and community, all of which continue to expand and grow exponentially in the face of shifting dynamics and technological innovation, fuelled by the digital revolution to connect everyone and everything, everywhere. The Indian M&E sector powered through to a growth of 20 per cent to reach ₹2.1 trillion in 2022, which is 10 per cent more than its pre-pandemic levels in 2019.

How segments have performed
Given that video, audio, text, and experiences are available across almost all segments, the M&E sector is redefining itself across four verticals. Video remained the largest earning segment in 2022, and despite resumption of normal life after the pandemic, held on to a 11 per cent gain in revenue share since 2019.

The pandemic impacted 2020 and 2021 as regards experiential revenues, but those have now recovered, and we expect their share to keep growing as India’s per capita income grows. Text has probably seen a permanent loss due to the fall of print circulation, but will remain relatively stable as regards ad and sub growth, albeit at a slower rate than other media. Audio revenue models remain largely digital advertising and events linked, and their revenue share will therefore remain stable.

Advertising big bucks
In 2022, when India’s nominal GDP grew 15 per cent, advertising recovered 19 per cent. Advertising is usually around 2x to 2.5x of real GDP growth, which is expected to be 7 per cent for FY2023. However, when GDP is impacted, the discretionary nature of the M&E sector results in a disproportionately higher contraction, as was seen in 2020.

Digital powering subscriptions

Subscription revenues grew 13 per cent in 2022. But, overall, subscription revenues were 8 per cent below 2019 levels due to the following factors:

  • Lower theatrical revenues due to the relatively poor performance of Bollywood and ticket pricing regulations in certain states
  • Reduction in absolute print circulation, particularly in metros and English dailies, and
  • Fall in pay TV households

Across segments, subscription is focused on the topend of the consumer pyramid, which is resulting in a heavily concentrated subscription base. The Hindu BusinessLine

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