India’s entertainment and media sector is expected to grow steadily over the next four years, according to PwC’s recently released report called ‘Global Entertainment & Media Outlook 2016-20’. The report forecast the industry to exceed US$40,000 million by 2020 growing at a compounded annual growth rate (CAGR) of 10.3 per cent between 2016 and 2020.
“Given India’s overall growth in GDP and PCI, it is not surprising that India is amongst the top 10 markets for growth in the sector. Although, in India traditional media like newspaper publishing and cinema has always shown strong growth, we expect that even in terms of absolute total US$ spend, it should get into the top 10 in the early part of the next decade,” said Frank D’Souza, Partner & Leader - Entertainment & Media, PwC India.
D’Souza feels it would be more interesting to see how rapidly India would catch up with global trends, where traditional media is finding it hard to remain relevant, and the digital sector is leading the growth trajectory and consequently bringing in continuous disruptions. “That will all depend on how quickly the Indian digital/broadband ecosystem matures, and how the Indian players adapt and drive business models in what would be a rapidly changing environment for consumption of data/content fashioned largely by India’s under 35 population,” he added.
The report reveals that while India is currently the biggest cinema market in the world and will remain so until the end of the forecast period, China is expected to be close to overtaking it by 2020.
In terms of admissions, in 2015, admissions were at an estimated 2.04 billion, and in 2020 are predicted to be at 2.80 billion, rising at a 6.6 per cent CAGR. Box office revenue in India stood at an estimated $1.64 billion in 2015 and will rise to $2.74 billion in 2020, at a 10.9 per cent CAGR. There is still considerable room for expansion. In terms of multiplexes, India remains underserved, according to the report.
At the end of 2014, there were around 11,200 screens in the country as a whole — a small number given the population and the appetite for cinema-going. The thousands of single-screen cinemas that have traditionally dominated are beginning to disappear as a result of the multiplex boom. Multiplexes will provide better facilities — and should allow exhibitors to raise prices, within limits.
Cost-conscious advertisers embrace paid search
Paid search Internet advertising revenue is, and will continue to be, India's largest Internet advertising sub-component over the forecast period, states the report. Paid search grew 26.7 per cent year-on-year in 2015, reaching revenue of $211 million. With a forecast of 18.5 per cent CAGR over the next five years, paid search Internet advertising revenue will rise to $492 million by 2020. Online spend on display ads in India has witnessed strong growth in the historic period and revenue has almost tripled since 2011, reaching $200 million in 2015.
Digital upgrades focussed on cable and satellite sectors
Indian TV advertising revenue has consistently grown throughout the global recession and India will be one of only seven countries to achieve double-digit growth over the forecast period at an 11.7 per cent CAGR. This will generate revenue of $5.54 billion in 2020, compared with $3.19 billion in 2015.The pace at which TV's reach has increased is seeing a shift in overall advertising budgets towards television. With no Digital Terrestrial Television (DTT) launch, TV advertising revenue is driven primarily by the subscription sector. Multichannel TV advertising revenue reached $2.91 billion in 2015 and will grow at a 12.1 per cent CAGR to generate revenue of $5.13 billion in 2020.
Indian publishing growth bucks global trend
Where global trends in magazine, books and newspaper publishing combined are at a near flat or negative growth trajectory, Indian publishing remains one of the fastest growing across the world. Demographics, ever increasing literacy rates, educational needs, and strong desire to consume news and content in local languages, combined with nascent digital/broadband penetration, would fuel the growth and keep it relevant over the 2016-20. In 2015, the overall publishing revenues were at $6133 million, an increase of $302 million over 2014.
Key global shifts:
PwC’s analysis reveals that there exists an almost perfect correlation between the relative size of the under-35 population and growth in entertainment and media spending confirming that younger consumers are now the primary drivers of global growth.
In a world where Netflix can launch in 130 new countries in a single day, it’s easy to assume that content is becoming more globally homogeneous. But the reality is that content is being redefined by forces of globalisation and localisation simultaneously—and that while much of the industry is growing more global, content tastes and cultures remain steadfastly local.
The ability for consumers to design and curate their own media diet has been one of the most powerful trends to emerge in the industry. But the bundle is far from dead, with video and cable incumbents - which were initially slow off the mark - now fighting back by offering their content on an integrated omnichannel basis, on TV, laptop, tablet, and smartphone.
Generally, entertainment and media companies had one set of expectations about developed markets (slow growth, low regulation, easier to access) and another about developing markets (rapid growth, high regulation, harder to access).
Today’s entertainment and media market includes technology companies racing to become hybrid content companies, and traditional publishers evolving the other way to emerge as hybrid technology companies. This underlines how the growth of technology and digitisation is acting as a centripetal force—breaking up existing relationships; pushing large, generalist entities to give way to smaller specialists; and allowing smaller, nimble competitors to beat out incumbents.
Some of the key takeaways from the report were that the pace of growth in the digital market, or rather the lack of pace, will determine the hold of traditional media in the growth spectrum. Having said that, India’s trajectory on constitution of relative share of digital to traditional media will move towards the global model. “We expect that the digital infrastructure will take time to mature over the Outlook Period, thus providing room for traditional media such as publishing, cinema and TV to continue its pace of growth. Hence, recognizing this, businesses need to take a call on how they will prepare for such eventuality,” concludes the report.