OTT, VR, Video Gaming to drive Entertainment & Media market in India
According to PwC E&M industry will reach Rs 353,609 Cr by 2022, growing at a CAGR of 11.6% between 2018 and 2022.
PwC’s Global Entertainment & Media Outlook 2018-2022 (Outlook) forecast for the Indian entertainment and media industry shows that the industry will reach Rs 353,609 Cr by 2022, growing at a compound annual growth rate (CAGR) of 11.6 per cent between 2018 and 2022. In comparison, globally the industry is growing at a CAGR of 4.4 per cent and will be worth around $2.3 trillion by 2022.
The main growth driver for India will come from non-linear media propelled by an increase in device penetration, lower Internet prices, consumer content demand and portability preferences. This will manifest in significant growth in OTT, e-sports, and Internet advertising. India’s E&M market (excluding internet access) is the fastest growing market globally. “India will be in the top ten E&M markets globally in the next couple of years. Even though globally the market will not seem very large, from the India market it would be a large market,” said Frank D’Souza, Partner & Leader - Entertainment & Media, PwC India.
“Mobile devices are becoming the primary source for consumption of content and services. This makes it necessary for content creators and publishers to directly reach the consumer on their devices. Revenue streams that nourished companies in the past are under stress. And linear mediums are facing saturation and decline,” noted D’Souza. In mid-2019 data consumption on smartphones will surpass data consumed via broadband connection and that would be the tipping point for businesses and how they adapt with that change.
OTT Video revenue has grown rapidly in recent years reaching Rs 2,019 Cr in 2017, the study found. The study further predicted that the sector will see strong growth at a 22.6 per cent CAGR taking India into the top ten largest global OTT video markets in 2022 with revenue of Rs 5,595 Cr.
OTT is expected to contribute to 10-15 per cent of the revenues while VR will take the lead contributing to more than 40 per cent of the revenue by 2022. But for now the two sunrise sectors OTT and VR contribute barely 1.8 per cent and 0.2 per cent of the total E&M revenue pie.
Increasingly companies are looking to build a direct relationship with the customer as evidenced by Disney’s move to remove all content from Netflix in order to offer it on Disney’s own platform. Direct-to-customer models are evolving.
The growing competition among international and regional Subscription Video on Demand (SVOD) platforms is evident with over 70 per cent of revenue in 2017 attributable to subscription services. This trend will grow and by 2022, 79.4 per cent of total market revenue is expected to be from SVOD. India is among the top ten countries with highest SVOD CAGR for 2017-2022. “OTT has not replaced traditional TV like everyone fears and neither will it happen. What will happen is capturing users who have been mobile natives.”
Industry of tomorrow
The next phase of the M&E industry would be defined by ‘convergence.’ A world where a handful of global players will converge towards a similar business model which will unite content commerce, advertising communication. They will try to secure exclusive control of every aspect of its own customer relationship consumption activity,” D’Souza explained. No one can say whether these supercompetitors will be today’s tech companies, telcos, or tech companies.
Privacy and trust in platforms
Brand safety remains a huge concern for advertisers as spends on internet advertising increase. Some even say that ad spends will get split between the Facebook-Google duopoly and OTT platforms that promise brand-safe content. But this is a wish that may remain unfulfilled in India, D’Souza indicated. “While Jio may have changed the landscape with internet speeds, rates, and connectivity, the monthly cost to subscribe to an OTT channel is still much higher than the cost to watch say 600 channels on cable,” he said. User shift to OTT will determine the shift of monies, and D’Souza indicates it will be a while before the duopoly will face competition from OTT players.
Companies will want direct access to consumers, making it crucial to ensure privacy of the data that is collected stored and processed. D’Souza said that self-regulation could be a way forward. “Companies will need to approach the regulator and have conversations and draw their own boundaries about how data is used. If companies that demonstrate that data will be anonymised and used only in cohorts regulators will be keen to listen to that. The problem today is that people are able to store data at the individual level and target,” he said. D’Souza said that this could be one way to assuage the regulator and consumers.
Unlike many other markets India is witnessing significant growth in the newspaper segment. It will register around 4 per cent growth between 2017-2022. Globally, newspapers will witness a decline of 2 per cent. “Any country where there is a significantly large population, weak digital infrastructure, people getting into the middle-class, etc will see growth in newspapers. India is in the top ten markets for newspapers globally in sheer size. I do not think there is anyone in the top ten markets that is growing like India,” said D’Souza.
As per the report total Internet advertising revenue hit Rs 6,513 Cr in India in 2017, up a healthy 25.4 per cent on 2016. Over the next five years, total revenue will be more than double to Rs 13,500 Cr, driven by strong growth in mobile and paid search Internet advertising. Mobile video advertising is the fastest-growing sub-segment of India’s Internet advertising market, rising at a 32.8 per cent CAGR to 2022, when revenue will total INR 2155 Cr. As the India story evolves, the global story has already taken shape. “Globally internet advertising will overtake traditional advertising by the end of 2018,” D’Souza said.
India will be in the top 10 markets for video gaming by 2022. Indian traditional gaming is growing relatively slowly at just a 4.0 per cent CAGR, but the social/casual gaming category will represent 82.2 per cent of all Indian consumer gaming revenue by 2022. The segment is expected to grow by a 55.9 per cent CAGR over the forecast period from Rs 1,645 Cr to Rs 14,772 Cr by 2022 (surpassing the traditional market in 2018). India was relatively late to the social/casual boom, but over the next five years better connectivity, better telco offerings and a competitive handset market are expected to propel apps and games to the fore.
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