India is one of the fastest growing markets in the world despite the fact that it is the least digitised of the 54 markets covered by PwC’s Global entertainment and media outlook 2017-2021.
The middle-class Indian consumers are investing more in traditional media since internet access is still lower than many other markets. This has resulted in print and broadcast media, including television and radio, gaining.
Within the Asian markets, the report states that China and India represent the two most populous markets and hence have vast potential. But internet use in India is overwhelmingly a mobile phenomenon. Only eight per cent of data traffic in India will course through broadband in 2021, it says. In contrast, in China, 56 per cent of internet traffic will travel on fixed broadband in 2021. India, therefore, has a huge preference on mobility.
The study also says that the Indian M&E industry will grow at 10.5 per cent CAGR to reach Rs 2,910 billion. These reasons indicate that television and print media will have higher growth rates. Television will grow at an overall CAGR of 11.4 per cent, where subscription households is expected to reach 16.7 crore by 2021.
Within advertising revenues, digital advertising is growing at 9.9 per cent globally while in India, it is 18.4 per cent CAGR. The non-digital growth is at 0.2 per cent globally, against a 7.5 per cent CAGR in India.
Print is an interesting sector. Globally, circulation revenues overtook advertising revenues with an eight per cent gap. But in India, the revenue contribution from advertising is still at 68 per cent.
The 54 countries studied by PwC were divided into four quadrants by the research outfit. The ‘mature markets’ that can have an average market size of USD 77 billion are the US, Japan, Germany, France, Canada, Italy, South Korea, Australia and Mexico. These are effectively slow growing but significantly large. Then there are the ‘slow growing’ markets (average market size of 6.6 per cent) including Ireland, Denmark, Portugal, Finland and Greece. Next is the ‘next wave’, wherein there are countries with an average market size of USD 52 billion such as India, South Africa, China, Russia, Indonesia and South Africa. These nations have the largest overall growth percentage. Then there are ‘up and comers’ with average size of USD 6 billion.
Globally, only four streams are growing at a pace faster than the global GDP -- internet video (6 per cent CAGR), internet advertising (4.3 per cent CAGR), video games (2.7 per cent CAGR) and internet access (0.5 per cent CAGR). All the other media platforms are growing slower than the global GDP growth -- cinema, OOH, television advertising, radio, music, B2B, traditional TV and video, books, magazines, newspapers.
Factors affecting M&E revenue include spending efficiency, macro challenges and expanding M&E universe.
India is over-performing in all the segments, when compared to the global growth rates.
Television: TV subscription revenues are expected to grow from Rs 52,755 crore in 2016 to Rs 90,713 crore in 2021 at a CAGR of 11.6 per cent. Though subscriber numbers are still growing, explosive growth levels of the recent past will not be replicated in the future. The cable market is approaching a saturation point but will still account for over 55 per cent of the total pay-TV market in 2021. In terms of advertising, TV will continue to hold the larger share of the pie from Rs 21,874 crore in 2016 to Rs 37,315 crore in 2021, even though Internet advertising is expected to growth a much faster rate of 18.6 per cent as opposed to TV advertising at 11.1 per cent from 2017-2021.
Cinema: India’s cinema sector is expected to experience strong growth throughout the forecast period. Box office revenue will rise from Rs 10,957 crore in 2016 to Rs 18,047 crore in 2021, at a healthy CAGR of 10.4 per cent. Admissions will rise from an estimated 200 crore in 2016 to 230 crore in 2021 (at a CAGR of 2.4 per cent) and ticket prices will rise at a CAGR of 7.9 per cent in the same period. This is one of the few major cinema markets in which 100 per cent digitisation of screens has not yet been achieved – and it is not expected to occur over the forecast period.
Publishing: Publishing in India is expected to grow from Rs 38,601 crore in 2016 to Rs 44,391 crore in 2021 at a CAGR of 3.1 per cent. Book publishing is projected to grow at 6.1 per cent CAGR over 2017-2021 whereas magazines are expected to grow at a CAGR of 3.3 per cent for the same period. The Indian newspaper industry continues to grow from Rs 23,161 crore in 2016 to Rs 24,447 crore in 2021, but the growth rate is tailing off as the effects of digital disruption begin to be felt in a market that had long enjoyed print expansion.
Internet: In terms of Internet advertising revenue, India is ranked eighth in the Asia Pacific region. One reason for the immature online ad market is the lack of Internet access among Indians – fixed broadband penetration remains low at just 6.9 per cent in 2016. Today, mobile Internet advertising comprises 27.6 per cent of total online spending, marking a clear gap between Indians with mobile access and brands reaching out to the mobile audience. India’s internet video segment has produced revenues of Rs 560 crore in 2016 and will grow at 22.4 per cent CAGR to reach a new high of Rs 1,540 crore in 2021. Transactional video-on-demand will account for over 61 per cent of total Internet video revenues in 2021, with many households not wanting to commit to the regular payments of subscription video-on-demand.
Frank D’Souza, Partner and Leader, Entertainment & Media, PwC India, commented, “Unlike the global economy, which will see a shrinking contribution from the entertainment and media sector over the outlook period, in India the sector’s growth rate will outpace the overall GDP growth rate. Being a relatively under-developed market in terms of per capita spending on entertainment and media will allow India to grow at 10.57 per cent over the next five years to an overall size of Rs 290,539 crore. Also, being the least digitised market will allow the traditional media to grow without being disrupted by digital competition. One may be tempted to conclude that India’s growth in this sector is divergent from the world’s, it will do well for Indian players to keep their eyes on changing landscape globally and prepare for its eventual impact on the Indian market.”
India should climb about 7-8 spots up in the ranking by the end of the outlook period, in terms of the market size, despite that our per capita spends are USD 32 per year. China is at USD 222, while the US is at USD 2206. No other country has a per capita spend lower than 100.
Major digital tipping-points are occurring or in prospect across all segments globally.
• Internet advertising now generates more revenue than TV advertising globally. In 2016 an important tipping point was reached in the global advertising industry, with revenue from Internet advertising exceeding that generated by TV advertising for the first time. That lead, thanks to the rapid growth of mobile ad revenues in particular, is set to increase significantly in the next five years.
• Internet video revenues will overtake physical home video in 2017. The Internet video segment has expanded rapidly in recent years, and will overtake the physical home video market for the first time in 2017. Internet video revenues are projected to grow at a CAGR of 11.6 per cent to reach USD 36.7 bn (Rs 236,111 crore) in 2021, while the terminally declining market for DVDs and Blu rays will have fallen to USD 13.9 bn (Rs 89,426 crore). Demand has shifted towards the more immediate and convenient video-on-demand (VOD) market, with content accessible via a wide range of connected devices allowing consumers to view when and where they desire.
• Global newspaper circulation revenue overtook global advertising revenue in 2016. While newspaper circulation revenue has been on a downward trajectory since 2015, publishers have had the useful lever of cover price rises to partly offset the rapid fall in units. However, the year-on-year falls in newspaper advertising revenue have been more pronounced -- reflected in the overall de-growth in the newspaper segment.
• Virtual reality video revenue will exceed interactive application/gaming revenue in 2019. The consumer virtual reality (VR) content market will grow at a CAGR of 77.0 per cent over the forecast period to be worth USD 15.1bn (Rs 97,147 crore) by 2021. Of this, USD 8.0bn (Rs 51,468 crore) will be spending on VR video (rising at a CAGR of 91.2 per cent), surpassing interactive experiences and games in 2019. This is one segment to look out for in the future.
• Smartphone traffic will exceed fixed broadband data traffic in 2020. Although mobile usage is a key driver of growth in overall data traffic, fixed broadband will continue to account for the majority of data traffic in the 19 markets for which we have developed detailed forecasts. Many consumers still prefer to access data-heavy content – notably high-quality video – via fixed broadband rather than their mobile device. But the shift towards the smartphone will continue.