CII-BCG report pegs India's M&E sector at Rs 245,000 cr by 2020

According to the report, with a growth potential of 13-16 per cent YOY, this industry has the potential to emerge as one of the largest employment providers, contributing significantly to the GDP

BestMediaInfo Bureau | Delhi | October 20, 2015

The Indian Media & Entertainment (M&E) industry has the potential to reach $100 billion by 2025 (including distribution revenues from broadband). This would imply growth to Rs 210,000-250,000 crore by 2020. This was revealed in a report by The Boston Consulting Group (BCG), titled 'Shaping The Industry At A Time Of Disruption – Taking Indian M&E Industry Towards A $100 Billion Aspiration'. The report was unveiled at the BCG-CII 4th Big Picture Summit on the future of Indian media and entertainment, being held in Delhi on October 19 and 20, 2015.

According to the report, such robust growth can come only on the back of enabling infrastructure and the support of the government and the industry itself. With a growth potential of 13-16 per cent YOY, this industry has the potential to emerge as one of the largest employment providers, contributing significantly to the Gross Domestic Product (GDP).

“At the core of this optimism is the fact that the underlying Indian consumer trend is positive,” noted Kanchan Samtani, Partner & Director at The Boston Consulting Group. “Unlike mature Western markets, digital media could expand the overall market size by tapping into latent demand and driving new media consumption rather than merely replacing other, more traditional platforms.”

The significance of India's M&E sector cannot be stated enough. It has the world's third largest television viewership base after the US and China, the world's second largest print industry in terms of circulation, and produces the highest number of films worldwide (1,900+ films per annum). The next decade, however, will be the decade of change. An interplay of five forces are seen creating a tectonic shift, which can potentially catapult the industry into the next orbit of growth. India is gearing for a consumption explosion.

The M&E sector also contributes significantly to the Indian economy, accounting for 1.7 per cent of the GDP and providing employment opportunities, both direct and indirect, to nearly 5 million people. The employment stats would be much higher if outsourced and informal employment is included. In addition, this sector has a strong pull-through effect in allied spaces such as travel and tourism.

Under achieving to potential

However, the sector has continued to underperform to its true potential. The Indian M&E industry lags global peers on several metrics. India has one of the lowest per capita media spends. With a TV ARPU of less than $4/month ($14/month on a PPP adjusted basis), India is much lower than its western counterparts (~$80/month in the US and ~$45/month in the UK - PPP adjusted). Similarly, India has amongst the lowest cover price charges for newspapers ($6/month on a PPP adjusted basis as opposed to ~$20/month in the US). Advertising as a percentage of the GDP is only 0.33 per cent as opposed to the global average of 0.64 per cent. As a result, despite high consumption levels, the Indian advertising industry still trails developed M&E markets in terms of revenue, ranking 12th worldwide.

According to the report, there are several barriers preventing the industry from reaching its true potential, which include infrastructure, regulatory issues related to pricing & taxation, ease of doing business, skills gap, and copyright & piracy

The report also lists six big shifts that could propel growth in the M&E sector. New consumption behaviours will get created with always-on, on-the-go, on-demand and seamless pick-where-you-left models across multiple devices and time frames. The distinction between prime and non-prime time will become redundant due to these changing patterns and behaviours of online consumption. It will also create fragmented audiences. With the ever-increasing choice of content and the popularity of time-shifted and on-demand viewing, measuring viewer behaviour will become increasingly critical as it will facilitate targeted advertising. Further, there is a fast growing need for innovative and newer ad formats for effective monetisation.

At the same time the next decade could also provide India the opportunity to emerge as a global M&E hub. Opportunities, content and players are all becoming universal, and India, backed by a stable macroeconomic outlook, a youthful, English speaking workforce and the government's 'Make in India' and 'Digital India' blueprints, is strongly positioned to exploit such trends.

“To advance industry growth, India needs to establish itself as a global production hub and encourage higher investment in the M&E sector – from global and domestic players,” said Neeraj Aggarwal, MD, The Boston Consulting Group - India.

Linear value chains of the past will collapse, accommodating new roles and new players. “This evolving ecosystem will create new winners and these winners will do three things differently,” contended John Rose, Senior Partner at The Boston Consulting Group. “They will think big, leverage multiple monetisation models – adding up dimes to create dollars and invest heavily in content – for content will continue to be king,” he added.

The report titled 'Vision 2020 Document on Media & Entertainment Sector' will also be discussed threadbare at the 4th edition of the CII Big Picture Summit. This annual event organised by CII is a platform to address concerns and challenges of the industry among the stakeholders to ferret out newer ideations and suggest measures for creating an eco-system for accelerating the growth of the industry.

The BCG-CII Big Picture Summit 2015 report:

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