Digital news subscription revenue to reach Rs 2.4 billion by 2025 in India

According to EY’s latest report on the media & entertainment industry in India, online news subscriptions generated Rs 1.2 billion in 2022 primarily for premium and exclusive content. The report further estimated that digital news subscriptions will generate Rs 1.6 billion in 2023.

Newspaper digital products will increasingly go behind paywalls for exclusive content, custom knowledge, and passion content, and news and related products are expected to generate subscription revenues of Rs 2.4 billion by 2025, which could increase to Rs 4.8 billion through bundling, stated the report.  EY estimated around 1.5 million paid subscribers across all news platforms in 2022, which can double by 2025 on the back of more speciality news and custom knowledge products.

EY wrote in its report that while several brands launched, bundled or promoted subscription products like e-papers, ad-free news or exclusive content, scale remained elusive due to the plethora of free news platforms available, resulting in syndication deals.

While digital news revenues will see evolutionary growth, developing a 1st party data strategy will be critical to compete with large digital ad platforms.

While the reach, time spent and revenues of online news apps and websites of newspapers continued to grow, the deflation in digital ad rates resulted in muted revenue growth.         

As per the report, individual creators, generating up to Rs 50 million a year each, fragmented the SVOD news industry, providing advice and/ or a point of view to niche communities on areas like finance, investing, career growth, technical knowledge, health, etc. In 2022, Comscore data indicates that online news had a reach of 473 million (55% of internet users) unique users across mobile and desktop users of news sites, portals and aggregators. By 2025, EY expects this reach to grow to over 550 million.

ChatGPT, Bard, etc., will impact news publishers’ revenues if they scale significantly.

In the case of print news publishers, given that most print companies earn less than 5% of their revenues from digital news products (EY estimated that digital news generates less than Rs 10 billion, including digital native brands), the focus of print companies will remain on the core print product to increase its utility and appeal to loyal audiences, while digital initiatives of publishers will evolve into a separate enterprise that goes wider than just news.

The online news audience was primarily web-based

Google News, Inshorts and Dailyhunt are some of the leading news aggregation platforms in India, and as can be seen above, focus relatively more on loyal app audiences.

Except for Times Group and DB Corp, most news publishers had an extremely low proportion of app-based audiences.

Most news publishers generate over 90% of their MAUs on their websites, which serve fleeting and transient traffic, in effect becoming an ad-rate arbitrage business with extremely high churn.                    

Given that most print companies generate less than 5% of their revenues from online news, their focus on this space needs to be directed towards news++ offerings and monetisable communities.

In addition, customer acquisition costs increased, resulting in minuscule margins for some digital brands.

News OTTs will focus on quality audiences

News platforms garnered only 2% of revenue from OTTs.

If generative AI tools like Bard and ChatGPT which use artificial intelligence scales and include current data, it could have an impact on news publishers’ reach and revenues.

News platforms will need to aggregate sticky and loyal customers, and thereby build first-party data, for which they will need to drive more user registration and build app audiences as compared to transient web audiences.

Consequently, it is expected to see a string of common-interest communities come into existence, with increased content than just news, and transaction-led monetisation capabilities.

Given that a majority of new internet users are expected to come from non-metro markets, news companies will launch hyper-local news services to compete with the quality of multi-edition vernacular print products, through the creation of massive stringer networks across their target markets.

By 2024, there will be more rural internet users than metro users and hence locality and village perspectives and interactivity will become a USP for news brands.

Custom recommendation-based connected TV products to serve top-end audiences will come into being, both ad-supported and subscription-based, across areas of interest.

Digital news – evolutionary growth

* Digital news, per se, will also need an innovative approach e.g.: Creation of an industry-wide India news stack where leading brands come together to offset customer acquisition costs, as well as provide a superior customer experience through automated/ algorithmic curation of content across multiple trusted brands and formats.
* Creating curated e-papers for corporate and hospitality clients to offset a reduction in these segments.        
* Direct sales to the large SME community.
* Improved integration with search engines and news aggregators as even in the next five years a significant portion of news publisher’s content discovery will be through search and social.

According to Reuters digital news report 2022, 63% of visitors to news sites were redirected from social media platforms.

A majority of this news consumption is now in vernacular languages and EY believes vernacular news portals will see increased penetration with the proposed launch of low-cost smartphones by telcos.

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