M&E sector to grow at a CAGR of 10% to reach Rs 3.08 trillion by 2026: EY

The media and entertainment (M&E) sector is projected to grow 10.2% to reach Rs 2.55 trillion by 2024, then grow at a CAGR of 10% to reach Rs 3.08 trillion by 2026, according to the EY Report, launched at FICCI Frames 2024.

According to the report, the Indian M&E sector continued its growth trajectory. It grew by Rs 173 billion (8.1%) to reach Rs 2.32 trillion (US$27.9 billion).

While the sector was 21% above its pre-pandemic levels, television, print and radio still lagged their 2019 levels. While television remained the largest segment, digital media is expected to overtake it in 2024, the report stated.

Kevin Vaz, CEO - Broadcast Entertainment, Viacom 18, said, “India is a unique market where the M&E sector distinguishes itself through a harmonious fusion of tradition and innovation. Here, technology-enhanced entertainment channels, OTT platforms, AI-powered newsreaders, traditional print media, flagship films, and short-form content not only coexist but thrive together, showcasing the vibrant diversity and dynamic growth of our industry. The Government of India’s thrust on improving digital infrastructure in the country combined with our ambition to be at the forefront of the next big technological thrust in media and entertainment, our sector is primed for a massive transformation.”

Ashish Pherwani, Partner and Media and Entertainment Leader, EY India said, “I believe the M&E sector is at the “inflection point” we foresaw in 2018, with the dominance of digital channels over traditional media. In 2023, new media comprised 52% of total advertising revenues, yet, unlike in many other countries, Indian traditional media also grew. This underscores the unique Indian market where while we are witnessing a seismic shift towards digital consumption, there is still adequate headroom for traditional media to grow.”

According to the report, it is estimated that the digital segment will grow to Rs 955 billion by 2026, at a 13.5% CAGR.

India is expected to have almost a billion active screens by 2030. Of these, around 240 million will be large (TV, laptop, PC), while the remaining will be small (mobile phones, phablets). Pay TV, Free TV, and Connected TV are expected to emerge as significant markets as switching to wired (or similar) broadband grows from 38 million homes today to 70 million homes by 2026 and over a 100 million by 2030. The 3:1 ratio in favour of mobile phones will sustain the demand for short videos and social commerce.

Online gaming is expected to reach Rs 388 billion by 2026. The segment will see growth across all its verticals, including esports, fantasy sports, casual gaming, and other games of skill to reach an estimated 150 million daily users. Revenue growth will be led by mobile-based real-money gaming and casual gaming.

Linear viewership increased by 2% over 2022, the number of smart TVs connected to the internet each week rose to 19 to 20 million, up from around 10 million in 2022. Television advertising declined by 6.5% due to a slowdown in spending by gaming and D2C brands, impacting revenues for premium properties. The Hindi speaking market (HSM) experienced softness, resulting in a 3% overall ad volume de-growth. However, subscription revenue saw growth after three years of decline, driven by price increases, despite a decrease of two million pay TV homes.

Contrary to the global trend, print media continued to thrive in India, with advertising revenues growing by 4% in 2023. Notably, there was significant growth in premium ad formats, as print remained a preferred medium for affluent metro and non-metro audiences. Subscription revenues also grew by 3% due to rising cover prices.

Radio segment revenues grew by 10% in 2023 reaching Rs 23 billion. This growth was driven by increased retail and local advertising, as well as alternate revenue streams. Ad volumes increased by 19% in 2023 as compared to the previous year, although ad rates remained below their 2019 levels.

The film segment grew 14% to reach Rs 197 billion in 2023. Over 1,796 films were released in 2023, and theatrical revenues reached an all-time high of Rs 120 billion. The number of screens grew 4%. 339 Indian films were released overseas.

The Hollywood writers’ strike impacted global supply chains, and consequently, animation and VFX grew just 6% in 2023. Potential mergers and falling ad revenues also reduced the slate of animated content produced for broadcast in India. A revival in demand in the second half of the year led to growth, boosted by the trend of using more VFX in Indian content.

OOH media grew by 13% in 2023, surpassing its 2019 levels. Growth was led by premium properties and locations.  Active digital OOH screens crossed 1,00,000 contributing 9% of total segment revenues.

Digital advertising grew 15% to reach Rs 576 billion, constituting 51% of total advertising revenues. This figure includes advertising by SME and long-tail advertisers totalling over Rs 200 billion, and advertising earned by e-commerce platforms amounting to Rs 86 billion.

Digital subscription grew 9% to reach Rs 78 billion accounting for a third of 2022’s 27% growth, as premium cricket properties were moved in front of paywalls. Paid video subscriptions decreased by two million in 2023 to 97 million, across 43 million households in India. However, paid music subscriptions grew from 5 million to 8 million, generating Rs 3 billion, while online news subscriptions generated Rs 2 billion.

According to the report, Indian advertising will grow at 9% till 2026 and digital will comprise 57% of the total advertising by 2026.

Also, advertising is expected to grow 10% in 2024 to reach Rs 1.25 trillion. Advertising growth lagged Indian GDP growth. The slowing down of India’s nominal GDP growth to 9% in 2023 after two years of double-digit increases impacted advertising, which grew just 7%.

“Advertising was impacted by a ban on certain large and high-yield categories like gaming and betting, and a slowdown in investments in D2C brands. Nominal GDP growth is expected to be 10.5% for FY 2025 (2024) and advertising is expected to outpace that based on past trends,” the report stated.

“Advertising is now 0.33% of India’s GDP, much lower than developed large markets, which are all between 0.6% to 1%,” it added.

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