FICCI-EY predict traditional media’s collapse; what’s next for India?

Mumbai: The FICCI-EY report released on Thursday said that the Indian advertising expenditure grew 8.1% to reach its highest level at Rs 1.23 lakh crore in 2024.

This growth in advertising is keeping pace with India’s nominal GDP growth across 2023 and 2024, said the report, adding that in 2024, the nominal GDP growth was 8.7%.

“The ad to GDP ratio is currently at 0.38%, which remains much lower than most other developed countries,” the report highlighted.

56% of total advertising in 2024 went to new media, leaving 44% for traditional media.

Declining by 6.4%, television advertising dragged growth down by 20%, driven by a decline in ad volumes and a shift in viewership to connected TVs, whose revenues are counted under digital media, the FICCI-EY report said.

According to the report, digital advertising spends touched Rs 70,000 crore, which is more than double that of television advertising (Rs 29,400 crore).

Traditional media’s fight for survival becomes more complicated with a fall in their subscription revenue along with advertising revenues.

While digital subscriptions added Rs 1,300 crore, the overall subscription revenue was down by Rs 1,600 crore. This implies a significant drop of Rs 2,900 crore in subscription revenue for traditional media.

Across segments, subscription was focused on the top-end of the consumer pyramid, which resulted in a heavily concentrated subscription base. 

FICCI-EY estimated that the top 40 to 50 million households are powering most digital and film subscriptions, while online gaming and print have a wider audience of between 70 and 100 million homes, and linear TV has the largest paid reach at 111 million homes.

Even as JioHotstar made headlines on Thursday for crossing 100 million paying subscribers, the FICCI-EY report cautioned a further drop in the share of subscription revenue in the overall M&E revenues.

While the share of advertising revenue is pegged to grow from 51% to 52%, the subscription revenue is projected to drop from 39% to 35% by 2027. 

FICCI-EY’s projection for the next three years added an incremental revenue of Rs 56,400 crore in the media and entertainment sector by 2027 at a CAGR of 7%.

Out of this total incremental revenue, new media will corner 68%, followed by live events (12%) and animation and VFX (8%). 

Television revenue will continue to decline and will lose Rs 1,200 crore by 2027.

Other projections include a decline in Pay TV from 111 million in 2024 to 95 million in 2027. This drop will largely be driven by CTV, which will grow from 30 million households to 48 million household by the end of 2027. Free TV, which stands at 49 million in 2024, will add 4 million households in the next three years.

This takes the total TV households from 190 million in 2024 to just 196 million in 2027.

On the other hand, smartphones will grow from 562 million in 2024 to 625 million in 2027.

By 2030, large screens will cross 200 million, and small (phone) screens will reach almost 700 million, creating a large base of consumers hungry for content and information, FICCI-EY said.

As news consumption shifts to online video and text, and as the youth consume news on social and other platforms, the FICCI-EY report suggested that news media will need to rethink their content, monetisation, and measurement strategies.

“Content will need to be created in multi-format and multimedia, and separately for younger audiences and for different segments,” the report said.

FICCI-EY predicted that alternate revenue streams like IP, branded content, and exclusive products would be introduced, adding that News would also move to a “News+” content model, covering a wider variety of themes to reach wider audiences.