As the COVID-19 pandemic has brought in major disruptions in the M&E business model, it is high time for the sector to forego holding on to old ways of thinking and working, and prepare to engage with the world with a new set of rules to propel growth, says the latest edition of FICCI-EY Report on Indian M&E sector
The COVID-19 global pandemic presented unprecedented challenges to the media and entertainment industry worldwide. Faced with isolation, consumers actively sought alternatives to keep themselves entertained. Thus, 2020 saw demand patterns shift with acceleration in digital media adoption aided by the growth of digital infrastructure. The supply side transformed, too, as M&E companies took the opportunity to reinvent.
“This altered the M&E sector as we knew it. Every segment – TV, radio, print, digital, etc. – had video, audio, textual and experiential products and had begun to redefine itself across those verticals. What didn’t change, however, was the compelling content created around news and escapism, and the passion to build some of India’s most powerful brands,” says Ashish Pherwani, M&E Sector Leader, EY India.
EY India in collaboration with Federation of Indian Chambers of Commerce & Industry, has come out with the 2021 edition of the FICCI-EY report on the Indian media and entertainment (M&E) sector—‘Playing by New Rules’—that seeks to capture transformation of the country’s M&E sector and offer useful insights into the new rules of the game.
According to Pherwani, appointment viewing on news television, gamification on e-commerce apps, circulation transformation in print companies, short video on OTT platforms, interactivity and brand solutions from radio companies were some of the many strategic shifts that were seen in 2020.
Saying that India’s diversity and scale will continue to fuel the growth of traditional media, Sanjay Gupta Chairman, FICCI Media and Entertainment Committee, highlights the new and big opportunities for M&E businesses.
“Today content creation and storytelling are much more diverse and come from all parts of the country. New distribution models and monetization strategies are evolving across both large and small screens. Learning content and gaming have emerged as very large new opportunities. These changes are driving a shift in monetization of content investments and this opportunity is global,” says Gupta.
The report points out that the Indian M&E sector fell by 24% to INR1.38 trillion (US$18.9 billion), in effect taking revenues back to 2017 levels. However, there were some silver linings as well. “Several digital trends accelerated their trajectory, fed by growth in broadband, personal devices and smart televisions, and the time and inclination to try online services,” observes Gupta.
“Digital and online gaming were the only segments which grew in 2020 adding an aggregate of INR26 billion and consequently, their contribution to the M&E sector increased from 16% in 2019 to 23% in 2020,” the report says.
Online gaming continues to be the fastest growing segment of the M&E sector for the fourth year in a row, the segment grew 18% helped by work from home, school from home and increased trial of online multi-player games during the lockdown.
Online gamers grew 20% to reach 360 million in 2020. Transactionbased game revenues grew 21%, despite adverse regulation in certain states, while casual gaming revenues grew 7%.
2020 also saw 28 million Indians (up from 10.5 million in 2019) paying for 53 million OTT subscriptions leading to a 49% growth in digital subscription revenues, thus clearly indicating that subscription fared better than advertising revenues.
“Growth was led largely by Disney+Hotstar which put the IPL behind a paywall during the year, increased content investments by Netflix and Amazon Prime Video and launch of several regional language products. In addition, 284 million Indians consumed content which came bundled with their data plans,” says the report.
According to the FICCI-EY report, online gaming will continue to grow and reach 500 million gamers by 2025 to become the third largest segment of the Indian M&E sector. The segment will grow across all its verticals viz, esports, fantasy sport, casual gaming and other games of skill, but revenue growth will be led by mobile-based real-money gaming applications across these verticals.
It continues to say that the pandemic disrupted the already fast evolving M&E sector and new rules have been set in place to drive success of the sector.
It lists out some strategic priorities for the Indian M&E sector including Identifying the audiences that matter, building a multi-media and multi-community strategy, addressing community needs apart from just news and entertainment, make end-customer data and insights the core of operating priorities, building customer acquisition efficiency, enhancing speed of product development and change, and reinventing ad sales.
The report points out that globally the M&E industry is under renovation. “The steps taken by media and entertainment companies to streamline the cost base and optimize the operating model for efficiency and effectiveness will remain on center stage as the entire industry plots a course through disruption,” it says.
It also adds that major business conferences, which moved to virtual gatherings in 2020, will continue to utilize digital platforms to extend reach and include remote participants who remain wary of business travel.
Esports and video games will build on a fan and user base that multiplied in size during the pandemic, believes John Harrison, EY Americas Media & Entertainment Leader. “In 2021 and beyond, companies will be successful not because they are better at predicting the future but because they are better able to orchestrate a wideranging ecosystem of in-house talent and external partners, and pivot in a timely, confident manner,” says Harrison.
Although Indian television segment declined 13% in 2020, the report expects television advertising in 2021 to be close to 2019 levels, growing over 20% to reach INR304 billion. Digital segment, too, is expected to grow to INR424.5 billion by 2023 and digital advertising will outpace all other media with paid subscriptions doubling to over 100 million by 2023. According to Pherwani, in effect it will be the same game, but with totally new rules.