During lockdown, both TV and smartphone video consumption surged as people spent more time at home. OTT continued its onward march, increasing its presence in Indian Tier 2-4 cities
Even as 2019 has been a tough year and businesses across the board have had challenges, Media and entertainment sector continues to be a strong contributor to the Indian economy, said Kanchan Samtani, Managing Director & Partner, Boston Consulting Group-India, while briefing about the CII BCG report on the state of Indian M&E sector that was released during the CII Big Picture Summit 2019.
The report, she said, “talks about what this year has looked like so far. And what are the expectations and what are some of the green shoots, we’re starting to see on the recovery front”. “Media and entertainment sector continues to be a strong contributor to the Indian economy. I think that fact has not changed. As we’ve been discussing over the last two or three big picture meetings, continue to be a set of imperatives, which have changed a little bit this year, on what all stakeholders have to do to continue to grow the sector and realize the full potential,” Samtani added.
Presenting an overview of the CII BCG report, the Managing Director & Partner of Boston Consulting Group-India said that from a consumption standpoint, this year, on the back of the COVID-19 crisis, the one thing that has changed positively for the sector, is there has actually been a spike in terms of the total consumption.
“This has been seen across platform, on digital or television broadcasting. And it’s been universally true, particularly at the start when people stayed home a lot more. But actually, a lot of that spike we expect will also continue going forward,” she said.
Speaking about major drivers of growth, she said that non-primetime viewership has actually been a major contributor to this growth. “OTT has been a major driver of growth, and has also actually seen a lot of growth in the rural and tier 2 and 3 cities from a consumption standpoint. And for the first time in India, on the digital platforms, we are actually starting to see a very meaningful inclination from consumers to pay for content directly on the digital platform.”
According to the report, the pay OTT models have actually started seeing as much as 50 to 60% growth in consumers who are willing to pay for subscription services online compared to the past.
India’s growth story on media and entertainment continues to be very unique, and multi modal, Samtani stated. “What I mean by multi modal is that different forms of media still have not been growing at the cost of necessarily the traditional media, I think what digital has done is added many more use cases for consumption, which didn’t exist in the pre odd pre digital days,” she observed.
According to the Managing Director & Partner of Boston Consulting Group-India, the growth rate in television consumption is actually continuing to grow in the range of 6-8 percent in some years, while they still continue to grow at more like 15%. “We’ll see other sectors have started to flatten a little bit. But I think overall, our expectation is that this will continue to be a high growth story across the board. And that’ll be multimodal in nature, in terms of the way that it actually takes off in other emerging markets like China, for example, where some of this has also played out in the past,” Samtani predicted.
She also thinks that the M&E Sector has had a tough time this year on the ad spend front, particularly in the first two quarters. However, given the recovery during the past crisis across the world, she is optimistic that the recovery will be faster. “Advertising, at least in the past crisis, has actually seen a V-shaped recovery. Of course, it’s linked to the GDP growth and growth of all the other sectors in the market. But I think the past crises give us some comfort that not just in India, but in other parts of the world as well, advertising has been closer to a V shaped recovery and we can hope to see that here as well.”
According to the CII BCG report, between July and October, Indian M&E sector actually saw 20% increase in AD volume. “Some sectors, particularly durables, food, and beverages, personal care and accessories, really saw a much sharper recovery in the month following the lockdown. Some sectors continue to be very resilient.”
One of the strong growth indicators, the report finds, is in the large number of advertisers utilizing both television and digital media platforms to expand their reach. “We’ve seen as many as 1,300 new advertisers coming up in the last couple of months, and a lot of these earlier have been from education and healthcare sectors,” Samtani said.
Another positive trend the report points out is that the digital advertising has accelerated in 2019. “Most published sources have reported that they expect digital advertising to be maybe 15% by 2022. But we have actually touched this figure and most people have revised their projections and start looking at more like 20% of growth over the next couple of years,” she pointed out.
Samtani attributes this shift to change in advertisers’ behavior. “Advertisers have wanted to target customers more specifically with improved analytics. They have been asking for return metrics and specific ROI calculations which digital has been able to offer to them. And I think that is what has accelerated the shift, along with the consumption shifts to digital platforms at a much faster rate.”
The report also talks about Indian M&E industry’s contribution to the Indian Economy. “It is well understood that the Indian M&E industry has actually been contributing both intangibly as well as tangibly to the Indian economy. The contribution in tangible terms and direct terms has been through employment generation and the contribution to GDP of which is almost 1%. If I take direct, indirect, as well as the induced figures, our estimate is that the contribution that the M&E industry is making to India’s GDP will be in the range of three to three and a half percent. Some of the sub sectors that have really grown faster have been OTT, gaming and digital,” the Managing Director & Partner of Boston Consulting Group-India said.