India has 5th largest M&E market in the world with more than 850 TV channels and over 17,000 newspapers. It is also one of the most diverse and vibrant media markets globally and has positive growth fundamentals across every type of media. The M&E sector is categorized into television, print, filmed entertainment, digital media, animation and VFX, live events, online gaming, out of home media, radio and music. The sector witnessed growth of 13.4% to touch US$ 23.9 billion in 2018 over 2017, as per FICCI-EY Report titled “A billion screens of opportunity- India’s Media & Entertainment sector”.
Further, the Indian advertising industry is projected to be the second fastest growing advertising market in Asia after China. At present, advertising revenue accounts for around 0.38% of India’s GDP.
Capacity and Production
Television sector is a dominant segment in M&E industry. It is the second largest source of advertising after digital segment. In 2018, the market size of television segment increased to US$ 10.83 billion from US$ 9.65 billion in 2017. The revenue of Pay TV market has been significantly expanding since 2001 and has more than doubled during 2001 and 2018.
The audio streaming market has been innovating to enable differentiation not only from radio and music TV stations but also through different streaming platforms such as Saavn, Jio music, Gaana, etc. The revenue of music segment grew at 10.9% to reach US$ 207.72 million in 2018.
The print industry accounted for the second largest share in M&E to reach US$ 4.95 billion in 2017-18 from US$ 4.60 billion in 2016-17, a growth of 3.9% from previous year. Newspaper readership in India increased to 407 million in 2017 from 295 million in 2014, an increase of 40%. Increasing income levels and evolving lifestyles have led to robust growth in niche magazines segment as well.
The growth in digital video consumption is providing new growth opportunities for major international film studios, many of which have already established domestic divisions or are collaborating with local studios. The Indian film industry is largest producer of films globally with 400 production and corporate houses involved in film production. The Indian film industry registered growth of 1.47% to reach US$ 2.47 billion in 2017-18 from US$ 2.16 billion in 2016-17. Increasing share of Hollywood content in the Indian box office and 3D cinema is driving the growth of digital screens in the country. Non-theatrical releases are becoming platitude with Indian filmmakers increasingly open to making movies for exclusive digital release.
The market size for Out of Home (OOH) entertainment, on the other hand, reached US$ 496.51 million in 2017-18 from US$ 426.29 million in 2016-17, with a growth of 16.4% as compared to previous year. In 2017-18, the radio industry in India accounted for a market size of US$ 401.86 million, as compared to US$ 357.73 million in 2016-17. Retail, consumer services and real estate were the top contributing sectors to the ad spend in the OOH segment. Digital OOH market reached INR 1.5 billion, accounting for 4.7% of overall OOH market in 2017-18.
Foreign Direct Investments
Radio: FDI limit in radio, including private FM channels have been increased from 26% to 49%. Private operators are allowed to own multiple channels in a city, subject to a limit of 40%of total channels in the city.
Television: FDI of 100% is allowed for DTH satellite and digital cable network. There are no restrictions on foreign investments for up-linking and downlinking of TV channels other than news and current affairs.
Film: FDI of up to 100% through the automatic route has been granted by government.
Print: FDI/NRI investment of up to 26% in an Indian firm dealing with publication of newspaper and periodicals. FDI/NRI investment of up to 26% in publications of Indian editions of foreign magazines. FDI/NRI investment of up to 100% in publications of scientific and technical magazines/ specialty journals/ periodicals.
Animation, Gaming and VFX (AGV): FDI of 100% allowed in the sector through automatic route, provided it is in compliance with RBI guidelines.
During April 2000 to December 2018, FDI inflows in Information and Broadcasting (including print media) sector reached US$ 7.50 billion and constituted 1.83% of the total FDI inflow.
Advertising, the lifeline of India’s M&E industry, remains amongst the lowest in terms of spending as a percentage of GDP. India is at an inflection point in wireless broadband connectivity and infrastructure, which combined with its GDP growth and young demographics, offer new opportunities.
Small and medium enterprises (SMEs) have typically advertised in the yellow pages, or used local print, OOH and radio in limited numbers. With digitalization, there is a wide scope of SMEs entering digital media for marketing and promotional activities primarily through Google and Facebook.
As per FICCI-EY Report titled “A billion screens of opportunity- India’s Media & Entertainment sector”, online population is expected to rise over 60% by 2022. With the global launches in 5G services, mobile broad band users are expected to cross 70% during the same period. The impact of the TRAI Tariff Order can have implications on total viewership, free television uptake, channel MRP rates and advertising revenues. As per the same report, the OTT platforms are sure to benefit due to increased parity between television and OTT content choice and costs. Since large broadcasters have removed their content from Free Dish, OTT’s attractiveness may be impacted.
The M&E industry overall is expected to grow at a CAGR of 21% between 2018- 2021.