Digital media and online gaming overtake print - The Noel D'Cunha Sunday Column

By 04 Apr 2021

The Indian media and entertainment (M&E) sector has de-grown by 24% to INR 1.38 trillion in 2020. It is expected to grow by 25% in 2021, to reach INR 1.73 trillion, says the recent FICCI-EY report 2021 titled ‘Playing by new rules’.

Print de-grew 36% in 2020 due to the impact of Covid-19. Digital media and online gaming were the only segments that grew in 2020, adding an aggregate of INR 26 billion. Read more ...

So, what about all that talk about high growth?
The good news is that the pandemic was a sort of temporary blip and the media and entertainment sector will grow by 25% in 2021 and it will notch up Rs 1.73 trillion.

What about print?
Not good.  Print de-grew 36% in 2020 due to the impact of Covid-19. The print segment revenue in 2019 was Rs 295.7- billion while it was down to Rs 189.9- billion in 2020.

Ad revenue saw a hit?
Advertising revenues fell 41% in 2020, but the FICCI-EY report 2021 expects them to grow 25% in 2021 to reach INR152.1 billion.

What about subscription revenues?
Subscription revenues fared better, falling 24%, though metro and English language newspapers witnessed a more pronounced fall.

Which segment benefitted from the fall in print revenues?
The study showed that television continues to remain the largest segment in 2020 while digital media and online gaming both these sectors over to print and the filmed entertainment segment respectively. The report also stated that digital media and online gaming were the only segments that grew in 2020, adding an aggregate of Rs 26-billion, while most segments de-grew by an aggregate of Rs 467-billion.

How did print de-grow?
Advertising revenues fell by 41% in 2020 to Rs 121.70-billion while circulation fell by 24% to Rs 68.2-billion. The total revenue being Rs 189.9-bn.

Newspapers were impacted?
The newspaper segment garnered Rs 184.9-billion in advertisements and circulation revenues while the magazine segment garnered a mere Rs 5-billion.

Same impact for English and Hindi newspapers?
Well, advertising in English publications fell by 52%, while advertising in Hindi and regional language publications reduced around 35%.

English and Hindi contributed over 64% of newspaper ad volumes?
Yes, Hindi continued as the largest contributor to ad volumes, given it has the largest reach of any language in India, growing its share by 4%; while English language publications had slight degrowth in 2020 and have lost 2% volume share since 2018.

What about the other languages?
36% share of print advertising volumes were from language newspapers, a fall from 39% in 2019.

Any signs of growth?
The advertising revenue is expected to grow 25% in 2021 to reach Rs 152-billion. having said that revenues for magazines, which halved in 2020 is not expected to see significant recovery till 2023.

Plan-B for print?
During the years, media print companies implemented significant cost reduction measures to achieve between 25% and 40% efficiencies, a significant portion of which can continue in the years ahead, though margin pressures will remain due to the proposed labour code and newsprint price changes.

Where did the fall come from?
The largest falls were seen in telecom (-82%), travel and tourism (-70%), e-commerce (57%) and household durables (-51%). According to Pitch Madison Advertising Report 2021, these and others saw de-growth on print because advertisers did not return in adequate numbers, fearing that circulation had not returned to pre-Covid-19 levels.

Which advertising categories are performing?
The top three categories FMCG, auto and education increased their contribution from 37% in 2019 to 48% in 2020. Personal healthcare (8%) replaced retail (7%)as the fourth largest sector on print in 2020.

Mega March 2021 sales figures

Which are the categories print should eye?
There were nine advertising categories which increased their ad volumes on print compared to TV, radio and digital, such as government universities/colleges, health stimulant/ginseng, commercial vehicles, retail outlets-agriculture, solar geysers/water heaters, and marriage bureaus.

Will print grow?
The report showed that print is expected to up its revenue a bit in 2021 to Rs 237.1-billion and Rs 257.7-billion in 2023.

How will this happen?
To expect more growth, print will need to focus on key areas of transformation – product realignment, revenue transformation, cost intelligence and digital demarcation.

Any golden mantra?
As per the EY-FICCI report, print will have to focus on a combination of areas which include identifying new micro-markets which are underpenetrated, as well as forging bundle deals with direct to consumer aggregator.More industry-level shared services initiatives are expected to ensure cost efficiencies. Publishers can also implement process automation for productivity improvement across key business processes.

But - have the advertisers returned?
Average ad insertions per day fell 77% in the April – June quarter during the lockdown, but recovered 2.6 times from there by the last quarter of the year.

2020 vs 2019 numbers?
There were 140,000 advertisers and 169,000 brands on print during 2020, a reduction from 170,000 advertisers and 210,000 brands on print in 2019.

Looks tough?
Yes, the focus will remain on strengthening the print segment’s core capability to building communities, with a wider scope of offerings.

Only five states contributed 49% of newspaper ad volumes?
Maharashtra. Uttar Pradesh. Karnataka. Tamil Nadu. Rajasthan. Minor variations were noted in states with highest ad volumes on print between 2019 and 2020, with only UP and Rajasthan improving their share of ad volumes.

What about ad revenues for magazines?
National magazines garnered 49% of magazine ad volumes.

And regional magazines?
Regional magazines increased their share from 45% in 2018 to 51% in 2020.

Circulation numbers for magazines?
Circulation revival will be critical in 2021 for national magazines to regain ad volumes.

Which were the top performing states for magazines?
Kerala. Maharashtra. Tamil Nadu. West Bengal. Kerala was the top state in magazine advertising with 11% share of ad volumes in 2020.

What about English magazines?
English magazines garnered 49% share of total magazine advertising, down from 54% share in 2018. The four south Indian languages together contributed 26% share of ad volumes in 2020.

What about the festival season?
Top five festivals (Deepavali, Navratri, Durga Puja, Independence Day, Christmas) generated 65% of the festival themed ad volumes in 2020, up from 60% in 2019.  Do note: Onam and Independence Day were more subdued due to the effect of the lockdown.

The next 12-24 months?
The Report estimates that by 2021 newspaper circulation will recover to 88% of 2019 levels and further grow to reach 94% by 2022, while magazine circulation will recover to 70-75% of pre-covid levels.

Did digital subscriptions among newspapers rise?
More publications put digital products behind a paywall during 2020 including Times Group, Indian Express, The Hindu, Hindustan Times. All have seen an increase in their online paid subscribers, which could be in the range of 0.3-0.4 million.

And magazines?
Post the lockdown, some leading magazines saw 20% growth in digital subscriptions - these magazines created micro-sites for popular IPs which led to an increase in subscriptions from India’s top 10 cities.

Is it doable, ad revenues vis-a-vis the wider printing industry?
For this newspapers are re-looking at their print strategy. 

Such as?
Discount coupons available exclusively in the print product. Then, exclusive print content with deeper analysis and infographics as well as points of view apart from factual reportage. Create [Print + digital] communities based on different segments of the newspaper, e.g., crosswords, comics, editorial, citizen reporters. Ensure interactivity on stocks, quizzes, polls, etc.

POD in newspapers?
Yes, print only editions for specific markets or readers' specific content needs.

What about recovering circulation in priority markets?
Yes, wherever advertising budgets are higher. For other markets, cover prices can be increased based on market dynamics. Some media houses have executed this and reaped benefits. 

New markets? Other than the ones mentioned above?
Print will need to focus on growing its reach in its existing markets through a combination of identifying new micro-markets which are underpenetrated as well as forging [service + print] bundle deals with direct to consumer aggregators like television, e-commerce platforms, OTT platforms.

What about margin pressures?
Margin pressures will continue due to manpower cost increases (on account of the proposed labor code) and the vagaries of newsprint costs.

Any industry-level initiatives?
Oh yes. News gathering (perhaps with a larger role played by the Press Trust of India). Also, UGC and stringer networks.

Anything for the print shopfloor?
Plentiful. Production, spares and maintenance. Bulk procurement of newsprint, inks and consumables. Then there is distribution and unsold copy management. And finally, support functions (AR, AP, HR, etc.).

One print innovation that shone during the pandemic?
Outline and seamless jacket remained the most popular innovative ad formats for newspapers. Magazines were deployed for product sampling.

Excellent. What are the industry A Listers saying?
Girish Agarwaal Promoter Director DB Corp Ltd said, "... 2022 will see India emerging stronger. The stupendous growth in cities of Tier-II, Tier-III and beyond is extremely encouraging. We believe that this period has provided the Indian language newspapers a huge opportunity of growth by fostering product innovation and reader-connect."

What are they saying about technology?
Jayant Mamen Matthew, executive editor and director, Malayala Manorama is saying, "Technology and creativity are the pillars on which the future of the industry is pivoted. AI and data analysis are helping us get a deeper understanding of the consumer's mind and preferences. Besides growth, M&E development must persevere greater good reflecting values and principles, not just millions in growth of numbers."

Consumer demand?
Praveen Someshwar, the Group MD & CEO at HT Media said, "With the economy bouncing back, consumer demand and consumption is bound to grow. Resultantly, advertising spends will increase as brands fight for mind and market shares. Digital will continue to grow on the back of high reach and engagement as print complements with impact and credibility, while other mediums will see growth but lower salience."

Final thoughts?
DD Purkayastha Managing Director & CEO ABP Private Limited said, "I believe Covid-19 came as a huge opportunity for the M&E industry. This is the time to establish credibility and relevance. Those who can grab the opportunity would be future-ready and those who cannot would be left behind."

Data courtesy: FICCI-EY report 2021 titled ‘Playing by new rules’.

Click here to download the report



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