Media industry to contract by 20% in FY21 as digital shows growth: KPMG Report

The Indian media and entertainment (M&E) industry, which grew by 7.4% in FY20, to reach a size of Rs 1.75-trillion, is expected to contract by a whopping 20% in FY21, KPMG in its Media and Entertainment Report 2020, titled A Year Off Script, released on 30 September, said. The report added that only by FY 2022 that the media and entertainment industry will regain its mojo. This is the 12th edition of KPMG’s Media and Entertainment (M&E) Report.

02 Oct 2020 | By Dibyajyoti Sarma

However, in a year of dismal shows and de-growth, the digital and gaming segments have given a stand-out performance, growing at a rapid pace. Thanks to changes brought about by Covid-19, the report projects that India’s digital ecosystem could reach a billion users faster than the earlier projections.

Advertising spends on digital is set to overtake spends on TV by FY21 itself. In FY20, television was the largest segment in terms of both overall revenues as well as advertisement revenues, with a 9% growth overall. However, the New Tariff Order (NTO) was responsible for some part of this growth as subscription revenues for TV channels grew on the back of this.

According to Girish Menon, partner and head, Media and Entertainment, KPMG, the third quarter (October to December) of this year may see a bounce-back to pre-Covid levels for television and print, which may attain the same revenues of FY20 third quarter.

Digital, however, posted an overall 26% growth in FY20, with OTT advertising growing by 24%. OTT subscriptions grew by 47% in FY20 and this year, too, are expected to exceed as these became platforms of choice during the lockdown.

Menon said even when things normalise, the new users gained by OTT platforms will stick on, while in digital gaming, which has seen the number of average users go up phenomenally, there could be some drop-offs.

Among other segments, television is the only other medium to experience growth, as it has grown by 4% to reach Rs 262-billion. Print (10%), radio (13%), films (7%) and OOH (9%) have all de-grown.  

Ad revenues are also expected to be hit severely in 2021. Print is expected to de-grow by 46% in 2021. In 2022, KPMG expects print to recover but still be below the numbers it has in 2020. Similarly, television will also de-grow in 2021. The expected dip is 17% before recovering to Rs 258-billion in 2022 (Rs 4-billion less than the numbers in 2020).

The M&E sector is expected to bounce back in FY22 with a growth of 33.1% over FY21 to reach a size of Rs 1.86-trillion, at a CAGR of 3.2% over FY20-22, with gaming and digital being the fastest growing segments.

Menon added, "There will be a deeper integration of digital technology across the M&E value chain — from content production to distribution. Technology adoption could however face some challenges in terms of skill development and the shift to a digital-first mindset but will result in operational cost savings and potentially lower lead times over the longer term."   

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