Industry on revival path; will grow at 13.1% over next five years: KPMG Report
Digital will grow at the fastest pace of around 30 per cent, followed by TV at 12.6 per cent, radio at 10.2 per cent, OOH at 9.2 per cent and print at 5.9 per cent over the next five years.
A KPMG report on the media and entertainment sector projects advertising revenues to grow at a CAGR of 13.1 per cent over the next five years and reach Rs 2.6 lakh crore by 2023. The report attributes this growth to rapid growth and increase in digital user base and usage, growing domestic consumption, a strong rural demand and in particular upcoming cricket world cup and the general elections in 2019.
Presenting the report titled Media Ecosystems: The Walls Fall Down, Girish Menon, Partner, Media and Entertainment, said the industry is bouncing back from the challenges of 2017. “Our assessment is that the dip last year was fundamentally driven by specific challenges - GST, Demonetisation, RERA. These are one-time aspects and we don’t expect them to recur. Most companies have already recovered from the impact of these challenges and we have been seeing a lot of position traction over the last couple of quarters,” Menon said.
The report found that of the various sectors, digital will grow at the fastest pace of around 30 per cent, followed by TV at 12.6 per cent, radio at 10.2 per cent, OOH at 9.2 per cent and print at 5.9 per cent over the next five years. By 2023 digital revenues are expected to surpass both television and print revenues.
In 2017-18, television revenues grew by 9.5 per cent to reach Rs 65,200 crore in 2017-18. Print grew by 3.4 per cent, earning Rs 31,800 cr in revenues last year. Digital, which saw maximum growth of 35 per cent, is now making Rs 11,600 cr in revenues. Radio and OOH grew at 7.9 and 11.9 per cent respectively over the last year. Overall, the industry grew at 10.9 per cent in 2017-18.
Digital
“Digital consumption has become democratised. It has become regionalised and gone into tier 3 and tier 4 areas,” Menon said, adding that vast spread of digital growth and its usage is driving ad spend on digital platforms. Crucial to the digital industry in India is a unified third-party measurement, Menon said. BARC is working on a digital measurement model, but it is yet to become clear when and how it will be implemented.
In FY 2018, the digital industry grew by 35 per cent, earning Rs 11,630 cr in revenues. Revenues on digital platforms are predominantly advertising driven, the report showed. “Subscription revenues in India are negligible for digital. The digital advertising revenue and subscription revenue are may be off by only 1-2 per cent. For all practical purposes, digital is advertising at the moment,” Menon said.
Even though the industry has been speaking about TMT (telecom-media-technology) convergence for a while now, it is finally a reality, Menon said. “With telecom and technology players making a play on the media side and media companies realising the value that telecom and technology bring to the table, incorporating them in their distribution augurs well for the industry.” He pointed out that media companies must find alternative distribution models and not get stuck in one distribution model.
Speaking about the contribution of telecom company tie-ups to OTT players, Menon said that OTT platforms are generating a significant chunk of their subscription revenues from the collaborations with telecom players.
While the Google-Facebook duopoly continues to thrive, OTT and e-commerce platforms are increasingly attracting ad monies. “Consumer internet companies like Zomato, classifieds platforms like Quikr are seeing some traction. OTT players and e-commerce sites are beginning to emerge as favourable platforms for advertisers. News publishers in print and television are also attracting ad spend on their digital websites,” Menon said. He further said that since Google and Facebook together make up for around 70-75% of the digital ad pie, even if other platforms are attracting double the ad monies, it does not seem significant in the overall scheme of things.
Even as concerns over brand safety, viewability continue to worry brands, Menon said that he does not expect advertisers to drop spends on digital because "they cannot afford to miss the digital bus."
Almost all OTT players in India, barring exceptions like Netflix and Prime Video, follow a freemium model. Menon felt that A-VOD will continue to dominate the OTT space. “We believe that India fundamentally will be an A-VOD ad-led model and subscription model will be different from what exists globally. There will be some niche players like Netflix that are pure play S-VOD, but for the rest, telecom players will bring in the subscriptions. That is what will drive pay-models in India.”
Print, which grew at 3.4 per cent over the last year raking in Rs 31,800 cr in revenues last year, underperformed in FY 2018, Menon said. “Print is probably the one sector which has felt the negative impact of digitisation because there has been incremental readers coming through on the digital side rather than on print. Also ad spend with news publishers is seeing some reallocation towards digital,” he pointed out.
Radio is another area that has underperformed, Menon said. Radio grew by 7.9 per cent during FY 2018 . “The phase 3 auctions have not taken off the way they were expected. Even where operationalisation of phase 3 cities happened, the traction in terms of ad demand has not kept up as expected. That has pulled down radio performance.”
Gaming
Presenting the report titled Media Ecosystems: The Walls Fall Down, Girish Menon, Partner, Media and Entertainment, said the industry is bouncing back from the challenges of 2017. “Our assessment is that the dip last year was fundamentally driven by specific challenges - GST, Demonetisation, RERA. These are one-time aspects and we don’t expect them to recur. Most companies have already recovered from the impact of these challenges and we have been seeing a lot of position traction over the last couple of quarters,” Menon said.
The report found that of the various sectors, digital will grow at the fastest pace of around 30 per cent, followed by TV at 12.6 per cent, radio at 10.2 per cent, OOH at 9.2 per cent and print at 5.9 per cent over the next five years. By 2023 digital revenues are expected to surpass both television and print revenues.
In 2017-18, television revenues grew by 9.5 per cent to reach Rs 65,200 crore in 2017-18. Print grew by 3.4 per cent, earning Rs 31,800 cr in revenues last year. Digital, which saw maximum growth of 35 per cent, is now making Rs 11,600 cr in revenues. Radio and OOH grew at 7.9 and 11.9 per cent respectively over the last year. Overall, the industry grew at 10.9 per cent in 2017-18.
Digital
“Digital consumption has become democratised. It has become regionalised and gone into tier 3 and tier 4 areas,” Menon said, adding that vast spread of digital growth and its usage is driving ad spend on digital platforms. Crucial to the digital industry in India is a unified third-party measurement, Menon said. BARC is working on a digital measurement model, but it is yet to become clear when and how it will be implemented.
In FY 2018, the digital industry grew by 35 per cent, earning Rs 11,630 cr in revenues. Revenues on digital platforms are predominantly advertising driven, the report showed. “Subscription revenues in India are negligible for digital. The digital advertising revenue and subscription revenue are may be off by only 1-2 per cent. For all practical purposes, digital is advertising at the moment,” Menon said.
Even though the industry has been speaking about TMT (telecom-media-technology) convergence for a while now, it is finally a reality, Menon said. “With telecom and technology players making a play on the media side and media companies realising the value that telecom and technology bring to the table, incorporating them in their distribution augurs well for the industry.” He pointed out that media companies must find alternative distribution models and not get stuck in one distribution model.
Speaking about the contribution of telecom company tie-ups to OTT players, Menon said that OTT platforms are generating a significant chunk of their subscription revenues from the collaborations with telecom players.
While the Google-Facebook duopoly continues to thrive, OTT and e-commerce platforms are increasingly attracting ad monies. “Consumer internet companies like Zomato, classifieds platforms like Quikr are seeing some traction. OTT players and e-commerce sites are beginning to emerge as favourable platforms for advertisers. News publishers in print and television are also attracting ad spend on their digital websites,” Menon said. He further said that since Google and Facebook together make up for around 70-75% of the digital ad pie, even if other platforms are attracting double the ad monies, it does not seem significant in the overall scheme of things.
Even as concerns over brand safety, viewability continue to worry brands, Menon said that he does not expect advertisers to drop spends on digital because "they cannot afford to miss the digital bus."
Almost all OTT players in India, barring exceptions like Netflix and Prime Video, follow a freemium model. Menon felt that A-VOD will continue to dominate the OTT space. “We believe that India fundamentally will be an A-VOD ad-led model and subscription model will be different from what exists globally. There will be some niche players like Netflix that are pure play S-VOD, but for the rest, telecom players will bring in the subscriptions. That is what will drive pay-models in India.”
Print, which grew at 3.4 per cent over the last year raking in Rs 31,800 cr in revenues last year, underperformed in FY 2018, Menon said. “Print is probably the one sector which has felt the negative impact of digitisation because there has been incremental readers coming through on the digital side rather than on print. Also ad spend with news publishers is seeing some reallocation towards digital,” he pointed out.
Radio is another area that has underperformed, Menon said. Radio grew by 7.9 per cent during FY 2018 . “The phase 3 auctions have not taken off the way they were expected. Even where operationalisation of phase 3 cities happened, the traction in terms of ad demand has not kept up as expected. That has pulled down radio performance.”
Gaming
