The Indian media & entertainment (M&E) sector has grown in double digits almost every year for the past 10 years. This growth has been fuelled by drivers like government policies (increased FDI limits), technological development, growing consumer spends, and increasing competition leading to greater affordability and better and wider infrastructure like broadband, multiplexes and DTH penetration.
The sector stands strong at an estimated size of Rs 1.5 trillion in 2017 maintaining its double-digit trend with almost a 13% rise over the previous year. This growth, looks set to continue, with estimates that India will be the third largest economy in the world by 2030 backed by a strong demographic, economic factors and a supportive regulatory environment which is expected to further the growth of the M&E sector.
Let us look at some of the factors that have been game changers for this sector.
Television distribution: Digitisation of cable TV services, which began in 2012, was finally completed on March 31st, 2017. The government’s persistence and support towards digitisation has helped to resolve one of the most pernicious issues, which was addressability. Digitisation and increasing market share of DTH is seen to have had a ripple effect on a number of factors like increased collections from the last mile, increase in government revenue, some stability to the carriage/subscription equation and an increase in media consumption. In addition to private sector DTH, another key influencer has been free dish–the government’s free DTH service. Its expanded market share seems to have impacted business models across the TV broadcasting spectrum and influenced advertising strategy.
Film distribution: If there is one segment that has been revolutionised by technology, it is film. A little over 15 years ago, we would talk about a movie being a hit if it was a ‘silver jubilee’ or a ‘golden jubilee’. A nationwide release was considered an impossibility. For the last few years, major films have been regularly released on 2000 plus screens and many on 4000 plus screens on the same day. Digital distribution has enabled wide distribution at an affordable cost and changed production, distribution and business models along the way. This has not only helped the film industry fight piracy to an extent but also better-enabled monetization of advertising by exhibition chains.
Viewer experience: Subscribers today are willing to pay more for a superior experience in entertainment but are also becoming increasingly selective about what they pay for. Easy access to high affordable technology like HD content and devices, sophisticated set top boxes, three and four-dimension content and superior sound experiences like Dolby has raised the bar for quality entertainment. According to industry estimates, HD grew with digitization and is now estimated to have crossed 10 million subscribers, on the back of increased sale of large television screens of 40 inches and above. The proliferation of better experiences and choice in the home, has enabled consumers to become selective about what they step out for, thereby impacting the way films are made. Movies that offer a grand scale, big stars or special effects have been generally garnering an increased share of box office revenue, as consumers begin to prefer to watch ‘regular’ movies on the home TV or mobile screen. As entertainment on the mobile screen proliferates, tools like personalisation algorithms are expected to become as important to success and increasing viewership time and retention as is great content.
Broadband infrastructure: A key factor in the evolution of the media and entertainment sector has been the wider adoption of broadband. Not only has it changed the way consumers behave and consume entertainment, it is changing the relationship between the business and the consumer. For decades, many parts of this sector viewed themselves as B2B enterprises with customers being advertisers or cable companies but as the direct relationship with customers grows, they should increasingly consider becoming B2C companies. In 2017, India reached a telecom subscriber base of 1.19 billion and almost 430 million broadband subscribers in mid-2018–with most being wireless, according to data from the Telecom Regulatory Authority of India (TRAI). The number of smartphones sold in India in 2017 amounted to 124 million, as per market research firm IDC. India is now the second largest smartphone market in the world after China. The increase in affordability of data in the past two years seems to have propelled consumption of entertainment on the mobile. The OTT app ecosystem now has over 30 providers, impacting the content production ecosystem and driving up the price of content. Further technology adoption like Fibre to the home (FTTH) lined up for wired broadband connections, is expected to fuel growth of IPTV and consumption across three household devices: television, laptop and mobile.
In India, we are still in the early stages of the transformation of the M&E industry, with technology as a catalyst. Changing consumer patterns are seen disrupting business models that have held sway for almost a century, and have resulted in initiating the process of transforming the structure of the industry. India is unlikely to follow the exact same path charted in western countries with the economics being quite different.
(Views expressed are personal. )
Jehil Thakkar, is partner at Deloitte India.
Prashanth Rao, partner, and Kashyap Pathak, senior manager, Deloitte India also contributed to this article.