India’s media and entertainment (M&E) sector which was valued at Rs. 2,64,588 crore in 2018 continues to post marked growth. KPMG in India’s media and entertainment report 2019 says that the slowdown in consumption has had a moderate impact on some sectors in the Indian media and entertainment (M&E) industry, which grew by 13.3 per cent in FY19, to reach a size of INR1.63 trillion, with a CAGR of 11.5 per cent over FY15-FY19, but the strong growth displayed by the digital, gaming and the film segments has contributed to the overall performance of the sector. India is one of the fastest growing entertainment and media markets globally and is expected to keep that momentum.
A major reason for this exponential growth is the digitisation and the infusion of over-the-top (OTT) platforms. Specifically, the digital revolution has created a tectonic shift in content consumption in India.
The digital segment has continued to be the torchbearer of growth of the industry in FY19, with a 43.4 per cent growth taking the overall segment (including digital advertising and subscription revenues from OTT video and audio) to INR173 billion in FY19.
The Indian M&E industry is expected to grow at a CAGR of 13.5 per cent during FY19 to FY24 to reach a size of INR3, 070 billion by FY24.
According to the KPMG in India’s media and entertainment report 2019, FY19 was an excellent year for the film industry, with the segment experiencing a higher than expected growth of 15.1 per cent in FY19 over previous year on the back of robust box office collections, with more than thirteen movies crossing INR1 billion at the Indian box office. This was the best performance in the past decade at the box office, as content took centre-stage and small budget movies turned out to be box office money-spinners.
Importantly, with a sharp increase in consumption on OTT platforms, the revenues from digital rights saw a substantial increase in FY19, with the sub-segment growing the fastest at 30 per cent in FY19, albeit from a smaller base.
It needs to be understood that India is not a single market but a combination of multiple markets, each with its unique characteristics. Content today is being created in eight major Indian languages besides Hindi and English.
According to the report, the film industry in India is to hit $3.7 billion by 2020. At present, the film industry grosses a total revenue of Rs 13,800 crore ($2.1 billion), and it has grown at a CAGR (compound annual growth rate) of over 10% in the last couple of years.
Despite the hurdles, the Indian film industry is the largest in the world in terms of number of films produced. India produces 1,500-2,000 films every year in more than 20 languages.
According to a report by global accounting firm PricewaterhouseCoopers (PwC), India’s video streaming industry is all set to grow at a CAGR of 21.82% to reach Rs. 11,977 crore by 2023. Subscription video on demand would grow at 23.3% CAGR to $1.5 b, 89.4% of overall revenues.
In keeping with the global digitisation trend, OTT platforms, which comprise both American platforms such as Netflix and Amazon Prime Video as well as local Indian services like ZEE5, VOOT, Eros Now and ALTBalaji, have invested heavily in acquiring exclusive rights to cinematographic films, which in doing so, have pioneered a digital-only film market in India since 2018.
The entertainment content industry is at the cusp of a revolution spurred by the OTT boom of the past two to three years.
As of 2018, India is the tenth largest market for OTT in the world with overall revenue standing at Rs. 4,462 crore. Subscription-based video-on-demand platforms are projected to grow at a CAGR of 23.33% to reach Rs. 10,712 crore between 2018-2023. According to experts, the OTT market is clearly tilted towards advertising right now. Advertising-led platforms are a Rs. 4,500 crore industry compared to ₹1,500 crore for subscription services which are incidentally, growing faster.
According to the report, Indian video OTT service is to grow at 21.8% CAGR to reach $1.7 billion by 2023 from $638 million in 2018. Indian OTT market will overtake South Korea to become the 8th biggest market in the world by 2023.
The over-the-top (OTT) video industry will record the highest growth rate among all segments and drive evolution over the next four years in the overall media and entertainment industry in the country that will rise by 11.28% to reach Rs. 4,51,405 crore.