Indian M&E fell 24% to Rs 1.38 tr in 2020; expected to recover 25% in 2021: FICCI-EY
FICCI-EY’s annual report on the Media & Entertainment sector shows that the Indian M&E sector fell by 24% in 2020 to Rs 1.38 trillion ($18.9 billion), in effect taking revenues back to 2017 levels.
However, as per the report, the last quarter of 2020 showed a marked improvement in revenues for most segments and the M&E sector is expected to recover 25% in 2021 to reach Rs 1.73 trillion ($23.7 billion) and then to grow at a CAGR of 13.7% to reach Rs 2.23 trillion ($30.6 billion) by 2023.
While television remained the largest segment, digital media overtook print, and online gaming overtook a disrupted filmed entertainment segment in 2020. Digital and online gaming were the only segments which grew in 2020, adding an aggregate of Rs 26 billion and consequently, their contribution to the M&E sector increased from 16% in 2019 to 23% in 2020; even as other segments fell by an aggregate of Rs 465 billion.
Severely disrupted by the pandemic and the lockdowns, the largest absolute contributors to the fall were the filmed entertainment segment (Rs 119 billion), print (Rs 106 billion) and television (Rs 102 billion).
The share of traditional media (television, print, filmed entertainment, OOH, radio, music) stood at 72% of M&E sector revenues in 2020.
The FICCI-EY reported states that TV remained the largest earner of ad revenues in 2020, contributing 42% to the total advertising, while Digital advertising increased to 32% of total advertising in 2020, from 24% in 2019. E-commerce advertising (included under digital advertising) grew to Rs 35 billion in 2020.
The largest segment saw a 22% fall in advertising revenues on account of highly discounted ad rates during the lockdown months – though ad volumes reduced only 3%. In addition, it also witnessed a 7% fall in subscription income, led by the continued growth of free television, reverse migration and a reduction in ARPUs due to part implementation of NTO 2.0.
Digital advertising stayed stable, led by increased allocation from traditional advertisers, who accelerated their investments in digital sales channels. This could become a permanent phenomenon. SME advertisers continued to increase their spends on digital advertising and experimented more with online sales platforms like Amazon and Flipkart. News brands, whose reach crossed 450 million in 2020, also increased revenues from their digital platforms.
28 million Indians (up from 10.5 million in 2019) paid for 53 million OTT subscriptions in 2020, leading to a 49% growth in digital subscription revenues. Growth was led largely by Disney+ Hotstar, which put the IPL behind a paywall during the year, increased content investments by Netflix and Amazon Prime Video and launch of several regional language products. In addition, 284 million Indians consumed content which came bundled with their data plans.
Print’s revenue declines were led by a 41% fall in advertising and a 24% fall in circulation revenues. English language newspapers were hit harder and struggled to get back their circulation post the pandemic, particularly in metros, while regional language newspapers recovered a larger portion of their lost circulation. The segment saw the establishment of a new lower-cost operating benchmark, with most print companies reducing costs by over 25%.
Continuing as the fastest growing segment of the M&E sector for the fourth year in a row, the segment grew 18%, helped by work from home, school from home and increased trial of online multi-player games during the lockdown. Online gamers grew 20% to reach 360 million in 2020. Transaction-based game revenues grew 21%, despite adverse regulation in certain states, while casual gaming revenues grew 7%.
While theatrical revenues plummeted to less than a quarter of their 2019 levels, a portion of this loss was made up through higher digital rights revenues, which almost doubled during 2020 to Rs 35 billion. However, the stoppage in production for over six months had its impact, which will now only recover once a healthy slate of films is made ready for release and the fear of stepping into crowded places subsides. While the trend for direct to digital releases will continue, producers realised the importance of theatrical releases for large scale film productions.
Animation and VFX
Stoppage of television and film content production for several months in 2020 resulted in a fall in revenues – while VFX and post-production contracted 62% due to this, inability to conduct live shoots led to increased demand for animated content, and consequently animation registered a growth of 10%.
Perhaps the hardest hit of all, the segment witnessed numerous attempts to digitalise its offerings, but could only recover a small fraction of revenues through that medium. The segment will continue to remain impacted for the first two quarters of 2021 before marketers and audiences feel comfortable about participating in live events.
The segment lost out due to reduced travel and less time spent out of the home on account of the lockdown. Largest hits were witnessed by premium transit properties, where passenger volumes plummeted. Digital OOH reached 5% of total segment revenues. The need for a credible and universally accepted measurement system for OOH continues to be critical for recovery.
Radio revenues, which had fallen 7.5% in 2019, fell by over 50% again on account of both ad rate and volume drops as key advertiser segments (regional and retail) were unable to run their businesses at their usual scale. Revenues had recovered to over 50% of pre-pandemic levels by the October to December quarter.
The digitisation of music continued in 2020 with audio streaming revenues growing 15%, but overall, music segment revenues were flat as performance rights fell by over 65%.
Advertising saw a fall of 5% in 2020 at Rs 199 billion. While digital advertising remained flat, the highest falls were noted in print (Rs 84 billion) and television (Rs 69 billion) advertising.
Overall, subscription de-grew Rs 154 billion or 20%, with the highest fall being seen in domestic and international theatricals of over Rs 100 billion. The pandemic showed the resilience of subscription models vis-a-vis ad-based models, across OTT, print and television, as subscription increased from 49.7% in 2019 to 51.5% of total revenues in 2020.
Future outlook – Time to recovery will vary
While the M&E sector is expected to rebound in 2021 and double to around Rs 2.68 trillion by 2025, the recovery of various segments will vary. The FICCI-EY report expects that different segments will take different periods of time to regain their 2019 (pre-pandemic) revenue numbers.
The following periods for recovery are estimated for different sectors, assuming no further setbacks:
- TV, film, music: 1-2 years
- Animation and VFX, events: 2-3 years
- Print, radio, OOH: Beyond 3 years