Indian M&E sector crossed Rs 2.3 tr in 2023; expected to reach Rs 3.1 tr by 2026: FICCI-EY

The annual FICCI-EY report on India’s media and entertainment industry was released on Day 1 of the FICCI Frames 2024 event earlier today. Titled ‘#Reinvent - India’s media & entertainment sector is innovating for the future’, the report reveals that the Indian M&E sector continued its growth trajectory in 2023, growing by Rs 173 billion (8.1%) to reach Rs 2.32 trillion. This growth of Rs 173 billion was driven by new media. While the sector was 21% above its pre-pandemic levels, television, print and radio still lagged their 2019 levels.

As per the report, the M&E sector is expected to grow 10.2% to reach Rs 2.55 trillion by 2024, and then grow at a CAGR of 10% to reach Rs 3.08 trillion by 2026.

While television remained the largest segment, digital media is expected to overtake it in 2024. Except for television, all M&E segments grew in 2023. The growth of Rs 173 billion was half of the Rs 371 billion growth that took place in 2022, mainly due to headwinds in advertising during the first half of the year.

New media (digital and online gaming) grew the most, providing Rs 122 billion of the total growth, and consequently, increased its contribution to the M&E sector from 20% in 2019 to 38% in 2023.

The share of traditional media (television, print, filmed entertainment, live events, OOH, music, radio) stood at 57% of M&E sector revenues in 2023, down from 76% in 2019. Experiential (outside the home and interactive) segments continued their strong growth in 2023, and consequently, online gaming, filmed entertainment, live events and OOH media segments grew at a combined 18%, contributing 48% of the total growth.

Ashish Pherwani, Partner and Media & Entertainment Leader, EY India, said, “I believe the M&E sector is at the “inflection point” we foresaw in 2018, with the dominance of digital channels over traditional media. In 2023, new media comprised 52% of total advertising revenues, yet, unlike in many other countries, Indian traditional media also grew. This underscores the unique Indian market where while we are witnessing a seismic shift towards digital consumption, there is still adequate headroom for traditional media to grow.”

Kevin Vaz, Chairman, FICCI Media and Entertainment Committee and Chief Executive Officer - Broadcast Entertainment, Viacom 18, noted, “India is a unique market where the M&E sector distinguishes itself through a harmonious fusion of tradition and innovation. Here, technology-enhanced entertainment channels, OTT platforms, AI-powered newsreaders, traditional print media, flagship films, and short-form content not only coexist but thrive together, showcasing the vibrant diversity and dynamic growth of our industry. The Government of India’s thrust on improving digital infrastructure in the country combined with our ambition to be at the forefront of the next big technological thrust in media and entertainment, our sector is primed for a massive transformation.”

Key highlights:

Indian advertising reached Rs 1.1 trillion:

Digital advertising grew 15% in 2023 and surpassed traditional advertising for the first time. Social, sports, e-commerce and SME advertisers will continue to drive the growth in the sector moving forward.

A billion screens by 2030:

India is expected to have almost a billion active screens by 2030. Of these, around 240 million will be large (TV, laptop, PC), while the remaining will be small (mobile phones, phablets). Pay TV, Free TV, and Connected TV are expected to emerge as significant markets, each comprising between 60 million and 80 million homes. The 3:1 ratio in favour of mobile phones will sustain the demand for short videos and social commerce.

Online gaming is expected to reach Rs 388 billion by 2026:

The segment will see growth across all its verticals, including esports, fantasy sports, casual gaming, and other games of skill to reach an estimated 150 million daily users. Revenue growth will be led by mobile-based real-money gaming and casual gaming.

Segmental performance in 2023

Television: Television advertising fell 6.5% due to a slowdown in spending by gaming and D2C brands, which impacted revenues for premium properties. The HSM market was also soft, resulting in a 3% overall ad volume de-growth. Subscription revenue grew after three years of fall on the back of price increases, though pay TV homes fell by two million. While linear viewership grew 2% over 2022 – 19 to 20 million; smart TVs connected to the internet each week was up from around 10 million in 2021.

Digital advertising: Digital advertising grew 15% to reach Rs 576 billion, or 51% of total advertising revenues. Included in this is advertising by SME and long-tail advertisers of over Rs 200 billion and advertising earned by e-commerce platforms of Rs 86 billion.

Digital subscription: Digital subscription grew 9% to reach Rs 78 billion. This was a third of 2022’s 27% growth, as premium cricket properties were moved in front of paywalls. Paid video subscriptions reduced by two million in 2023 to 97 million, across 43 million households in India. Paid music subscriptions grew from 5 million to 8 million, generating Rs 3 billion, while online news subscriptions generated Rs 2 billion.

Print: Bucking the global trend, print continued to thrive in India. Advertising revenues grew 4% in 2023, with a notable growth in premium ad formats, as print remained a “go-to” medium for more affluent and non-metro audiences. Subscription revenues grew 3% on the back of rising cover prices. Digital revenues were insignificant for most print companies.

Online gaming: The segment’s growth slowed to 22% in 2023 to reach Rs 220 billion. It overtook filmed entertainment to become the fourth largest segment. There were over 450 million online gamers in India, of which around 100 million played daily. It is estimated that over 90 million gamers paid to play; real money gaming comprised 83% of segment revenues. Impact of a higher GST levy was largely absorbed by larger players, impacting margins, but protecting growth.

Film: The segment grew 14% to reach Rs 197 billion. Over 1,796 films were released in 2023, and theatrical revenues reached an all-time high of Rs 120 billion. Number of screens grew 4% and fewer films released directly on digital platforms. 339 Indian films were released overseas.

Animation and VFX: The Hollywood writers’ strike impact global supply chains, and consequently, the segment grew just 6% in 2023. Potential mergers and falling ad revenues also reduced the slate of animated content produced for broadcast in India. A revival in demand in the second half of the year led to growth, boosted by the trend of using more VFX in Indian content.

Live events: The organised segment grew 20% to finally exceed its pre-pandemic levels. Growth was driven by government events, personal events and weddings, and ticketed events, including several international formats.

OOH: OOH media grew 13% in 2023 and crossed its 2019 levels. Premium properties and locations led the growth. Active digital OOH screens crossed 100,000 and contributed 9% of total segment revenues.

Music: The Indian music segment grew by 10% to reach Rs 24 billion in 2023, slower than previous years as certain music OTT platforms went pay and stopped or reduced their free services. 87% of revenues were earned through digital means, though most of it was advertising led on YouTube, there being around only 8 million paying subscribers despite music streaming’s reach of 185 million.

Radio: Radio segment revenues grew 10% in 2023 to Rs 23 billion on the back of more retail and local advertising, and alternate revenue streams. Ad volumes increased by 19% in 2023 as compared to the previous year, though ad rates remained below their 2019 levels.