M&E revenue to grow 12-14% next fiscal: CRISIL Ratings

The Indian media and entertainment1 (M&E) sector may log revenue growth of 12-14% on-year to reach Rs 1.6 lakh crore  in the fiscal 2024 against 16% growth expected this fiscal. 

Advertisement (ad) revenue, which accounts for 55% of the sector’s revenue, will grow 14% given its strong correlation with economic activity. Also, the general elections expected in mid-2024 will trigger an increase in ad  spend in the last quarter of the next fiscal. 

Subscription revenue, accounting for the balance 45%, will grow at a slower pace of 12%, led by strong recovery in  films. Excluding film exhibition, the revenue growth would be modest at 4-5%. 

Naveen Vaidyanathan, director, CRISIL Ratings, “While television (TV) will continue to dominate ad  revenue share given its wider reach, digital will lead in growth, rising 15-18% annually over the medium term.  It has emerged as the medium of choice in the past few years amid accelerated adoption of over-the-top (OTT)  platforms, online gaming, e-commerce, e-learning, and online news platforms. After the pandemic, digital has  become the second-largest segment after TV in terms of ad spends. Together, they account for over three fourths of the ad revenue for the M&E sector, followed by the print segment with a one-fifth share.” 

While the print media, too, will see healthy ad revenue growth of 15% on-year next fiscal, it would still trail pre-pandemic level by 800-1000 basis points. That is because of slow recovery in ad yields, especially for English  editions. Other hyperlocal media such as radio and outdoor could reach pre-pandemic levels next fiscal spurred by  increased commuting as well as higher ad budgets for micro, small and medium enterprises, the key drivers for these  segments. 

Digital will be driving the growth followed by TV and print, the report states.

As for non-ad revenue, theatre collections for film exhibition, which was the most affected by Covid-19, may surpass  pre-pandemic levels with strong growth of ~30% on-year next fiscal, after making a strong comeback this fiscal. The  addition of screens amid rising occupancy will support the growth. Subscription revenue growth for TV and print would  be driven by moderate improvement in realisations in the near term but would bear the heat of shifting consumer  preference towards digital medium in the long term. 

Rakshit Kachhal, associate director, CRISIL Ratings commented on this, “Increasing digitalisation would affect TV and print  subscription in the long run, necessitating accelerated integration of digital media into traditional segments.  Moreover, while moviegoers are back in cinema halls, increased OTT consumption could impact theatrical  collections. Some of the pandemic-driven changes in consumer behaviour may lead to structural changes in  business models in the M&E sector over the long term and will need to be monitored.”