The M&E industry has horizontalised: Ashish Pherwani

Television remains the dominant force, defying predictions of digital overshadowing it. Despite the rise of digital platforms, TV retains its top spot, with a notable exception in the advertising to GDP ratio, currently at a concerning 0.3%, emphasizing the industry's untapped potential for further growth. This was revealed by Ashish Pherwani, M&E Sector Leader, Ernst & Young LLP, while speaking at the FICCI Frames 2024 event that got underway in Mumbai today.

“The industry has horizontalised. TV channels are digital, newspapers go digital, radio companies do events, everything. Every company that you’ve been tracking is doing everything,” remarked Pherwani.

Analysing India’s thriving media and entertainment landscape, Pherwani shed light on the sector’s impressive growth, revealing intriguing trends and anticipating future trajectories. The sector’s expansion from Rs 2.1 trillion to Rs 2.3 trillion, marking an 8% growth, is indeed noteworthy. However, the headline news lies in the industry standing firmly at 21% above its pre-pandemic levels, showcasing resilience and robust recovery.

Last year witnessed a substantial 17,300 crore growth in the industry, with an interesting twist – 70% of this growth originated from new media, encompassing digital and online gaming. Pherwani emphasised this as a shift from the perceived “digital divide” to a more accurate portrayal as a “digital multiplier”, signifying growth across both digital and traditional media.

Examining the unique circumstances of the past year, Pherwani highlighted a deviation from the usual correlation between Indian nominal GDP and advertising growth. While the GDP grew by 9%, advertising grew by just 8%, primarily due to supply chain concerns and tightening VC funding during 2023.

A significant disruptor in the industry was the decline in paid OTT subscriptions, witnessing a rare downturn of 2 million paid subscriptions. However, this setback was offset by a surge in free ad-supported streaming, reaching an unprecedented 500 million viewers for cricket on digital platforms.

Experiential aspects, including movies, online gaming, and live events, witnessed an 18% growth, outpacing the industry's overall 8% growth. The Indian film industry, particularly Bollywood, celebrated its best-ever year, with theatrical revenues crossing 12,000 crores for the first time. Online gaming emerged as a formidable segment, boasting 450 million players and poised to become the third-largest segment in the Indian media and entertainment sector by 2026.

The industry’s horizontal expansion, with companies diversifying into various media segments, prompted a reclassification into four categories: video, experiential, text, and audio. Video, encompassing large and small screens, claimed the lion's share at 67%, with experiential, representing out-of-home experiences, following closely at 22%.

Looking ahead, Pherwani predicted a shift in focus from distribution channels to screen size, with a projected one billion screens in India by 2030. The future will witness the rise of short videos and snackable content, particularly on mobile phones. Social media is anticipated to grow by 40% to 50%, and TV will undergo significant changes, breaking into three segments: paid TV, free TV, and connected TV.

Gaming, already a substantial segment, is expected to reach 500 million gamers within the next few years, creating additional opportunities for advertising and subscriptions. Premium OTT content is foreseen to grow from 3,000 to 4,000 hours by 2026, with a focus on profitability. Online news, currently reaching 450 million, is predicted to reach 550 million within three years, with subscription models playing a crucial role.

Pherwani wrapped up the analysis by projecting a 10.2% growth in the industry next year, reaching Rs 2.6 trillion, with digital overtaking television as the largest segment. By 2026, gaming is poised to become the third-largest segment after digital and television.

In conclusion, Ashish Pherwani’s insightful analysis provides a comprehensive snapshot of the Indian media and entertainment industry, showcasing its growth, challenges, and the evolving landscape.