The report highlights how traditional media could face challenges in the near to medium term due to the coronavirus pandemic
Though media consumption overtime has become income inelastic, however the current environment could result in a dip in media consumption in the near term, according to the latest KPMG report. Titled “COVID-19: The many shades of a crisis- A media and entertainment sector perspective”, the report highlights how traditional media could face challenges in the near to medium term due to the coronavirus pandemic.
According to Satya Easwaran, partner and leader – markets enablement, technology, media and telecom (TMT), KPMG India, the COVID-19 pandemic has resulted in a drastic cut in advertising expenditure across all media. However, with people being homebound, consumption of media and entertainment – and digital media in particular – has seen considerable growth. “Post crisis, we anticipate an even greater integration of technology into our everyday lives with a marked digital progression of Indians across socio-economic classes. Monetisation however might remain a challenge in the near term,” he added.
As per the report, the economy is under stress and the adverse impact on the key ad-spend sectors such as consumer, auto, e-commerce etc is likely to impact monetisation significantly. As a result, though consumption may rebound earlier, monetisation recovery may take
Longer time. Meanwhile, digital subscription revenues could see an upswing post COVID-19 as habit formation in terms of OTT video consumption sets in. As for traditional media, print will get a new lease of life due to its credibility factor as fake news of digital medium runs rampant. “It is critical for print businesses to leverage this opportunity to evolve and build strong integrated
digital cum print solutions to retain consumer loyalty,” the report stated.
According to the report, ad-spend pressures will linger on the back of weak economy as well as lower domestic consumption. Meanwhile, digital consumption will witness a rapid incremental growth with India’s digital billion trajectory likely to accelerate materially. Similarly, at-home entertainment options such as digital, TV, online gaming will see an upswing as ‘lockdown behaviour’ results in habit formation. Outdoor entertainment, on the other hand, particularly in COVID-19 hotspots, will notice a lingering risk aversion even in the medium term. Further, while India’s media consumption remains upbeat during the lockdown, indulgent expenses around purchase of latest hardware, technology upgrades etc. could be postponed for a while
“The COVID-19 experience is likely to result in a long-term upward shift in the integration of digital technologies into our everyday lives, with India’s ‘digital billion’ trajectory likely to accelerate materially. We expect greater affinity to be seen for at-home entertainment with subscription models, cord-shaving and streaming to larger screens seeing exponential pick-up in the near to medium term,” Girish Menon, partner and leader – media and entertainment, KPMG, India, said.
The report also highlighted that the pandemic could result in bringing forth innovations in the content pipeline, delivery model and emphasise on predictive analytics. With a focus on building a stronger content bank, innovation in the content pipeline will result in working capital being locked up across the value chain, leading to higher cash flow requirements. Greater emphasis on predictive analytics will help the M&E sector in predicting consumer behavior during these uncertain times via Artificial Intelligence (AI)/ Machine Learning (ML).