Investment in media and entertainment industry declines by 40% to $260 million in CY2020

Online news sites besides short form video streaming platforms are some of the players which have raked in the money

Investment in Media and Entertainment Industry, Media and Entertainment Industry in India
Foreign investments in the online news space may witness some kind of slack in the coming years.

With advertisers tightening their purse strings — it’s not only the ad spends which seem to have taken a hit, the media and entertainment industry including ad-tech and mar-tech industry too have seen a decline in investment. Funding in the ad-tech and mar-tech sector declined 40% to $260 million in CY2020 (Jan-Nov) as compared to $434 million, according to data provided by Tracxn Technologies.

As per Tracxn, last year social media apps such as sharechat and OTT apps such as MX Player and Saavn were acquired by Tencent and Reliance Jio — while this year online news apps such as DailyHunt, and Inshorts have received funds. “In the early stage of lockdown– April-June, very little new content was made available for viewer’s consumption. Meanwhile, from covid update to Bihar elections to the US election, the year has been very news heavy. Hence, it is no surprise that investments were made towards online news portals,” Lloyd Mathias, brand strategist, said. Online news platforms saw a rise in userbase during lockdown as newspapers’ distribution took a hit of over 70%, forcing readers to shift online for news consumption.

Other than digital news platforms, social media apps specifically featuring short-form video, also registered a rise in user base post the ban on chinese apps including TikTok in June, by the government. The move led to the mushrooming of many such apps. In fact, social media platform Sharechat received $40 million in September 2020 from a clutch of investors including Shunwei Capital, Google and Twitter after the Indian startup added tens of millions of new users. Similarly, Trell– a lifestyle-community-commerce platform, received $14 million in August. For industry experts, this is a trend that will continue in 2021 as well. “While there are certain sectors in the industry that are growing, there are a number of companies that are in launch or growth mode and are funded quickly one after the other. This is what has happened with news apps, short-form video apps and regional versions of video apps this year. In the coming year you will see an extra bump given to short-form video apps because they have seen an exponential growth with TikTok out of the market,” Jehil Thakkar, partner, Deloitte, stated.

However, foreign investments in the online news space may witness some kind of slack in the coming years. This is largely due to the implementation of foreign direct investment (FDI) policy in digital news media which restricts foreign investments to 26%. Hence, industry observers believe that while there will be a drop in FDI in 2021, overall investments into the M&E sector will see a rise. According to Thakkar, there might be additional rounds, but it is very unlikely that there will be new investment. “This year investment was lower because of covid but given the economy will be a lot more open next year and with the vaccine coming out soon, media and entertainment will make a comeback,” he added.

Read Also: TV ad volumes spike during festive season

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First published on: 08-12-2020 at 08:01 IST