The M&E (Media & Entertainment) industry in India is one of the fastest growing industries and the next two years promise change across content creation, distribution and monetisation, as India’s need for escapism and entertainment increases.
Indians have long been used to group escapism, but that is changing with the advent of new technology and the spread of broadband. Individual escapism will be on the rise — it will reach 50% of total entertainment by 2020 vs just 20% last year. Smartphone penetration and broadband connectivity will play a key role in this change. The impact of this change on the M&E industry the way we know it today will be significant across media.
Television
Television forms the largest segment in the M&E industry in India and we expect it to continue its dominance, growing at 15-20% p.a. Industry players will soon recognise the benefits of digitisation in terms of increased subscription revenue flowing back to the MSO on the back of expected completion of Phase III of digitisation.
In terms of programming, Indian television will continue to witness the emergence of ‘niche GECs’. Sony launched Sony Pal which was targeted towards women; the Epic channel was launched; Zee launched Zindagi and other TV channels which are GECs but appealing to a niche audience to cater to more individual escapism. These niche GECs, we believe are paving the way for niche channels which will be subscription based, and will address specific content needs of Phase III and IV markets.
Multi-platform consumption of content will lead to new revenue models. The trend of viewing content on multiple screens is slowly catching up in India, and we expect to see a significant spurt in mobile and PC based TV consumption when broadband rates reduce. India is also one of the fastest growing online video viewing markets with around 100 million video viewers. Producers and broadcasters will have to take notice of this phenomenon and leverage it to enable greater engagement with the viewers, and corresponding monetisation.
Newspaper circulation is expected to be driven primarily by Hindi and regional language dailies which could witness annual growth in excess of 7-10% over the next few years. Growing literacy rates in the country will lead to this growth which will fuel advertising revenues.
With smartphone penetration touching 20% levels in 2014, and expected to cross 60% by 2017, and internet subscribers growing from 250 to 550 million during the same period, there will be a definite shift in news consumption to the mobile phone, and newspapers could lose some youth and upper SEC audiences to the digital medium.
The strategy of print players to follow their print markets with radio will enable them to offer advertisers both launch ads on print as well as the reminder/follow-up ads on radio. That should help in cross-promoting local events and activations as well.
Radio
Post the Phase III auctions, radio companies can now offer a more compelling proposition to advertisers across metros, states and regions. Radio will get a larger share of the total advertising pie – from 3.5% to around 4.5%—as price sensitive advertisers could move ad spends from print and regional TV to radio. We expect the radio industry to grow by 20-25% within a year of operationalising the new stations acquired by them.
The biggest opportunity for radio companies can be around digital activation. As brands move towards Tier III and IV and V towns, simple IVR, SMS and or app-based solutions around coupons, contests and loyalty points can enable achievement of trial, purchase or feedback in a never-before possible scale.
Out of Home (OOH)
Transit media which has emerged as the fastest growing segment of OOH advertising will fuel growth in 2015. With the growth in digital media, advertisers will utilise technology for cross-platform promotions to enhance customer engagement and facilitate audience measurement. The events space will grow at 16% over the next few years, led by a 50% growth in live ticketed events, which should cross ‘500 crore in 2015.
Digital will integrate with activations – enabling cost effective amplification of on-ground events, and reducing the per capita contact cost for advertisers, while increasing reach manifold. India will see a plethora of intellectual properties being created to cater to niche audiences.
The author is partner & leader— advisory services, media and entertainment, EY
