The media and entertainment (M&E) industry is projected to be more than `2 lakh crore ($31 billion) by 2020, growing at a CAGR of 11.6%, according to the the FICCI-EY report ‘Re-imagining India’s M&E sector’.

The report was released in Mumbai on Sunday, the first day of the annual media and entertainment conference — Ficci Frames. The industry was valued at Rs 1.5 lakh crore ($22.7 billion) in 2017.

Much of the growth was led by the increase in advertising revenues on digital medium that accounted for 17% of the total ad spend, even as TV’s share remains the largest at 66%.The report said advertisers shifted spends to the digital medium. In 2017, revenues including advertising as well as subscription on digital grew 29.4% to reach `11,900 crore. While advertising revenue on digital grew by 28.8%, subscription revenue grew by 50%. However, subscription still remains a small portion at just 3.3% of the total digital revenues.

“Indian media and entertainment sector reached Rs 1.5 trillion in 2017 led by digital. The number of digital subscribers is expected to reach 20 million by 2020,” Farokh Balsara, partner and media and entertainment leader, EY India, said.

Ashish Pherwani, partner and media and entertainment advisor leader, EY India, said, “Growth in 2017 was led by the digital, film and animation, besides VFX segments. We expect sectors like digital and gaming to grow between two- and three-fold by 2020.”

As per industry estimates, there are around 20 lakh paid digital subscribers across application providers, and between 10 lakh and 15 lakh customers have moved entirely to digital media consumption. Analysts expect that by 2020, there would be 4 million digital consumers on video over-the-top (OTT) generating subscription revenues of Rs 2,000 crore.

Moreover, 25 crore people viewed videos online in 2017. This is expected to double to 50 crore by 2020. The key reasons behind higher adoption of digital are availability of niche content, global content, increased OTT-only content, sports and falling data charges.

Meanwhile, television revenues grew 11.2% (9.8% net of taxes) to Rs 66,000 crore in 2017 from Rs 59,400 crore in 2016. Advertising revenues which accounted for 40% of the spend grew to `267 billion in 2017 as distribution revenue increased to `393 billion. Broadcasters generated 60% of their revenues from distribution, while subscription revenues (including international subscription) contributed to approximately 28%.

The print accounted for the second-largest share of the sector, growing at 3% to reach Rs 30,300 crore in 2017. Print media is estimated to grow at an overall CAGR of approximately 7% till 2020 with vernacular at 8%-9% and English slightly slower. This growth is expected despite the FDI limit remaining unchanged at 26% and therefore, restricting access to foreign print players and the imposition of GST at 5% on the advertising revenues of the print industry for the first time, the report said.

While magazines contributed 4.3% to the total print segment, the segment was at largely status quo with not many significant new launches in 2017.

The film segment grew 27% to reach `15,600 crore in 2017 on the back of box office growth – both domestic and international – coupled with increased revenues from sale of satellite and digital rights. However, the industry witnessed slowdown in mergers and acquisitions, with the number of transactions decreasing to 40 deals valued at $1,261 million in 2017 from 56 deals valued at $2,863 million in 2016.