India’s media and entertainment (M&E) sector should recover from its current levels and post 33% growth in 2022, following a contraction of 20% in 2021, according to a new report from KPMG India.
This noted that India was already experiencing a slowdown in economic activity even prior to the outbreak of COVID-19 in March, with the country’s real GDP declining from 6.1% in 2018 to 4.2% in 2019. The onset of the global pandemic and ensuing lockdown has dealt a severe blow to the Indian economy.
Businesses will be encouraged to invest in credible digital fulfilment models as consumers migrate faster online thanks to the “low-economy” that has emerged thanks to the COVID-19 pandemic. Advertising spend on digital media is set to overtake TV by 2021, with digital likely to be one of the only M&E segments to continue to grow in double digits in the coming year.
In 2020, television was the largest segment in terms of both overall revenues as well as advertisement revenues, with 9% growth overall. Digital, however, posted overall 26% growth in 2020, with OTT advertising growing by 24%. OTT subscriptions grew by 47% and is expected to exceed as these became platforms of choice during the lockdown.
Ad revenues are also expected to be hit severely in 2021. Digital is again the only category that's expected to grow and overtake television. Print is expected to drop by 46% in 2021. In 2022, KPMG expects print to recover but still be below the numbers it has in 2020. Similarly, TV is expected to dip 17% before recovering to INR 258 bn (US$3.5bn) in 2022 (INR 4bn or US$54.4m less than in 2020).
The M&E sector is expected to bounce back in FY22 with growth of 33.1% over FY21 to reach a size of INR1.86 trillion (US$25.3bn), at a CAGR of 3.2% over FY20-22, with gaming and digital being the fastest growing segments.
KPMG analysts noted that there could be a dichotomy in the experiences of rural and urban India as the former appears to be showing signs of a quick recovery compared to urban centres with encouraging growth in demand and sales for fertilizer, tractors and two-wheelers.
“The distinction among segments of M&E has become more pronounced with the experience of the lockdown. Marketing spend has moved perceptibly towards digital media and away from traditional segments like print, radio and to some extent TV,” said Satya Easwaran, partner and head of technology, media and telecom at KPMG in India.
The report titled A year off-script: Time for resilience is KPMG India’s twelfth edition of its Media and Entertainment report.
Sourced from KPMG India, ETBrandEquity