– Advertising revenue is outpacing consumer revenue in the migration to digital.
– By 2018, internet advertising will be poised to overtake TV as the largest advertising segment.
– The biggest challenge is monetising the digital consumer.
– Rising consumer revenue may be driven by 24/7 access.
– Revenue growth is being driven by Internet access rather than content spending.
– Two-thirds of revenue growth from consumers and advertising will be digital.
As per CII-PwC’s latest report titled India Entertainment & Media Outlook 2014, India’s media and entertainment sector is expected to grow steadily at a CAGR of 15% to exceed 227,000 crore INR by 2018.
Between 2012 and 2013, the overall entertainment industry grew by 19% and was estimated to be 112,044 Crore INR.
India is expected to be among the fastest-growing market in terms of TV subscription revenue. The television industry grew year-on-year at 15% led by subscription revenues. With annual growth rates of 47% and 26% respectively, Internet access and internet advertising have been the fastest growing segments.
Overall Ad Revenue
Advertising revenue is expected to grow from 35,000 Crore INR in 2013 at a CAGR of 13% to cross 60,000 Crore INR by 2018. Internet access has overtaken the print segment as the second-largest segment contributing to the overall revenue of entertainment and media sector revenues.
Television and print followed by internet advertising are expected to be the major contributors to the ad revenue in 2018. The film segment estimated at 12,600 Crore INR in 2013 is projected to grow steadily at a CAGR of 12%, led by higher domestic and overseas box-office collections as well as cable and satellite rights.
India is a very print driven country and one among the very few countries where print revenue is also on the increase, the trend seems to remain constant and is expected to grow further.
Also, users have paid Rs 25,200 Crore as compared to 17,100 Crore in 2012 to access the internet in 2013, higher than the Rs 22,300 Crore in 2013 that the print medium earned in subscription and advertising, as compared to 21,000 Crore in 2012.
This could mainly be due to the increased adoption of Smartphones and their usage as the primary medium for internet connectivity. Android usage had overtaken Desktop usage in India.
The revenue contribution of internet access to the total revenue of the media & entertainment industry has gone up from 18 per cent in 2012 to 22 per cent in 2013, while that of the print medium fell from 22 per cent in 2012 to 20 per cent in 2013.
Trends and Initiatives
Smita Jha, leader of the entertainment & media practice, PwC India, explained that unlike in the West, the shift of advertising online would be gradual in India. In the US, revenue from digital advertising exceeded print advertising long ago and is closing in on television. The report mentioned that forging trust with consumers; creating the confidence to move with speed and agility; and empowering innovation is what the industry should exhibit to get closer to the consumer and adopt more flexible business models.
Gaming sector, due to the increasing adoption of smartphones in the country, is also a emerging as a promising source of revenue for the industry. With integration of social media into most games, users are getting better used to social sharing and referrals to invite other users to the gaming platform. Termed as the ‘Freemium 2.0 model’, games now create a community around the users and aim at keeping them more engaged and forces the user for more in-app purchases.
OOH advertising is gradually expected to slide to the last position in terms of revenue contribution to the sector, with its share declining to 1% in 2018. Statista.com has however predicted that the revenue will amount to 21.2 billion Indian rupees in 2014.
Music remains constant at 1% revenue share between 2013 and 2018.