The report was released by on the inaugural day of the three-day annual media conclave FICCI FRAMES.
According to the report, 2016 was a mixed bag for the M&E industry and while the digital ecosystem penetrated further into the citizens’ day-to-day lives and opened up new avenues of consumption and revenue, it was time for introspection for many parts of the industry.
For instance, television experienced slower growth due to a lacklustre year for subscription revenues, which have faced headwinds owing to continued challenges around digitisation and its intended benefits flowing through the value chain.
Print, meanwhile, continued to experience a slowdown in growth rates, as English language newspapers continued to be under pressure owing to rising users’ interest in digital content, while films had a disappointing year with a near flat performance.
Incidentally, led by digital, some of the traditionally smaller sub-segments of the industry registered impressive growth in 2016. Rising internet and broadband penetration, declining data charges, coupled with the proliferation of internet enabled mobile phones, led to data consumption levels increase manifold, driven by offers by the new entrant, Reliance Jio, which were quickly followed by major competitors Idea, Vodafone and Airtel. This phenomenon has led to a sustained advertiser interest in digital, resulting in a strong performance by the sub-segment in 2016. Digital has also positively impacted the relatively smaller sub-segments, such as gaming and music — which registered impressive growth too.
With OTT platforms continuing to see major traction, digital Video-on-Demand (VOD) and television could see harmonious co-existence for the near future, feeding off each other’s strengths, the report predicts.
Television sector
As per the report, Television is expected to grow at a CAGR of 14.7 per cent over the next five years as both advertisement and subscription revenues are projected to exhibit strong growth at 14.4 per cent and 14.8 per cent, respectively. The sector had witnessed slower growth in 2016 - at 8.5 per cent - primarily due to a lacklustre year for subscription revenues and a speed bump in advertisement revenue growth
The long-term forecast for the segment remains robust due to strong economic fundamentals and rising domestic consumption coupled with the delayed, but inevitable, completion of digitisation.
The rising share of FTA channels may, however, partially pull down the long-term subscription revenue forecasts, the report said.
Print media
Print is projected to continue its growth at 7.3 per cent, largely on the back of continued readership growth in vernacular markets and advertisers’ confidence in the medium, especially in the tier II and tier-III cities. However, rising digital content consumption is perceived to be a long-term risk to the industry.
Print revenue growth rates continued to register a slowdown, clocking a 7 per cent growth in 2016 as English language newspapers continued to be under pressure. Regional language newspapers though continued to show strong growth.
Films
While the film sector had a disappointing year with the growth down to a mere 3 per cent, the report said that this segment is expected to bounce back and is forecast to grow at a CAGR of 7.7 per cent, as the revenue streams broaden, driven by the growing depth of regional content, expansion in overseas markets and higher contribution of digital revenue streams.
However, slow growth in screen count, along with inconsistency in content quality would act as the primary limiting factors for the sector.
Digital advertising
Digital advertising is expected to grow at a CAGR of 31 per cent to reach Rs 294.5 billion by 2021, contributing 27.3 per cent to the total advertising revenues by that point.
As digital infrastructure continues to develop and data costs are driven down, digital consumption is likely to become more frequent and more mainstream. The resultant growth in investment by advertisers, supported by evolution of the audience measurement technology, is likely to drive growth over the next five years, predicts the report.
Animation & VFX
The animation and Visual Effects (VFX) industry showcased a growth of 16.4 per cent, largely led by a 31 per cent growth in VFX industry, which grew on the back of an increase in outsourcing work and the growing use of VFX in domestic film productions.
During 2016-21, the segment is expected to grow at a higher CAGR of 17.2 per cent, largely led by the continued growth in outsourced services and the swelling use of animation and VFX services in the domestic television and film space, respectively.
Out of Home
While the Out of Home (OOH) segment registered a slowdown in growth rate at 7 per cent – primarily due to the impact of demonetisation – long-term indicators remain positive.
As per the report, the OOH is projected to grow at a CAGR of 11.8 per cent primarily due to development of regional airports, privatisation of railway stations, growth in smart cities, setting up of business and industrial centres, and growing focus on digital OOH.
Radio
Radio is expected to grow the fastest amongst the traditional sectors at a CAGR of 16.1 per cent, with operationalisation of new stations in both existing and new cities, introduction of new genres and radio transitioning into a reach medium.
In 2016, Radio registered a 14.6 per cent growth led by volume enhancements in smaller cities, partial roll out of Batch 1 stations and a marginal increase in effective ad rates.
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