Report on Shemaroo

M&E sector witnessed 24% degrowth in 2020: FICCI & EY report

Digital and online gaming were the only segments which grew in the year

KOLKATA: Following a pandemic hit year, the Indian media and entertainment (M&E) sector declined by 24 per cent to Rs 1.38 trillion in 2020, compared to Rs 1.82 trillion in 2019. However, the allied sector is already seeing recovery with improvement in revenues for most segments in the last quarter of 2020. It is expected to recover 25 per cent to reach Rs 1.73 trillion in 2021, touching almost pre-Covid level scale, according to a report by FICCI and E&Y.

The report titled ‘Playing by New Rules: India’s M&E sector reboots in 2020’ states digital and online gaming were the only segments which grew in 2020, adding an aggregate of Rs 26 billion and consequently, their contribution to the M&E sector increased from 16 per cent in 2019 to 23 per cent in 2020.

Other segments dropped by an aggregate of Rs 465 billion. Largest absolute contributors to the fall were the filmed entertainment segment (Rs 119 billion), print (Rs 106 billion) and television (Rs 102 billion). The share of traditional media (television, print, filmed entertainment, OOH, radio, music) stood at 72 per cent of M&E sector revenues in 2020.

However, television stood as the largest sector despite a 22 per cent downturn in advertising revenues on account of highly discounted ad rates during the lockdown months. Moreover, the sector also witnessed a seven per cent fall in subscription income, led by the continued growth of free television, reverse migration and a reduction in ARPUs due to part implementation of NTO 2.0.

On the other side, digital advertising did not see much impact, led by increased allocation from traditional advertisers who accelerated their investments in digital sales channels. SME advertisers continued to spend on the medium and experimented more with e-commerce platforms like Amazon and Flipkart.

For the first time ever, OTT subscriptions surpassed the 50 million mark. From 28 million paid subscriptions, it went up to 53 million in 2020 leading to a 49 per cent growth in digital subscription revenues. Growth has been attributed largely to Disney+ Hotstar, which put the IPL behind a paywall during the year. Increased content investments by Netflix and Amazon Prime Video and launch of several regional language products also catalysed the growth, the report added.

Online gaming crossed all the marks with 18 per cent growth helped by work from home, school from home and increased trial of online multi-player games during the lockdown. Online gamers grew 20 per cent to reach 360 million in 2020.

Among the pandemic hit sectors, print’s revenue declines were led by a 41 per cent fall in advertising and a 24 per cent fall in circulation revenues. Theatrical revenues plummeted to less than a quarter of their 2019 levels, partly offset by direct-to-digital releases.

“While the M&E sector usually grows faster than GDP, it also falls more than GDP degrowth, given the discretionary nature of advertising. In 2020, when the GDP fell by eight per cent advertising fell over 25 per cent while the sector overall fell by 24 per cent,” the report read.

The M&E sector is expected to rebound in 2021 and double to around Rs 2.68 trillion by 2025, the recovery of various segments will vary albeit. TV, film, music will take one to two years, animation and VFX will take two to three years; print, radio, OOH will take the longest time, even more than three years.

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