Digital drives media & entertainment sector growth in India

20 April 2020 3 min. read
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India’s media & entertainment (M&E) sector continued its strong growth through 2019, growing at a percent faster than the Indian economy. Television still reigns supreme, but digital is playing catch up.

The Big Four accounting and advisory firm has been reporting monumental growth in the sector for a number of years now, driven by a boom in the amount of online engagement in India’s substantial population. Last year, the media & entertainment sector grew by 9% to a value of nearly $26 billion.

Growth is consistent with EY’s previous forecasts of media & entertainment progress. In 2017, the firm predicted that the sector would reach a value of $35 billion by 2021. The latest estimates reflect a marginal downward revision and an extension of the time period, with an expectation of $34 billion by 2022.

M&E Growth by segmentNevertheless, the road to $34 billion over the next two years translates into a remarkable compound annual growth rate (CAGR) of 10%. The firm also confirmed shifts in the sector when it comes to consumption patterns, with a predictable rise in digital media consumption.

Other consulting firms such as the Boston Consulting Group (BCG) have previously analysed the impact that an enormous online user base would have the digital entertainment landscape, and predictions have been grand. Online video consumption and over the top (OTT) content, in particular, is expected to drive growth going forth, a trend that has been reinforced by Deloitte as well.

EY observes a similar pattern, with significant growth in digital media, to the point that it performed better than filmed entertainment in India. This is despite the fact that India’s film sector recorded its best ever domestic revenue levels last year, driven by the successful launch of Bollywood blockbusters.

M&E Sector outperformed the Indian economy + Subscription outpaced advertising growth

The star of the media & entertainment sector, meanwhile, was the online gaming segment. EY reports that online gaming accounted for just under 40% of M&E growth last year, followed by digital media with 30%. The latter segment includes revenues from digital advertising-based models as well as subscription-based models.

Interestingly, the subscription model had a bumper year in 2019, with EY reporting staggering revenue growth of more than 100%. The firm attributes this growth to the fact that “quality video content went behind a paywall and telcos paid more to bundle content with their data packs.”

Another segment that recorded significant growth was animation & VFX, closely associated to growth in the OTT segment. The expanding use of animation & CFX in OTT content has created a significant client pool not only in India but also in entertainment industries across the globe.

Coronavirus is expected to impact India's economy

Music and television grew as well, but to a lesser extent than most other sectors, while the print and radio segments shrank over the last year. Print remains larger than digital media in terms of actual value, although the researchers expect the latter to pull ahead by 2021 if current trends persist. 

Overall, the sector grew by nearly 9%, outperforming GDP growth for last year which was at just under 8%. However, this is not accounting for changes that have come about due to the Covid-19 crisis. Much like other economies across the globe, India’s GDP growth forecast has been reduced considerably in the wake of the crisis, which will undoubtedly have an impact on every sector.

Under current lockdown conditions, the media & entertainment sector could benefit from significant growth in consumption as the industry needs to cater the needs of information hungry Indians. But, as it stands, it remains too soon to determine the exact economic impact of the pandemic.