India, today, is one of the fastest growing economies in the world with a GDP growth rate of 7.6 % in 2015-16, up from 7.2 % a year ago. A significant contributor to this growth has been the Media and Entertainment industry, which accounts for 0.9% of the GDP and provides direct and indirect employment to nearly five million individuals in India.
In addition, it has a multiplier effect on sectors such as trade and tourism. The sector has grown at a steady CAGR of 10% – 12% YoY, and is projected to reach a revenue base of Rs 130,000 crore by the end of 2016. India is one of the few economies where M&E industry continues to grow in double digits.
Of the various M&E sub-sectors, television is by far the largest component of the industry, and has grown steadily at ~11% annually over the past 5 years. We expect this momentum to be maintained given improved subscription revenues and media penetration.
The print sector which is on a decline in global markets is continuing to show positive growth in the Indian context due to a steady increase in literacy and regional growth. Print circulation in Hindi and vernacular languages has grown at ~6% over the past 5 years, with regional publications proving to be the most substantial drivers of this growth.
The digital medium now has the wherewithal to change the game for the industry and prove itself to be pivotal to future progress. Although the per capita consumption of traditional media continues to grow at 3%, digital consumption has expanded at a much more exponential pace clocking up to 15% annually. This points to a growing pool of new, albeit low volume users, who are rapidly being inducted into the existing consumer stream across the country. This growth is also proving to be additive rather than cannibalizing traditional media consumption.
The true potential of the Indian M&E industry can be summed up by the fact that it represents an opportunity for 5x – 6x growth over the next 10 years. Despite the robust growth in media consumption, India today is still lagging behind many developed and developing countries. While penetration levels are still low, there is also a gap in India’s per capita media consumption which presents a golden opportunity.
The country’s current per capita media consumption is only half that of Brazil and the United States of America, and bridging this divide can unlock exponential growth. Unlocking this latent consumption power can create new value for the industry.
Three key opportunities will be the drivers of consumption growth over the coming 5–7 years – tapping the rural un-connected consumer, capturing a large share of time of the digitally connected consumer and a supply explosion for strategically segmented audiences. Tapping into this growth is predetermined by a set of industry-wide initiatives that can enable players to unlock consumption as well as adequately monetise the eyeballs to create value for the industry.
Today, there exists a gap in monetization which needs to be addressed. Despite the strong consumer base and stable growth rates in consumption,the industry has not been able to monetize the consumption at levels comparable to their global counterparts. The cost per impression across various mediums is also the lowest in India when compared to other  emerging markets such as China, Brazil or Turkey.
Television impressions in China are 20x the cost of TV impressions in India while print impressions are ~4x higher. While the M&E industry in India sees better price points on the digital video medium and is almost double its Chinese counterpart, it continues to lag behind in other forms of digital media such as display advertising etc.
If these gaps are successfully bridged, India can increase digital advertising to 2x-3x current revenue levels with relative ease, adding an additional Rs 8,000- 13,000 crore to current industry revenues. The industry can drive better targeting of advertisement spends, minimise wastage and provide better value through big data and analytics capabilities in their monetization endeavours.
At the same time the metrics for monetisation need to be reflective of both, growth in the audiences reached as well as the quality of engagement and it is necessary to refine these across all sectors of the media industry to truly benefit from increasing consumption.
While industry-led efforts can tap consumption opportunities and monetise the growth, the industry ecosystem too needs to be conducive for break-out growth. The demand for talent and functional skills in the industry will outstrip supply given the pace of growth in the industry. Concerted efforts from the government, academia as well as industry bodies are the need of the hour to create a large and skilled workforce to take the industry to the pinnacles of growth. The industry also calls upon the government and regulators to support it on this journey to drive ease of doing business – be it ease of raising funds or ease in the licensing regime to spur individual players to achieve their potential.
Collaboration, convergence and co-ordination across stakeholders will thus be the key pillars driving exponential growth and expansion in the Indian M&E industry.
BCG-CII – Convergence-The new multiplier for Media & Entertainment’s $100 billion vision