Entertainment Sector: Rapid developments of online platforms augurs well for the industry

Owing to a continuously growing user base, rising content consumption and innovations on several fronts, the media and entertainment industry is primed for growth.

The Indian entertainment and media industry continues to keep its stakeholders enchanted. This industry is one of the fastest-growing industries globally. With over 40 players representing all types of content providers, the industry is one of the highly competitive sectors in emerging markets. This industry includes various segments such as television, radio, print, films, digital advertising, music, OOH (out of home), animation and VFX, gaming and live events.  

At the keynote address at the National Conference on 'Changing Landscape of Media and Entertainment 2022', Anurag Singh Thakur, the Minister for Information and Broadcasting, commented, "The media and entertainment ecosystem is a sunrise sector, which is expected to generate Rs 4 lakh crore annually by 2025 and reach USD 100 billion or Rs 7.5 lakh crore industry by 2030. The government has designated audio-visual services as one of the 12 Champion Service Sectors and announced key policy measures aimed at nurturing sustained growth."

Looking back, the pandemic has led to an increase in consumption across digital screens and platforms. In the OTT segment, the video services market (video-on-demand and live) in the country is expected to grow at a CAGR of 29.52% to touch USD 5.12 billion by FY26. This growth is expected to come on the back of rapid developments in online platforms and the rise in demand for quality content among users. In the gaming segment, approximately 90% of the gaming is done via mobile phones. India is emerging as a talent hub in this segment on both the domestic as well as international front.  

In the decade between 2010 and 2020, the number of gaming companies increased over 10 times. Gaming platforms that offer diverse games are witnessing increasing preference from many users. The gaming segment is being called the next big thing. Consequently, the segment is witnessing a rise in investor activity. In the animation and VFX segment, the government set up an Animation, Visual Effects, Gaming and Comics (AVGC) Promotion Task Force in early April this year. This step was an attempt at encouraging the AVGC sector and entrusted the task force with submitting its first action plan within 90 days. The task force aims to drive institutional efforts to guide growth policies for the sector, set up standards for AVGC education in the country, team up with the industry and international AVGC institutes and boost the global position of the Indian AVGC industry.  

Amongst the key developments in the entertainment industry, the PVR merger with Inox Leisure is a prominent one. The merger, which was announced towards the end of March 2022, shall bring about immense value creation for all stakeholders, comprising customers, real estate developers, content producers, technology service providers, the state exchequer and above all, the employees.  

Outlook 

The pandemic caused a paradigm shift in the consumption habits for content – both at home and outside. While the situation has eased, some of the trends that emerged during that period are expected to have long-term implications for the industry. Owing to a continuously growing user base, rising consumption of quality content and innovations on several fronts, the media and entertainment industry is primed for growth. As per Rajib Basu, PwC India Partner and Leader Entertainment & Media, the outlook for the industry for the next few years is quite unique.

According to him, "There is an exciting pace of growth of digital media and advertising led by the deeper penetration of internet and mobile devices in our market. At the same time, traditional media will hold their steady growth rate over the next few years. We shall see a very different profile of media and entertainment-related businesses and revenue models emerging in the digital space once we have the rollout of 5G."   

Financial Highlights  

Analyzing the FY22 performance of the 22 media companies forming part of the top 1,000 companies, Inox Leisure and PVR exhibited the highest revenue growth. Although the multiplex business has not picked up the required pace, the growth in Inox and PVR’s revenue has come on the back of the lower base of the previous year. On the other hand, Dish TV India Ltd. Reported a decline of 13.75% YoY in its revenue. Overall, the cumulative revenue of all the 22 companies under coverage grew by 14.12% whereas the operating profits increased by 12.72%. Similarly, the cumulative bottom line went up by 22.63% over the previous year.