A billion screens

of opportunity
India's Media &
Entertainment sector
March 2019
Foreword
Global Goes Indian!
A heartfelt welcome to the 2019 edition of the FICCI–EY Media
& Entertainment (M&E) report.

This year’s report provides an opportunity to the industry to

better understand last year’s performance and take stock of
the emerging market dynamics. In a nutshell, last year has
proven to be a decent one for our sector as traditional sectors
like broadcast TV and films seem to have maintained a healthy
pace and performed as per expectations on the back of growing
subscription base and ticket prices respectively. Whereas, new
age digital media has created an upward trajectory of its own
and an explosion in growth seems to be on the cards. Thus,
Indian M&E continues to match up to predictions and become
ever more vibrant.
Uday Shankar
The M&E sector is poised to kickstart a new era of growth.
Vice President, FICCI & Chair,
Technological disruptions are creating new opportunities for the
FICCI Media and Entertainment
Division sector. India is headed towards a billion screens of opportunity
and one can hope that the sector’s incumbents shall innovate,
transform and increase their relevance to mass and individual
consumers. In doing so the Indian M&E sector shall become
the harbinger of technical and product innovation and create
content that would not only capture our imaginations but firmly
establish India’s position as a global content hub.

I’m confident that Indian M&E is headed towards becoming a

world-class media-tech sector on the back of access to global
audiences through online platforms, its large talent pool,
storytelling capabilities, post-production and VFX expertise and
policy and regulatory certainty. It is time to create global media
giants from India and this year’s FICCI Frames as it completes
its 20th year of existence carries an appropriate tag line, “Global
Goes Indian”!!

With this thought in mind, I thank all those who have helped in
bringing this report to the fore and sincerely hope that readers
shall find it useful.
 India is one of the largest and perhaps the most diversified
content producers in the world. At heart it aims to entertain,
while at the same time the industry has embraced diversity
and has continued to innovate. Be it our movies or any form
of content across platforms, news, sports, Indian content has
already left an indelible mark on the world.

Technological changes we are currently witnessing across

content generation, emergence of different platforms,
marketing and distribution have played a big role in Indian
content expanding its reach. While our films and television
channels were always accessible across 130 countries, the
advent of globally distributed OTT platforms will be a game
changer for India. With abundant access to dubbing and
sub-titling capabilities, Indian stories can be exported and
consumed by global audiences. This trend is expected to
immensely benefit content creation in India.
Shah Rukh Khan
India can become a high quality and cost-efficient content
creation hub for the world. Our large talent pool, both in front of
and behind the cameras, our pre and post production facilities,
expertise in animation, VFX, back-office operational excellence
and high levels of connectivity are bound to help drive the
Indian M&E sector grow globally. India is already seen as a
hub for animation and VFX and the world has recognised its
potential.

All of this suggests that it is only a matter of time before India

establishes itself as a powerhouse and continues to entertain
the world, with the realisation that we have just begun our
journey!

Picture abhi baaki hai mere dost…

Foreword
Is India’s M&E sector ready for a
billion screens?
Welcome to the 2019 edition of the FICCI-EY report on the Indian
media and entertainment (M&E) sector.

The M&E product will always remain relevant for a young country
like India, thirsting for escapism and knowledge. The growth of
digital infrastructure is enabling Indians to fulfil their need for
personal content consumption, and the M&E sector has responded
by producing more content than ever before – across languages
and genre. We estimate that India produced and licensed around
750,000 hours of content in 2018, a majority of which was made
in India. We expect the amount of content being produced to keep
increasing.

This phenomenon is causing large shifts in consumer behaviour.

Ashish Pherwani For a country where the lowest common denominator was catered
M&E Sector Leader to on mass platforms, creators are now producing content for
Ernst & Young LLP well-defined audience segments. This year we have seen films
with strong storylines triumphing over those with high-power
talent. New content genres are being tried across digital. Creative
experimentation is at an all-time high!

In addition, global OTT platforms – and Indian platforms available

globally – have made it possible for people across the world to
experience Indian content, something which was out of the reach of
most Indian content creators just a few years ago. The opportunity
this provides is enormous, both to create content for the world
and support global content creators with our talent, production,
animation and VFX capabilities.

The sector has to serve a billion screens in India and globally.

Through this report, we have tried to showcase the changes
brought about by digital, data and direct-to-customer on the various
segments of the Indian M&E sector. We are certain you would find
this report to be insightful.
Cont
08 M&E sector overview
10 M&E sector 2018: Key trends

16 Indian economy and its impact on M&E

22 The global perspective on Indian M&E

tents
Segmental trends
28 Television

52 Print

72 Filmed entertainment

104 Digital media

26
138 Animation and VFX 240 Blockchain in Indian M&E
152 Live events 244 M&A activity
162 Online gaming 254 Tax environment
178 Out Of Home media 270 Regulatory update
190 Radio 284 About this report
202 Music 286 Glossary
214 Sports 290 Acknowledgements
230 Advertising landscape 292 EY’s M&E leadership team
 Media and entertainment

Image courtesy ImagesBazaar

 9

M&E sector overview

2018:
Key trends
 Media and entertainment

The sector grew 13% to reach INR1.67 trillion

The Indian M&E sector reached INR1.67 trillion (US$23.9 billion), a growth of 13.4% over 2017. With its current trajectory,
we expect it to grow to INR2.35 trillion by 2021 (US$33.6 billion).

2017 2018 2019E 2021E CAGR 2018-21

Television 660 740 815 955 8.8%

Print 303 306 317 338 3.4%

Filmed entertainment 156 175 194 236 10.6%

Digital media 119 169 223 354 28.0%

Animation and VFX 67 79 93 128 17.4%

Live events 65 75 86 112 14.0%

Online gaming 30 49 68 120 35.4%

Out Of Home media 34 37 41 49 9.2%

Radio 29 31 34 39 8.0%

Music 13 14 16 19 10.8%

Total 1,476 1,674 1,887 2,349 12.0%

All figures are gross of taxes (INR in billion) for calendar years | EY analysis

While television will retain pole position as the largest

segment, digital will overtake filmed entertainment in 2019
and print by 2021.

Growth was led by online gaming

and digital media
Segmental growth 2018 vs. 2017

Online gaming 59.4%

Digital media 41.9%

Animation and VFX 18.5%

Live events 15.6%

M&E sector overall 13.4%

Filmed entertainment 12.2%

Television 12.1%

Music 10.1%

Out Of Home media 8.8%

Radio 7.5%

Print 0.7%

Growth (in percentage) over 2017

 11

►► Online gaming grew across real money gaming Value was driven by direct-to-
(including fantasy and e-Sports) as well as casual
gaming, on the back of a 52% growth in online gamers customer (D2C) capabilities
who reached 278 million in 2018
For a while in May 2018, Netflix was valued more than Walt
►► Advertising budgets continued their inexorable Disney1. This is a clear indication that valuation is being
shift towards digital media where, despite fears of driven by D2C capabilities – mainly access to deep customer
advertising fraud, the segment grew 34% to command data and the ability to interact with customers accordingly
21% of total advertising spends – an area where Netflix excels. Disney has focused on D2C
with the launch of its proposed OTT platform Disney+2, as
►► Digital subscription grew by over 250% with Indians well as the proposed acquisition of Fox’s assets like Hotstar
opening their purse strings to pay for online content and Hulu.

►► Animation and VFX continued to grow on the back In India, too, media buyers have started shifting budgets
of India’s cost-effective talent pool and growing to segments with more D2C capabilities and the segmental
participation in an international film and digital growth rate chart is representative of this. Some advertisers
content market that is producing more content than have started investing in their own D2C capabilities, to build
ever before communities and subscription product sales. There is a
huge opportunity for media companies to assist brands in
►► Live events continued to grow in scale and size on their D2C initiatives. Traditional media companies spent
the back of weddings, sports, government spends and 2018 building their customer data through second-screen
large format concerts and theatricals interactive propositions, polls, house-to-house surveys,
integration of third-party data, etc. We expect this (small)
►► The film segment crossed INR100 billion in domestic data to lay the foundation for more (big) data initiatives in
theatrical revenues, and was further supported by the the coming two to three years.
growth in Indian film exports, particularly to China,
and increasing values for digital rights

►► Television, the largest segment, grew at the industry Advertising outpaced subscription
average on the back of a strong performance by growth
regional brands, multiple sporting events and impact
properties Advertising and subscription revenues

►► Music made a strong recovery led by digital revenues 2,000

from a host of ever-growing audio streaming
platforms whose user base grew by 50%
1,500 948
►► OOH benefited from operationalization of metros and
airports, and from categories like retail, consumer 796
719
services and real estate, which continued to spend 1,000 646
heavily on the medium

►► Radio grew from the additional inventory sold on 500 1,042

stations operationalized during the last 18 months 753 843
668
(though advertising volume drops were seen in some
large markets) and from non-advertising revenues, -
led by events, activation, content production and 2017 2018 2019E 2021E
syndication
Advertising Subscription
►► Print grew 0.7%; advertising revenues grew 0.4% in
INR billion (gross of taxes)
2018 while subscription grew 1.2% on the back of
circulation drives and some cover price increases Note: The above numbers exclude events and activation, online gaming and
animation and VFX revenues

1. https://money.cnn.com/2018/05/24/investing/netflix-disney-comcast-
market-value/index.html

2. https://www.adweek.com/tv-video/disney-announces-the-name-of-its-
much-anticipated-ott-service/
 Media and entertainment

Advertising grew 12.7% in 2018, while subscription grew Digital subscription grew 262%
11.2%. Advertising revenues comprised 51.2% of the total
in 2018 and are expected to grow to 52.4% of the total by Indians started to pay for online content – well, more than
2021. they used to. We estimate that the number of Indians
who paid for any content in 2018 (not including those
Advertising got over the effects of demonetization and
who consumed content through bundled telco offerings)
caution necessitated due to the implementation of GST,
increased from 7.5 million in 2017 to 12-15 million in
which had impacted it for more than half of 2017. Growth
2018. The digital subscription market accordingly grew
was led by digital advertising (which grew 34% over 2017)
262% to reach INR14.2 billion, of which the majority was
and television advertising (which grew 14% over 2017) on
video subscription. Telco bundling remained key, with an
the back of sporting events, more impact properties, several
estimated 60% of consumption coming from such offerings.
state elections, and growth in regional advertising.

Subscription growth was driven mainly by international film

exhibition revenues, digitization of DAS-III and IV television Content was, and made, kings
markets and digital streaming on OTT video platforms.
With the growth in demand for content, driven by global OTT
platforms’ localization strategy and domestic OTT platforms’
Clear shift towards performance drive to grow their digital audiences, as well as the increasing
number of regional television channels, the demand for
advertising was seen original digital content increased by around 1,200 hours in
Advertising is seeing a clear shift towards performance as 2018. This has led to an increase in content rates, and till
compared to brand, with rates reflective of the closeness such time as consolidation takes place in the OTT segment,
to the point of customer action. While audiences come we can expect content companies to continue to benefit
to platforms for content, they go to search engines when from this trend.
interested in a product or service and visit e-commerce
platforms when interested in purchasing. Such platforms are
now generating more advertising interest from brands and Global entertainment, made-in-India
we can expect to see Amazon, Flipkart and others attracting
Indian content was made available on global platforms in
increased advertising revenues going forward.
2018. Led by the success of Netflix’s Sacred Games, where
two of every three viewers were outside India, Indian content
earned access to a non-diaspora audience in 2018. Global
SMEs invested in advertising digital platforms are buying more Indian content, and this
Small and medium enterprises (SMEs) have typically is an opportunity for Indian content creators to showcase
advertised in the yellow pages, or used local print, OOH India’s content prowess and make India a content creation
and radio in limited numbers. They have now diverted a hub for the global market. The opportunity for this can be
significant spend on digital platforms. While we are unable significant, given that Netflix alone, with a budget of US$12
to size this segment accurately due to lack of verifiable data – US$13 billion3, has a content budget comparable with India
(and have therefore excluded it from advertising sizing), our as a country.
analysis of industry discussions indicates that this segment
could be spending upwards of INR72 billion on digital
advertising and search, primarily on Google and Facebook.
This segment of advertisers can be as large as 300,000 or
more and is growing. Such advertisers spend an average of
around INR20,000 per month on advertising.

3. https://www.forbes.com/sites/danafeldman/2018/07/09/netflixs-
content-budget-is-updated-to-13b-in-2018/#33114c812b8c
 13

The customer lifetime value While the Indian economy grew its nominal GDP by 10.2%4,
the Indian M&E sector grew 13.4%. Advertising, which had
equation refused to balance on dropped below the nominal growth rate in 2017 due to
digital platforms demonetization and implementation of GST, recovered and
grew 12.7%. The M&E sector is seeing the fruits of continued
For most OTT platforms – video, news or audio – the cost of economic growth and India’s rising per-capita nominal GDP,
content and customer acquisition continued to be higher which is estimated to have grown by 10.6% in 20185, a five-
than the revenues earned per customer. While subscription year high growth rate.
growth has begun, advertising rates are already at levels
much higher than those charged by traditional media.
Programmatic advertising – expected to grow from 20% in Sector consolidation continued
2018 to 50% by 2021 – could further impact advertising
revenue yield. Consequently, the formula for success Deal value doubled to US$2.8 billion in 2018. Indian media
will depend on massive growth in reach and more paying companies saw 41 large deals in 2018, led by PVR Cinemas
subscribers. Till such time as the customer lifetime value acquiring SPI Cinemas, Reliance acquiring Hathway and Den
equation balances, we can expect to see a high amount of Networks, etc. Deals were driven by scale, market share and
content syndication by platforms to recover content costs. access to technology. Investments in technology start-ups
and content creators continued.

Width of sports consumption

increased India became a multi-strategy
market
2018 saw wrestling garner 20% of time spent on sports on
television, while cricket achieved 19%. The share of time Many investors realized the heterogeneity of India and have
spent on volleyball, athletics, boxing, hockey, martial arts, created multiple strategies to target India and Bharat and the
badminton and soccer all increased. different strata within them. There is not going to be a single
market strategy, and companies adapted to the fact that
global strategies do not always work in India.
M&E sector continued to outperform
the Indian economy
M&E growth vs. nominal GDP growth

13.1% 13.4%
12.7%
11.8%
10.9% 10.2%

2013 2014 2015 2016 2017 2018

M&E sector growth rate

Advertising growth rate
Nominal GDP growth rate

4. Growth (Basic data): First Revised Estimates, NAS dated 31 Jan 2019
and Advance Estimates, NAS dated 07 January 2019, CSO, MoSPI

5. IMF World Economic Outlook, October 2018

 Media and entertainment

Customer segmentation is driving a multi - strategy approach

2017 2018 2021

Customer
segment

Digital only 1-1.5 Mn 2-2.5 Mn 5 Mn

Tactical digital 6 Mn 12 Mn 25 Mn

Bundled digital 155 Mn 218 Mn 376 Mn

Mass consumers 464 Mn 427 Mn 387 Mn

Free consumers 155 Mn 180 Mn 180 Mn

Source: EY analysis

Customer segments:

►► Digital only – consume content only on digital plat-

forms, do not access television

►► Tactical digital – Consume Pay TV and at least one

paid OTT service

►► Bundled digital – Consume Pay TV and generally only

telco-bundled content

►► Mass consumers – Consume Pay TV and occasionally

may consume some OTT content

►► Free consumers – Do not pay for content

The key growth will come in digital only, tactical digital and
bundled digital customer segments. Telco bundling will drive
consumption for a majority of Indian OTT audiences.

The M&E sector continues to show great potential and we

can expect to see stable, sustained growth over the next
three years. India’s thirst for knowledge and escapism
will ensure the M&E product remains a necessity. Digital
consumption will grow, and monetization avenues will
see great innovation to cater to the new Indian customer
segments.
15
 Media and entertainment

Image courtesy ImagesBazaar

 17

Indian economy
and its impact on

M&E
India remained the growth
leader in 2018
India has been the growth leader amongst major economies including
Emerging Markets and Developing Economies (EMDEs) over the last
five years (Chart 1). It surpassed China in terms of real GDP growth
in 2014 and has remained higher since. The recently released first
revised estimates for FY18 combined with the advanced estimates
for FY19, imply a fall in the real GDP growth in 2018-19. However,
these numbers are likely to be revised upwards. India is thus expected
to remain the global growth leader for 2018.

Chart 1: GDP growth: Cross-country comparison

9.0
8.0 8.2
8.0 7.4
7.2
7.0
5.9
6.0 5.5 6.4 6.0
5.0 4.9
4.0
3.6
3.0

2.0
1.7
1.0

0.0
2012 2013 2014 2015 2016 2017 2018

United States EU EMDEs

India China World

Source: IMF World Economic Outlook October 2018; CSO, MoSPI

 Media and entertainment

Per capita nominal GDP grew 10.6% Advertising continued to outpace

in 20181 GDP growth
India’s per capita nominal GDP is estimated to have grown Chart 2 depicts the trend in growth of advertising revenues
by 10.6% in 2018, a five-year high, to INR140,000, as and nominal GDP. From 2012 till 2015, even as nominal
compared to a growth of 8.5% in 2017. It was also higher GDP growth was falling, growth in advertising revenues was
than the 8.5% growth in per capita GDP of China in 2018. rising. However, growth in advertising revenues has fallen
Higher per capita income drove consumption growth, which since then but has picked up again in 2018. Advertising was
in turn gave a boost to advertising and subscription. maintained around 0.4% of GDP in 2018.

Chart 2: Growth in advertising revenues and nominal GDP

India is expected to become the fifth
largest economy in 2019 15.0
14.2 14.7
According to International Monetary Fund World Economic 14.0
Outlook (October-2018), GDP (nominal) of India in 2018 at 13.0
13.8
13.0
current prices is US$2,690 billion. India contributes 3.17% 12.7
of total world's GDP on exchange rate basis. It comprises 12.0 11.5
11.3
17.5% of the total world population and 2.4% of the world’s 11.0
11.0 10.5 11.2
surface area. India is now the seventh largest economy of 10.9 10.2
the world. It is behind sixth ranked France and fifth ranked 10.0
United Kingdom, by US$105 billion and US$119 billion 9.2
9.0 9
respectively and is expected to overtake them in 2019, when
India’s economy is expected to reach US$2,958 billion. India 8.0
will be ranked third in 2019 on the basis of purchasing power 2012 2013 2014 2015 2016 2017 2018
parity (PPP). Nominal GDP (% growth, y-o-y)
Advertising revenues (% growth, y-o-y)
Table 1: Expected GDP in 2019
Source: Advertising Revenue: FICCI M&E reports
GDP 2019 (billions of US$)
Growth (Basic data): First Revised Estimates, NAS dated 31 Jan 2019 and
Country Advance Estimates, NAS dated 07 January 2019, CSO, MoSPI
Nominal Rank PPP Rank Note: While advertising revenues are estimated for a calendar year, GDP
estimates are for a fiscal year. For example, a 2012 fiscal year represents the
fiscal year from April 2012-March 2013.
United States 21,482 1 21,482 2

China 14,172 2 27,449 1

Japan 5,221 3 5,807 4

Germany 4,117 4 4,555 5

India 2,958 5 11,413 3

France 2,845 6 3,081 10

United
2,810 7 3,145 9
Kingdom

Source: IMF

1. IMF World Economic Outlook, October 2018

 19

Forward estimates of growth are 2020. They have the potential of raising consumption
demand in the economy and correspondingly advertising
positive spends, since the relatively lower income groups tend to
have a higher marginal propensity to consume.
Interim Budget 2020: Providing a
Further, this fiscal stimulus is likely to have a stronger
consumption-based push
positive effect on growth rather than inflation since food
The Interim Budget 2020 of the Government of India has inflation in December 2018 was contracting at (-) 2.5% y-o-y
given a consumption-based push to the economy. First, and the overall CPI inflation was quite low at 2.2%.
in the form of direct transfers to farmers, a budgetary
commitment for INR200 billion in FY19 and INR750 billion in Crude prices are expected to remain low in
FY20 has been provided. Secondly, the standard deduction 2019
for salaried employees has been raised from INR40,000
to INR50,000, which would increase their disposable The fall in crude prices from their peak level of US$76.7/
income. Third, a tax relief has been given to the low and barrel in October 2018 to US$56.6/barrel in January
middle income groups with a taxable income of less than 2019 significantly contributed to the fall in Consumer Price
INR500,000 which may be claimed as a rebate. Index (CPI ) based inflation to an 18-month low of 2.2% in
December 2018 (Chart 3). Further, as per the IMF2, crude
These programs are likely to add to the private disposable prices are expected to remain low in 2019 and 2020, closer
incomes of low to middle income segments in 2019 and to the current levels. If this were to materialize, it would likely
exert a benign effect on inflation and also provide additional
disposable income in the hands of consumers through lower
domestic fuel prices. The print segment would also benefit
through lower newsprint prices and logistics costs.

Chart 3: Trends in global crude prices and CPI-based inflation

5.5 85
4.9
5.0 76.7 80
4.5 75
4.0 70
3.5 65
3.0 56.6 60
2.5 55
2.2
2.0 50
1.5 45
1.0 40

CPI-based inflation% (LHS) Crude price (US$/bbl) (RHS)

Source: Pinksheet. World Bank; MoSPI

Note: Crude price represents the simple average of three spot prices; Dated Brent, West Texas Intermediate, and the Dubai Fateh

2. IMF World Economic Outlook Update, January 2019

 Media and entertainment

Exchange rate fluctuations are expected to FDI policy initiatives are driving
be muted investment
Starting January 2018, India’s exchange rate had
The Indian government has focused on liberalizing the FDI
depreciated to an all-time low averaging INR73.7/US$ in
regime for both telecom and media and entertainment
October 2018 partly due to foreign portfolio outflows and
sectors, to attract investment for adequate infrastructure
the impact of higher crude prices on India’s import bill
development. FDI limits for the telecom sector were eased in
(Chart 4). Since then, however, the Rupee has recovered and
20134 while those for the media and entertainment sector
stood at INR 70.7/US$ in January 2019. It is expected to
were eased in 2015 and 2016. More recently, in June 2016,
remain close to this level for the remaining part of the year
FDI limits in teleports, DTH, cable networks, mobile TV,
as well3.
headend-in-the sky broadcasting service and cable networks
Chart 4: Exchange rate movement were completely lifted allowing 100% FDI through the
automatic route.
63.0 63.6

Table 2: FDI limits for the Telecom and M&E sectors

66.0
Services FDI limit Approval condition

69.0
Telecommunications
70.7 Telecommunication • FDI up to 49%:
services (basic, automatic route
72.0 cellular, internet,
national, • F
► DI beyond 49%
100% and up to 100%:
73.7 international long
75.0 distance, etc.) approval route,
i.e., prior approval
May-18

Aug-18

Nov-18
Jun-18
Mar-18

Dec-18