India’s volume of mature internet users is estimated to outpace that of the USA by 2030, as the digital media and entertainment landscape, which is currently valued at $12 billion, will triple in size, according to Redseer’s research.

The country’s current landscape of Internet users consists of a 450–500 million strong cohort of explorers, 300–320 million transactors and 35–40 million mature users.

Moreover, non-real-money gaming (Non-RMG) and the rise of OTT across audio and video are among the contributors to the sector’s current growth trajectory, despite the slowdown in digital ad spending and regulatory changes affecting the RMG space.

Going forward, three key factors will prove to be critical to its growth: the continued increase of paid users across OTT video, audio and gaming; the rise of regional content; and the growing share of digital ad spend across new-age and traditional brands.

Key trends

In FY23, the media and entertainment sector experienced robust growth in paid user bases and average revenue per paying user (ARPPU) across OTT video, OTT audio, RMG and non-RMG gaming segments. Despite a 90 per cent increase in paid user growth, challenges persist with higher customer acquisition costs (CAC) and low user retention.

According to the report, overcoming these challenges through innovative solutions like subscription bundling, low-cost packs and creative monetisation models is crucial for achieving sector profitability in the next 3–5 years. Similarly, India’s audio series and audiobooks witnessed a 9X growth in FY23, driven by paid user expansion, engaging content and sachet payment options.

Further, the rise of core gaming, eSports and livestreaming has resulted in a 150 million-strong community of mid-core gamers in 2023. With 40 per cent paid user penetration in the gaming segment, in-game payments for costumes and accessories are opening new avenues.

Additionally, the shift from casual to mature gaming is also boosting livestream viewership and fostering the development of a vibrant domestic eSports ecosystem.

Short form video (SFV) platforms in India, with a user base of 250 million, are particularly significant, especially in Tier-2+ cities. Forty per cent of users are online transactors, offering ample scope for monetisation through ad revenue and influencer marketing.

In fact, the growth of ‘Made for India’ content is a driving force in India’s digital media and entertainment industry, while the increasing adoption of core gaming further enhances the sector’s potential. Effectively addressing challenges such as CAC, user retention and subscription models is key to unlocking exponential growth in the coming years.

Related Topics