The Indian media and entertainment industry in 2016 was able to sustain a healthy growth on the back of strong economic fundamentals and steady growth in domestic consumption coupled with growing contribution of rural markets across key segments.

These factors aided the industry to grow at 9.1 per cent on the back of advertising growth of 11.2 per cent, despite demonetisation shaving off 150 to 250 basis points in terms of growth across all sub-segments at the end of the year.

Compared to 2016, the industry is projected to grow at a faster pace of 14 per cent over the period of 2017-21, with advertising revenues expected to increase at a CAGR of 15.3 per cent.

The year 2017 is likely to witness a marginally slower rate of 13.1 per cent as the economy recovers from the lingering effects of demonetisation and initial uncertainties arising from GST implementation.

The ‘FICCI - KPMG Media & Entertainment Industry Report 2017’ launched here today.

Uday Shankar, Chairman, FICCI M&E Committee and Chairman & CEO of Star India, said, “The industry has gulped down the bitter pill of demonetisation trusting its long-term benefits and yet is set to bounce back to steady growth thanks to strong fundamentals. Building solid infrastructure and continued government support will help the industry reach the tremendous potential it holds for employment and creating socio-economic value for the country. A commitment towards a quick transition to digitisation will ensure growth for all stakeholders.”

Girish Menon, Director, Media and Entertainment, KPMG in India, stated, “2016 was a mixed bag for the industry with digital media making its way to the centre-stage rapidly from being just an additional medium. It is compelling existing players to rethink their business models. The long-term factors driving future growth are expected to remain positive, with growing rural demand, increasing digital access and consumption, and the expected culmination of the digitisation process of television distribution over the next two to three years."

According to the report, the TV industry clocked slower growth in 2016 at 8.5 per cent, attributed to tepid growth of 7 per cent in subscription revenues and a lower than estimated 11 per cent growth in advertising revenues.

A key theme in 2016 was the emergence of FTA channels as a key focus area following the expansion in rural measurement by BARC and the resultant increased interest by both broadcasters and advertisers.

Additionally, the strong performance of sports properties and increased spending for the launch of 4G by telecom operators helped alleviate some of the pressure.

The industry is expected to grow at a CAGR of 14.7 per cent over the next five years with advertising and subscription revenues projected to grow at 14.4 per cent and 14.8 per cent, respectively.

Print on the other hand continued to witness a slowdown at seven per cent in 2016, as English newspapers remained under pressure. Regional language papers demonstrated strong growth, but were adversely affected by demonetisation given their high dependence on local advertisers. Print is expected to grow at 7.3 per cent, largely driven by continued growth in readership in vernacular markets and advertisers’ confidence in the medium, especially in the tier-II and tier-III cities. Rise in digital content consumption poses a long-term risk to the industry.

Films

Films grew at a crawling pace of 3 per cent in 2016. The segment was impacted by decline in core revenue streams of domestic theatricals and satellite rights, augmented by poor box-office performance of Bollywood and Tamil films.

Digital advertising

Continuing to ride on a high growth trajectory with a 28 per cent growth in 2016, digital advertising has captured 15 per cent share in overall advertising revenues, with a minor hiccup due to demonetisation. 4G roll-outs and the resultant data price wars are providing further impetus to growth as digital consumption and habits are becoming more mainstream. It is projected to grow at a CAGR of 31 per cent to reach Rs 29,450 crore by 2021, contributing 27.3 per cent to the total advertising revenues.

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