Growth drivers for the media and entertainment industry in 2016

It wasn’t until Hitler used the power of Television to propagate Nazism in the dark years leading to World War II, that the world realized what reaching the masses actually meant.

As a pre-cursor to what TV could do, Hitler also ensured that the opening of the Berlin Olympics in 1936 became the first ever televised event. And with that, the media and entertainment industry (M&E) was taking its first step to influence and touch lives across the world.

About 80-odd years since then, today, the M&E sector has a lot to write home about. Take, for instance, how quickly the sector has cottoned on to digitization and how both new media and traditional media business models are complementing—not competing—with each other. That’s true as much for India as it is for the rest of the world.

The Indian media segment is growing double the rate of global media. It’ll grow at a CAGR of 13.9 percent by 2019, according to a FICCI-KPMG report.

Credit must be given to the rise of the Internet and a generation that hasn’t been fed the staple diet of TV. For the millenials, the Internet is TV and online music is radio. They consume news, opinions, and ideas online. And that has redefined the M&E sector.

The Indian media segment is growing double the rate of global media—it’ll grow at a CAGR of 13.9 percent by 2019, according to a FICCI-KPMG report.

For instance, young India wants to consume media at its own pace, they want the ability to share content and engage in discussions on social media. This was unimaginable a decade or so ago when people had to wait, even set alarms, to listen to their favorite songs or watch their favorite shows on TV, and rein in their curiosity till they got their hands on a newspaper. Today, it’s all instant. Twitter has replaced TV newsrooms to deliver breaking news, youtube has changed the way people view TV, and mobile apps like Savvn and Gaana have redefined radio. Over 50 percent of revenues of the music sector in India comes from digital channels, according to the FICCI-KPMG study.

A major reason for this digital revolution is the fact that it is user-driven and content is available on-demand. This phenomenon is accelerating the pace at which the sector is growing.

A Blockbuster in the Making

There’s no doubt that the M&E sector is at a happy place. It is growing at an envious pace and is shaping the future of digital entertainment.

Rising consumer demand and an upswing in advertising revenue are encouraging trends in the sector.

India’s young population can take the credit for the growth of the M&E sector. An expanding base of India’s young workforce and a growing middle class is pressing the pedal for the sector. “India is a young country and there’s tremendous growth in personal wealth and people with disposable income are engaging in digital technologies. That’s an opportunity for publishers. It’s true for all emerging markets,” says Colin Bodell, EVP and CIO, Time Inc.

In fact, India has the world’s largest young population, followed by China and Indonesia, and they hold the remote that controls the M&E sector. All organizations, across media are playing to this crowd and are catering to the needs of this young audience. TV reality shows are made for the youth, they represent sections of the youth and employ young artists. Radio shows run contests for the college-crowd, they even play music that’s upbeat and new in their morning shows. Actors are touring colleges to promote their movies that are targeted at the youth.  Even the advertising industry is being fuelled by ideas of the younger generation.

 A major reason for this digital revolution is the fact that it is user-driven and content is available on-demand. This phenomenon is accelerating the pace at which the sector is growing.

“Today, in advertising, there’s a new generation of innovators who are coming with none of the shackles of the past. They are coming with ideas and are able to experiment with very simple technologies. The new generation is very pro-digital and open to these sorts of things,” says Ritu Madbhavi, SVP-IT, FCB Ulka.

Another factor that’s moving the sector ahead is the rise of e-commerce. With its foundation built on digital technologies like cloud and mobility—and to some extent social media, in terms of promotions—the e-commerce sector is playing a huge role in the M&E growth story.

That’s creating a positive impact on advertising revenue for print, radio and broadcast. According to the FICCI-KPMG report, companies in the e-commerce sector have spent Rs 7.5 to Rs 10 billion on advertising across media (TV, print and social).

This trend has been encouraged by the increasing popularity of smartphones. In 2014, India became the world’s fastest growing smartphone market. And along with it, it swept the young crowd off its feet by providing another medium to consume content whenever they want and wherever they want. This freedom of choice has made the youth addicted to mobiles and Internet TV.

Companies in the e-commerce sector have spent Rs 7.5 to Rs 10 billion on advertising across media (TV, print and social).

And that has egged on advertisers to invest in mobile and social media ads to market their products and follow the customer. That has showered the sector with more investment. In fact, according to IBEF (India Brand Equity Foundation), digital advertising has been the fastest growing segment with annual growth rate of 44.5 percent.

Another reason for the growth of the sector is the increased FDI that it’s getting. FDI inflows in the information and broadcasting (I&B) sector (including print media) from April 2000-June 2015 stood at US$ 4,050.58 million, according to data released by the Department of Industrial Policy and Promotion (DIPP).

With so much money being pumped into the industry, it wouldn’t be wrong to call it India’s sunrise sector.