Overall, the Indian media and entertainment industry is estimated to touch Rs 2,260 billion by 2020; consumption of online video content is up from 49 to 66 percent over the last year. These findings are a part of the recently released annual report on the media and entertainment (M&E) industry by market research and audit firm KPMG and lobby group Ficci (Federation of Indian Chambers of Commerce and Industry).
The report titled ‘The Future: Now Streaming’ was launched at the annual media and entertainment industry event Ficci Frames in Mumbai. (Download the extensive report here)
The report says that the Indian M&E industry is expected to grow at a CAGR of 14.3 percent to Rs 2,260 billion by 2020, with advertising revenues expected to go up to Rs 994 billion at a CAGR of 15.9 percent.
In line with the trends seen in digital media across sectors, digital advertisement spend outperformed expectations in 2015, growing almost 38.2 percent over 2014 to reach INR 60 billion. It is expected to cross INR 255 billion in 2020.
Television registered a 14.2 percent growth led by strong growth in advertising at 17 percent. Radio continued its strong run with a 15.3 percent growth in 2015. Following the new stations licensed in Phase 3 and consolidation in the industry, Radio is transforming from a ‘coverage’ media to a ‘reach’ platform. (You can find out more insights about other sectors by downloading the report, Lighthouse Insights has focused on the Digital and Social Media findings here.)
Digital advertising spends are increasing due to the increasing budgets to engage customers through the digital medium. This is also backed by Continued allocation of spend from e-commerce companies and a significant rise in consumption of video on-line, a category that tends to attract much higher CPMs.
Video has moved up the charts, driven by new launches such as Hotstar, much better monetization across platforms and high CPMs on premium content. This category should continue to see significant growth till 2020 as more and more premium content is monitised on OTT platforms. We have already seen almost every TV player is out with an Over the Top Video service.
With the growing smartphone penetration, content consumption behavior is now being driven by smartphones. This has led to increase in mobile advertisement spends which has reflected a significant growth. In 2015, mobile advertising spends were estimated to be at INR 9 billion, is now expected to grow at a CAGR of 62.5 percent to reach INR 102.1 billion by 2020.
Giving more insights on the digital advertising segments, the report states search and display continues to take the largest share of the market mainly driven by volume. “Given that this segment is maturing (in relative terms) and continues to see lower CPMs, expectation is that this segment will grow slower than the category.”
Another strong factor for the growth of digital advertising market is driven by the new found love for OTT video services. While it is a true fact that 90% of households in India have a television set, still watching other content on laptops and smartphones based on individual choices has been a key trigger for increasing adoption and usage of OTT services. Besides Improvement in mobile broadband infrastructure, gradual reduction in the cost of internet and increase in smartphone screen sizes are driving consumers to shift their viewing preferences to mobile.
The video on-demand market in India is at a cusp of a meteoric take-off, thinks Gaurav Gandhi, Chief Operating Officer, Viacom18 Digital Ventures which joined the bandwagon of growing number of video on demand services in India with the launch of VOOT. He further adds that the numbers already are substantial, but the next 24 months will drive this up manifold driven by much improved mobile data speeds, reduced data prices, fixed line broadband growth and large OTT services investing heavily on marketing and content.
“The immediate term opportunity is advertising led, with digital video advertising expected to become close to USD1bn market by 2020. On the pay side, while the market will be smaller in the short run, the opportunities lie in specialised and sharply targeted subscription services as well as transactional VOD. All this will be aided by much reduced data prices (or bundled data and content packs) as well as digital and mobile wallets as payment modes.”
This growth is happening at a time when the country has the slowest average Internet speeds in Asia Pacific. According to a third quarter report by Akamai, India had an average of 2.5 Mbps Internet speeds whereas South Korea has the highest speeds at 20.5 Mbps in the region. Globally, India ranks at the 116th position.
Nonetheless, mobile is paving the way for video consumption. Mobile data traffic grew 50 percent in 2015, driven by 85 percent surge in 3G data traffic. This growth is largely on the back of surging consumption of videos, with approximately 40 percent of mobile data traffic being driven by video and audio consumption.
While these new platforms continue to grow and stabilize, YouTube is taking the lion’s share of video advertising in India. YouTube continues to lead with maximum share of the online video viewership and online video advertising revenues, while other OTT platforms currently occupy only a small portion of this pie.
According to Google:
YouTube’s total viewing duration has grown 80 percent over the past year in India with 55 percent of YouTube’s watch time coming from mobile devices and hours of content uploaded from India growing by 90 percent. On YouTube, entertainment-related content (film, TV and music videos) continue to take the lions share, contributing 90 percent of viewership on the Top 100 YouTube channels. Education and health-related videos are growing and likely to be the future growth drivers on YouTube.
With such positive growth Digital advertisement spend per capita in India still continues to significantly lag behind global economies. U.S., China, Japan, Germany and U.K. are the top five spenders on advertising. According to the current growth assumptions, India is expected to be about 0.6 percent of global digital spend in 2015 indicating significant headroom for growth.
Challenges such as ad blocking have increased by nearly tenfold to 181 million between 2010 and 2015. While active advertisement blockers account for merely 7 percent of the total internet population, it is becoming a widely adopted practice by consumers to avoid watching unwanted content while carrying out their daily activities on the web.
In India where digital is still evolving, ad blocking problem isn’t that rampant but publishers are not leaving any stone unturned to scare the reader out of her mobile/web reading experience. “Currently the ad blocking penetration in India is at 2% (4 million) and this number will grow rapidly,” informed Vignesh Vellore, Co-Founder, The News Minute. He had spoken to LI earlier while sharing his thoughts on ad blocking and how Indian publishers are dealing with it.
Nevertheless the report states that the future is digital – currently, in India, digital advertising constitutes about 12.6 percent of the total advertising market in 2015 and is expected to grow to 26 percent of the total advertising market by 2020.
“Increasing second screen consumption, growing mobile internet and device penetration and technology innovations will drive digital advertising growth at a CAGR of 33.5 percent over the next five years.”