How regional is defining India’s digital future

According to the KPMG M&E India 2019 report, the M&E industry in India is likely to reach a size of INR 3.07 trillion. Regional is the key and growth future for Digital, TV, Print, Films and Music

In tune with the global economy, India’s GDP growth rate marginally declined from 7.2% in 2017 to 7.1% in 2018. The country is witnessing a slowdown and it has impacted the Indian media and entertainment (M&E) industry, which grew by 13.3% in FY19, to reach a size of INR1.63 trillion. TV and Print advertising felt the impact of the slowdown, but digital, gaming and film segments delivered strong growth.

The growth of digitization and evolution of consumption has found an impact into the lesser penetrated rural markets. Regional markets are the next growth frontiers, there is an increasing demand in terms of media consumption across mediums – TV, Print, Digital, Radio, and Films.

According to the KPMG M&E India 2019 report, the M&E industry in India is likely to reach a size of INR 3.07 trillion. 

Based on the rapid uptake of India’s digital media consumption, the report has attempted to study what the projected India digital billion 2030 would mean to businesses.

Indian Consumer Archetypes 2030

The hypothesis is that the digital consumer in 2030 will likely be:

Non-English speaking, mobile phone user and increasingly willing to pay for content online

The insight for me is that the consumer is going to be a local Indian(a non-English speaking one.) Realising this majority of mediums – traditional and digital have started to cater to the interests of this local consumer. Going forward we would see how each medium is building a regional consumption and commerce model.

KPMG M&E Regional Report 2019

Digital 

Digital has been the torchbearer of growth of the industry in FY19, with a 43.3% growth taking the overall segment to INR 173 billion. The advertising sub-segment grew by approximately 38% in FY19.

In 2018, India touched 142.3 million smartphone shipments, making the country among the top five global countries with the most improved score on the GSMA mobile connectivity index. Much of the video viewing is happening in the local language and YouTube. “95% of YouTube users watched videos in regional languages.” 

The same trend has been witnessed among the OTT video players. It is estimated that 40-45% of consumption across OTT platforms is from regional content libraries. Platforms such as ZEE5, Voot, Hotstar and Amazon Prime Video are investing in original content in regional languages for larger reach. Additionally, the cost to create content is also ~30-40% lower than that of Hindi.

Television

Television witnessed a lower than expected growth. The revenues grew at a rate of approximately 9.5% in FY19, a similar rate at FY18, reaching a size of INR714 billion. The market size in FY19 includes advertising revenues of INR251 billion and subscription revenues of INR463 billion. 

Regional plays a significant role and continues to drive the growth of TV. Out of 595 total channels tracked by BARC, 332 channels are regional across 16 languages. 2018 witnessed 52 new regional launches about 70% of total channels launched. The regional language viewership witnessed a strong growth in 2018, thereby making the regional advertising market grow faster than the market at more than 16% in FY19. 

Regional viewership in 2018 was driven by Bhojpuri(38%), Odia(36%), Assamese(31%) and Marathi(26%)

The market was driven largely from the sports consumption in local languages with nearly 366 million people viewing sports content in regional languages in 2018. Over the years IPL has become a classic example of cricket being consumed in regional languages. IPL 11 was broadcasted in 17 channels with live feeds in 8 languages(English, Hindi, Tamil, Telugu, Bangla, Marathi and Malayalam.) The regional languages got 23% of the total viewership for IPL.

With the south markets maturing, the new growth is expected from markets like Marathi, Bangla, Odia and Gujarati. This up-spring growth from the regional markets has indirectly created survival pressures for the English channels.

Print

Like TV, Print hasn’t had an exceptional growth. Though, globally the print industry is on the decline with newspaper’s share of global advertising spend falling from 37% in CY08 to 12% in CY18, the Indian print industry continued to grow at 5.6% CAGR from FY15 to FY19.

Revenue growth for English was sluggish, whereas Hindi and regional advertising continue to drive revenues by increased focus on the northern Hindi speaking belt and hyper local advertising.

The below visual shows you how regional and Hindi language newspapers are leading the change for circulation. Regional accounting 42% of total circulation as it counties to grow in tier two, three and rural areas.

As per the IRS 2019 Q1, Hindi dailies continue to dominate the list of top 10 publications with only English newspaper featuring on the list(Times of India.) With regional and Hindi newspapers finding a strong ground, English newspapers experienced a decline of 1.3% in FY19 due to increasing completion from digital.

Films

India’s highest grosser at the box office is ‘Bahubhali – The Conclusion’, a Telugu film that crossed over all Indian markets to earn INR10 billion at domestic NBOC for all languages.

FY19, was a groundbreaking year at the Indian box office. Regional cinemas continued its surge – in 2018-19, south market produced 45% of total content and contributed 42% of domestic theatrical collection, followed by Hindi movies at 39%. Other regional markets produced 35% of the content.

Regional Films Produced in India

Like TV and Print, the gamut of regional cinema has widened beyond South Indian languages to other language markets like Marathi, Gujarati, Punjabi and Bengali. 

Music

The Indian music industry is witnessing a revival in the last few years with digital continuing to lead the way. The strong growth over the last year has resulted in the industry leapfrogging in worldwide rankings from 19th in 2017 to 15th in 2018. The industry saw a robust growth rate of 15.3% in FY19, reaching a size of INR 17 billion.

The Indian consumer is spending 21.5 hours per week listening to music, higher than the global average of 17.8 hours a week. Digital content consumption, including online music has been witnessing a steady growth, resulting in the largest contributor (from 55% in FY15 to 78% in FY19) to the overall growth and revenues of the Indian music industry.

Indian music consumption

In mid-2016, Bollywood accounted for 70% share of music on streaming platforms. The share has dropped to 50% by 2019, with a surge in demand for non-Bollywood genres of music including regional, spiritual, Indian rap, etc. 

Regional music segment accounted for around 32% of the market in FY19. Punjabi music leads the share of revenues among regional languages.

Going forward, the share of regional music consumption is expected to increase with the share of Bollywood music consumption is expected to go down. However the size of the overall pie will also expand substantially, so Bollywood music consumption, in absolute terms will remain large. Access to streaming platforms for users in tier 2 and beyond markets has led the increase in consumption of regional music and this trend is going to grow.

Audio streaming platforms are also building their offerings for regional content like video streaming platforms.

Challenges and road ahead

Regional is the way forward for content creators and marketers but has its own challenges. Ad revenues of English and Hindi content is comparatively larger than regional audience. This is because regional content produced are specific to regional issues and sensibilities, there by catering to a certain niche. Thus, the content with limited reach is attracting to limited monetisation potential. Talent is another crucial challenge – the regional players struggle to find quality content creators and popular local talents.

Even with the set of challenges, regional has its own impact. Marketers and production houses will have to change their mindset from reach to quality engagement. Regional content is targeted to a relatively small target group but the impact is significant as we have already seen how it is driving almost all forms of mediums in the Indian M&E industry. 

The demand is right there, but how prepared are we to feed the growing beast (Regional) and make a business case out of it? The answer lies within us.