In a recent report by rating agency CRISIL, the Indian media and entertainment (M&E) industry may see a 12-14% year-on-year increase in revenues to 1.6 lakh crore in fiscal 2024, up from 16% growth expected this fiscal.
Since it has a strong correlation with economic activity, advertising revenue, which accounts for 55% of the sector’s revenue, will grow 14%. Furthermore, the general elections scheduled for mid-2024 will cause an increase in ad spending in the final quarter of the next fiscal year. Subscription revenue, which accounts for the remaining 45%, will grow at a slower rate of 12%, owing to a strong recovery in film. Revenue growth would be modest, at 4-5% excluding film exhibition.
Even as television will continue to dominate ad revenue share due to its wider reach, digital will outperform in terms of growth, increasing 15-18% annually over the medium term. It has emerged as the preferred medium in recent years, thanks to the rapid adoption of over-the-top (OTT) platforms, online gaming, e-commerce, e-learning, and online news platforms.
Advertisement revenue, which accounts for 55% of the sector’s revenue, will grow 14% given its strong correlation with economic activity. Also, the general elections expected mid-2024 will trigger an increase in ad spend in the last quarter of next fiscal. Subscription revenue, accounting for the balance 45%, will grow at a slower pace of 12%, led by strong recovery in films. Excluding film exhibition, revenue growth would be modest at 4-5%.
Naveen Vaidyanathan, director, CRISIL Ratings said in a statement. “After the pandemic, digital has become the second-largest segment after TV in terms of ad spends. Together, they account for over three-fourths of the ad revenue for the M&E sector, followed by the print segment with a one-fifth share,” he added.
In terms of non-ad revenue, after making a strong comeback this fiscal, theatre collections for film exhibition, which were the most affected by covid-19, may surpass pre-pandemic levels with strong year-on-year growth of 30% next fiscal. The addition of screens, combined with rising occupancy, will aid growth. Subscription revenue growth for TV and print would be driven by moderate increases in realisations in the short term, but would bear the brunt of shifting consumer preference towards digital mediums in the long term.