Media & entertainment sector now at Rs 1.26 lakh cr: FICCI-KPMG Report 2017

Consumption slowdown, demonetisation put the brakes on growth; films, TV and print worst hit

According to the FICCI-KPMG Media and Entertainment Report 2017, the media and entertainment (M&E) industry grew at 9.1 per cent in 2016, to reach Rs 1,26,210 crore. This marks a 4 per cent drop from the growth projections made last year (Rs 1,31,500 crore). It is also slower than the 12.8 per cent the industry clocked in 2015.

One of the big reasons for the slowdown is demonetisation that adversely impacted the sector’s performance in Q3 and Q4 of calendar 2016, especially advertising revenue. The report says that demonetisation had a negative impact on ad revenues in TV to the extent of 2 per cent, on print (1-1.5 per cent), films (5 per cent) and radio (2-3 per cent). However it said that the impact is likely to be short lived and normalcy will return by Q2 2017. 

The fastest growing sector continued to be digital where ad spends rose by 28 per cent. Growth is on a smaller base, but it reflects the rapid adoption of digital innovations among advertisers and brands in all categories. Films grew the slowest, merely 3 per cent followed by print (7 per cent) and television (8.5 per cent). Animation and VFX, radio, music and gaming all clocked double digit growth. Digital advertising accounted for 15 per cent share in the overall advertising revenues in 2016. Advertisers see a continuing shift in consumption towards digital media with increasing internet penetration, falling prices of mobile devices and lower data costs.

Radio has been the surprise package, registering 14.6 per cent growth but it is still a small player with its size estimated at Rs 2,270 crore. Girish Menon, director (M&E) KPMG in India says, “Radio is being recognised for the local presence it enjoys. It also provides a cost effective medium for communication. The medium is set to be the fastest growing among traditional media.” 

It was a poor year for the television industry that is estimated at Rs 5,88,30 crore in 2016. Ad revenues grew 11 per cent but, it was significantly lower than the 17 per cent in 2015. The report believes that the numbers are an aberration as they have been impacted by a temporary drop in consumption and demonetisation on the one hand and the ongoing viewership measurement recalibration by Broadcast Association Research Council (BARC) data on the other. According to the report, “Ad revenues across television, print and radio suffered while the attendance at cinema halls, particularly single screens, and live events, was also impacted.” The industry could take a few more hits with GST roll-out in the second half of the year as broadcasters and advertisers will take a while to figure out business models in the new tax regime the report says, but adds that this is a temporary hurdle. 

Print revenue growth rates slipped further, clocking 7 per cent growth (Rs 3,03,30 crore) in 2016. However, while English language newspapers continued to be under pressure regional language newspapers showed strong growth, but even they were adversely impacted by demonetisation.

The worst off however was the film industry. It saw a drop in core revenue streams of domestic theatricals and satellite (C&S) rights, on the back of poor box office performance of Bollywood and 

Tamil films. “In 2015, there were many more films that collected Rs 50-70 crore and thus added to the overall box office. In 2016, this consistency was missing. Hollywood had an exceptionally good year thanks to The Jungle Book. It is taking up the share that Bollywood is losing, while regional films are helping expand the market,” says Menon.