SRK, smartphone & Scale: Box office booms for entertainment, OTT in trouble

Media & entertainment has done very well in the physical world. It is the virtual one that is in trouble

Manoj Kumar Sharma grew up in penury in the badlands of Chambal. While struggling to make a living, he is impressed by an honest cop and decides to join the Indian Police Service (IPS). His journey from Chambal to Gwalior to Delhi, the soul-crushing poverty he deals with, the odd jobs he does while attempting the various exams for IPS all make for heart-warming cinema in Vidhu Vinod Chopra’s 12th Fail.
 

The film, based on Sharma’s real-life journey captured in a 2019 book by Anurag Pathak, is one of the best movies of 2023. It is also one of the most profitable ones, grossing Rs 64 crore at the box office on a budget of Rs 20 crore. Along with Pathaan, Jailer, Rocky Aur Rani Kii Prem Kahani, Leo, Sam Bahadur and Gadar 2, it is among a smorgasbord of movies that pulled audiences back to the theatres after three miserable years.
 

That is the biggest and best piece of news coming out of 2023. Cinema is the origin of all the value in the Rs 2.1-trillion media and entertainment business. It is one-fourth of all that is watched on television and streaming, three-fourths of all the music made, and fodder for so many of the short videos, memes and other things you watch online. As it comes back to health, it will inject new life into the whole “content” ecosystem.
 

There are several other nice things that happened this year. The theatrical renaissance of Shah Rukh Khan who leads the charts with two Rs 1,000 crore-plus grossers, the new buoyan­cy in the overseas markets, and the expansion of the domestic market thanks to the rise of pan-Indian films such as Jawan and Animal — all of these are good portents for the world’s most populated and film-crazy country.
 

Much of this physical movement to be entertained finds resonance elsewhere, too. In 2023, the number of people attending music concerts, stand-up, satire or lifestyle comedy, musicals and other live events was 13.5 million, over twice that in 2019. Note that this is data from just one app, BookMyShow.
 

The trouble in digital fantasyland
 

Physically then, Indian media and entertainment seems to be a good space. In the virtual realm though, there are several red lights flashing brightly. Internet growth has slowed down to low single digits, going by data from the Telecom Regulatory Authority of India (Slow­ing Internet Growth, Busi­ness Standard, December 6).

This is largely due to the rise in prices and, therefore, drastic fall in the sales of entry and mid-level smartphones, the first port of entry into the internet for many Indians.
 

From 273 million in 2018, the number of unique visitors who are watching video or hanging out on social media online has grown rapidly to 510 million in 2022, according to Comscore data. However, the figure has been stuck there for a year now. This fall/stagnation did not matter till last year because the time spent continued to rise ensuring that revenue kept pace. This year, time spent by existing users shows stagnation.

This suggests two things. One, this is the level of internet growth possible. Two, there is some fatigue with online media consumption.
 

Also note that creatively it has been a great year. After floundering in India for years, Netflix has finally found its footing and viewers with shows such as Kohrra and Scoop among many others. Dahaad on Amazon Prime Video, Scam 2003 on SonyLIV, Sirf ek Bandaa Kaafi Hai on Zee5 and a sparkling season 8 of Koffee with Karan on Disney+ Hotstar, along with dozens of superbly done shows and films tell you that streaming services are hitting it out of the park more often than not.
 

However, globally, the pressure of producing high-quality programming and serving it in one go to consumers who pay a fourth of what they pay for TV is now beginning to tell on streaming services. They have been struggling with the big question of how to make money for some time now. That is true for India as well.

The number of subscribers for streaming services fell from 112 million 2022 to 80 million this year, according to Media Partners Asia. More and more viewers at the lower and middle ends are migrating to free services such as YouTube or DD Free Dish. Remember that high-quality programming, the Delhi Crime kind of fare that wins India Emmys, usually comes from pay services.
 

This brings it to the last red flag — scale, size and the looming threat of a hyper-consolidated business. Google (YouTube, Search), at over Rs 25,000 crore in revenues, and Meta (Facebook, Instagram and WhatsApp) with Rs 18,000 crore dominate the Indian media market on time spent and revenues both. They have a vice-like grip on social media, search and streaming. Some consolidation from other media firms has been long due.

But the alliances being forged in 2023 throw up questions.

If Reliance (Viacom18, Jio, TV18) and Disney ally and if the beleaguered Sony-Zee deal goes through, the Indian media market will be dominated by only four companies. Every other entity in the list of top 10 media firms is less than a fourth of their size. Where does that leave independent media or creative freedom?
 

As the Broadcasting Bill — which could put the same price and content controls that killed variety in television — looms over streaming, these are questions that should worry us 

in 2024.