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Thursday, July 25, 2024

Slow growth and poor AD revenue crimp the entertainment sector

<p>Media & Entertainment (M&E) is one industry that excels much above its size. The performers and anchors are well-known in society. Their journey to political parties began with their appearance on billboards. TV series like “Big Boss” and “Kaun Banega Crorepati?” are common topics of discussion in families and among commuters.</p>
<p><img decoding=”async” class=”alignnone wp-image-494391″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-slow-growth-and-poor-ad-revenue-crimp-the-entertainment-sector-newindianexpress-20-750×422.jpg” alt=”theindiaprint.com slow growth and poor ad revenue crimp the entertainment sector newindianexpress 20″ width=”992″ height=”559″ title=”Slow growth and poor AD revenue crimp the entertainment sector 6″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-slow-growth-and-poor-ad-revenue-crimp-the-entertainment-sector-newindianexpress-20-750×422.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-slow-growth-and-poor-ad-revenue-crimp-the-entertainment-sector-newindianexpress-20-1024×576.jpg 1024w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-slow-growth-and-poor-ad-revenue-crimp-the-entertainment-sector-newindianexpress-20-768×432.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-slow-growth-and-poor-ad-revenue-crimp-the-entertainment-sector-newindianexpress-20-390×220.jpg 390w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-slow-growth-and-poor-ad-revenue-crimp-the-entertainment-sector-newindianexpress-20.jpg 1200w” sizes=”(max-width: 992px) 100vw, 992px” /></p>
<p>However, the businesses that provide the entertainment, provide us with news, and broadcast live sports are having difficulty. Businesses must swiftly adapt to these changes in consumer preferences for news and entertainment, or risk going out of business. Nowadays, families would rather eat their chips and watch movies on Netflix, thus the great multiplex firms of the past, PVR and INOX, are dying a last breath.</p>
<p>Because the media and entertainment sectors are “secondary,” their development has been sluggish. It depends heavily on advertising income, which depends on other industrial sectors’ willingness to spend, which is little, on advertising. “Entertainment” is always a “optional” expense for the individual consumer, based on how much money is left over after purchasing necessities like food. India’s modest increase in consumption is reflected in the entertainment income.</p>
<p>TV becomes smaller</p>
<p>The M&E industry conducts a cycle of self-examination each year. This week marked the 24th anniversary of the annual jamboree, which is organized by FICCI and goes by the name “Frames,” which took place in Mumbai. There was little turnout, mediocre speakers, and a dull atmosphere. The head of the FICCI’s media and entertainment committee, Kevin Vaz, made an attempt to stir things up by asserting that “India’s entertainment industry was poised to captivate the world.”</p>
<p>On the other side, during one of the sessions, Mrinalini Jain, Chief Development Officer at content companies Banijay Asia and Endemol, said that while Indian soap operas portray the complexities of human connections, they are having trouble finding markets abroad. There is only one way to follow this movement: the formats of “The Good Wife,” “Big Boss,” and “Fear Factor” were all taken from popular US television series.</p>
<p>Vaz reminded us that 200,000 hours of material are produced in India every year. This comprises 20,000 songs, 3,000 hours of premium OTT entertainment, and more than 1,700 movies. However, the little money they bring in is nothing. Does it affect how good the goods are? Or is it a blunder in marketing? Regarding these issues, the verdict is yet out.</p>
<p>The Ernst & Young status report is the high point of the three-day industry assessment. It sounded hopeful, as it does each year, but a further examination exposes just how hard the sector is hit. Digital media is a glimmer of hope, if there is one.</p>
<p>According to the E&Y research, the M&E industry expanded by around 8% in calendar 2023, or Rs 17,300 crore, to reach Rs 2.32 lakh crore. Although this was 21% higher than pre-pandemic levels overall, the study acknowledged that conventional media, including print, radio, and television, fell short of 2019 levels.</p>
<p>Particularly for television, the biggest entertainment category, the significant decline in advertising during the first half of 2023 had a detrimental effect. Ad income actually decreased by 6.5% as a result of a slowdown in D2C and gaming brand expenditure. Although subscriber income increased somewhat, total television revenues decreased by 2% to Rs 69,600 crore in 2023 from Rs 70,900 crore the year before.</p>
<p>Pecking order shift</p>
<p>One major worry is regulation and the stringent control over broadcasting licenses. There has been a slowdown in the formerly explosive expansion of TV channels, with a total of 899 channels on the air in 2023 compared to 906 in 2021. The quantity of MSOs, or last-mile cable-wallahs, has also drastically decreased on the ground, going from 1,702 in December 2020 to 998 in December 2023.</p>
<p>The conventional sectors have seen a little increase, but it has been single-digit and linear. For example, the film industry reported income of Rs 19,700 crore, up 14% from the previous year. However, it is only crawling at 3% as compared to the pre-pandemic income of Rs 19,100 crore.</p>
<p>Digital media was clearly identified as the future’s best hope. 51% of all advertising sales, or Rs 57,600 crore, came from digital advertising, which increased 15%. Even still, earnings from digital subscriptions decreased to Rs 7,800 crore. By the end of 2024, digital media as a sector is predicted by E&Y to surpass television.</p>
<p>This is all reflected in the new hierarchy. The two largest tech firms, Google and Meta (previously Facebook), have made significant progress in comparison to the largest conventional M&E firms. Just Google India and Meta generate Rs 43,308 crore of the current anticipated 1.2 lakh crore yearly advertising income, which is more than the combined revenue of Disney Star, Zee, Times, and Sony.</p>
<p>Sadly, “Ficci Frames” neglected to address the largest shakeout currently rocking the industry: the impending combination of Viacom 18 and Disney Star with Reliance Industries (RIL). The new Rs 70,000 crore ($ 8.5 billion) behemoth will face fierce competition for ad income and viewership from Big Tech firms Meta and Google India.</p>
<p>In the end, it will be a Reliance enterprise. Disney Star, which would own 37% of the company, will become a minority, maybe before a full withdrawal.</p>
<p>from the Indian subcontinent. Large challenges are raised by the merger: can a company that will control around 34% of OTT revenues and 45% of the TV advertising market legally operate under our anti-monopoly laws? Will artistic substance be smothered by this? However, it is a different tale.</p>

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