FY 2022 comeback: Digital, OTT to drive recovery in M&E revenues

Digital and OTT categories are estimated to have clocked revenues of Rs 25,400 crore in FY21, an increase of 17% even as the M&E space as a whole contracted 20% to report revenues of Rs 1.4 lakh crore. Not surprisingly, digital media advertising revenues are projected to overtake those from television in the current financial year, mopping up Rs 22,300 crore against Rs 21,700 crore by television channels. The bulk of the ad revenues are, however, cornered by social media giants Facebook and Google. The M&E sector is expected to notch up revenues of Rs 1.87 lakh crore in FY22 with an acceleration in the use of digital modes among users across geographies.

The fall in M&E revenues in FY21 has been led by the steepest decline in the films segment, analysts at KPMG said in a report unveiled on Wednesday. Though the pandemic squeezed theatre, out-of-home and print businesses, it lifted consumption of the digital and over-the-top (OTT) segment as people started working from home.

While more users explored content across platforms, film producers launched movies on OTT. At least nine Hindi films have premiered across Netflix, Amazon Prime Video and Disney+Hotstar with more in the pipeline. Nachiket Pantvaidya, group COO, Balaji Telefilms and CEO at AltBalaji, told FE viewers sampled OTT content during the pandemic and the firm did not need to spend to acquire new customers.

A study by Dentsu Aegis Network showed that on an average, north Indians purchased three new platform subscriptions during the lockdown period while south Indians bought two. Bengali platform Hoichoi claims to have 13 million subscribers that include direct and those acquired through partnership with telcos. While the platform made inroads into tier two and three towns during this period, it also acquired customers in Argentina and Sweden, Vishnu Mohta, ED at SVF and co-founder, Hoichoi, said.

Raghav Anand, partner at EY, earlier told FE that once 6-10% of the user base is converted into subscribers, revenues from subscriptions could rival the advertising potential. This could well happen in two to three years.

Going ahead, films produced on budgets of Rs 10-30 crore may increasingly opt for OTT platforms as producers will get reasonably good returns while marketing expenses will be taken care of by OTT players. Films with a budget of Rs 50 crore and beyond will stick to theatres owing to the high revenue realisation potential, said Girish Menon, partner at KPMG.

The film segment, estimated to report a 67% y-o-y dip in total revenues in FY21 at Rs 6,100 crore, is expected to post a 196% growth in revenues in FY22 over FY21.

Online gaming is estimated to have recorded revenues of Rs 9,900 crore in FY21, higher than Rs 9,000 crore reported in FY20. “Digital and gaming are projected to continue their strong growth in FY22 as well, with the habit formation around consumption translating into greater monetisation,” analysts at KPMG said. India is likely to be home to a billion digital users by 2028 compared with the initial estimate of 2030, they said.