1、The era of consumer A.R.T. March 2020 Indias Media we expect it to overtake print by 2021 2020 estimates have been created prior to the advent of the coronavirus and we will update the same once we are in a position to quantify its impact. 11 Key trends in 2019 Growth was driven by direct-to-custome

2、r segments 39.8% 30.9% 20.3% 10.2% 9.5% 8.9% 8.3% 6.4% 5.0% -3.2% -7.5% Online gaming Digital media Animation and VFX Live events Filmed entertainment M it now comprises 13% of total digital segment revenues Animation and VFX segment benefjted due to increased demand from domestic content companies

3、(which produced over 1,600 hours of original OTT content, 1,800+ fjlms and over 200,000 hours of entertainment television) as well as international content companies producing ever larger amounts of content for both developed and growth markets Live events continued to entertain India in 2019, with

4、a growth in the number of event IPs launched, international formats coming into India, growth in ticketed events and digital activation Filmed entertainment segment saw its best ever domestic theatrical revenues (a record 17 Bollywood fjlms crossed INR100 crore) and growth in value of digital rights

5、, though overseas revenues fell slightly Music grew on the back of digital streamers reaching around 200 million due to the launch of a number of audio streaming platforms in 2019 and better implementation of performance rights collection mechanisms Television advertising saw 5% growth in 2019 due t

6、o large impact properties like the ICC World Cup and the general elections, while subscription grew 7.5% due to increase in end-customer prices OOH growth in 2019, was led by airport advertising, metro station naming rights and Indian Railways push to increase non-fare revenues Print readership fell

7、 marginally in 2019 and consequently witnessed 3% revenue degrowth, with advertising revenues falling 5% but subscription revenues increasing 2% Radio segment witnessed 7.5% decline in revenue on account of the slowdown in economic activity, which impacted ad spends from retail advertisers in the se

8、cond half of 2019, though we expect revenues to grow once economic growth revives Media and entertainment 13.8% 7.8% 9.0% 5.3% 12.6% 8.9% 2012 2013 2014 2015 2016 2017 2018 2019 Nominal GDP (% growth, y-o-y) Advertising revenues (% growth, y-o-y) M a digital layer will be added over physical activit

9、y tracked by the IoT / wearables ecosystem on one hand, while game-led events (like eSports) will bring the physical touch to the online gaming world User generated gaming (UGG) could also emerge as a signifjcant opportunity to combine content creation and gaming Traditional media will embrace platf

10、ormmatic advertising sales Traditional regional media has the power of feet on the street today and will capitalize that to reach SME and long-tail advertisers across the country, offering traditional plus digital bundles and integrated sales Ad platforms will enable them to reach a larger set of ad

11、vertisers, and earn revenues through simple, self- serve models A Hindi-mass film product is needed To grow the around 100 million theatre audience in India6 and bring forward the next 50 million theatre- goers, the industry will need to create more Hindi- mass content that will appeal to a wider au

12、dience This content will need to be released at low cost non- metro venues with affordable pricing below INR100 per person including F click on the picture 17 Despite a growth slowdown in 2019 and 2020, India is expected to regain its position as a global growth leader India has been the growth lead

13、er amongst major economies including Emerging Markets and Developing Economies (EMDEs) over the last fjve years (Chart 1)1. It surpassed China in terms of real GDP growth in 2014 and has remained above since. However, the recently released fjrst revised estimates for FY19 combined with the advanced

14、estimates for FY20 indicate a fall in the real GDP growth in 2019-20 to a level below that of China. Growth in the Indian economy is expected to pick-up thereafter1. Chart 1: GDP growth: Cross-country comparison 1.7 1.4 4.6 7.4 8.0 8.2 7.2 6.8 4.85.8 6.5 5.8 3.4 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9

15、.0 2000202021 United StatesEuro AreaEMDEsIndiaChinaWorld Source: IMF World Economic Outlook October 2019; IMF World Economic Outlook January 2020 update; CSO, MoSPI 1. IMF World Economic Outlook October 2019; CSO, MoSPI Media and entertainment India remained the fjfth largest e

16、conomy in 2019 India shares 17.7% of the total world population and 2.4% of the worlds surface area. According to International Monetary Fund World Economic Outlook (October-2019), Indias nominal GDP is estimated at US$2,936 billion in 2019, making it the fjfth largest economy in the world. India co

17、ntributed 3.39% of the worlds GDP measured in nominal US$ exchange rate basis. When measured on the basis of purchasing power parity (PPP), India is estimated to be the third largest economy at PPP$11,326 in 2019. Country GDP 2019 (US$ billion) Nominal RankPPPRank United States 21,439121,4392 China1

18、4,140227,3091 Japan5,15435,7474 Germany3,86344,4445 India2,936511,3263 United Kingdom 2,74463,1319 France2,70773,06110 Table 1: Nominal GDP in US$ and PPP dollar terms: Cross-country comparison Source: IMF Per capita nominal GDP grew by 8.5% in 20191 Indias per capita nominal GDP is estimated to hav

19、e grown by 8.5% in 2019 to INR154,600, as compared to a growth of 7.6% in China in the same year. Growth in Indias per capita nominal GDP is projected to increase to 9.8% in 2020 and further to 10.2% in 2021 and remain stable thereafter. Higher per capita income drives consumption growth including t

20、hat in the media and entertainment sector. Advertising growth fell below nominal GDP growth in 2019 Chart 2 depicts the trend in growth of advertising revenues and nominal GDP. From 2012 till 2015, even as nominal GDP growth was falling, growth in advertising revenues was rising. However, growth in

21、advertising revenues has fallen since then but recovered to a level higher than nominal growth in 2018. In 2019, it fell to 5.8%, trailing nominal GDP growth by 2%. Advertising remained at around 0.4% of GDP in 2019. Chart 2: Growth in advertising revenues and Nominal GDP Nominal GDP growth (y-o-y%)

22、 Advertising growth (y-o-y%) 13.8% 13.0% 11.0% 10.5% 11.5% 11.3% 10.2% 7.8% 9.0% 10.9% 14.2% 14.7% 11.2% 9.2% 12.7% 5.8% 2012 2013 2014 2015 2016 2017 2018 2019 Source: Advertising Revenue: FICCI M CSO, MoSPI 19 Recent policy initiatives strive to stimulate economic growth Pre-Budget initiatives One

23、 of the most important policy reforms aimed at attracting investment was rolled out between the FY20 and FY21 union budgets in the form of an overhaul of the corporate tax rate (CIT) structure along with the related exemptions and deductions. Investment by companies may pick up gradually as capacity

24、 utilization improves. Until then, the additional corporate savings may be used for additional dividend distribution, price reduction, reduction in corporate debt and fjnancing buybacks which may increase consumption demand. Another demand enhancing policy initiative relates to the proposed National

25、 Infrastructure Pipeline (NIP). The NIP is a six-year investment plan to augment infrastructure in different sectors of the Indian economy. The fjnancing of the proposed cumulated investment of INR102 trillion is to be done by the central government including central public sector enterprises (CPSEs

26、), state governments including state public sector enterprises (SPSEs), and the private sector in the ratio 39:39:22. The centers budgetary support to the NIP is meant to serve a pivotal role in bringing together the states and the private sector to play a complementary role. Budget 2021: Providing

27、a consumption- based push The Union Budget 2021 has prescribed a consumption- based push to the economy. To push up demand, the government relaxed the fjscal defjcit targets from 3.3% of GDP to 3.8% in FY20 (revised estimate) and from 3% to 3.5% in FY21 (budget estimate). Most of the additional borr

28、owing is proposed to be spent on augmenting revenue expenditure. Additional stimulus has also been introduced by providing an optional personal income tax rate structure and by abolishing the dividend distribution tax. The estimated magnitude of stimulus provided through these two reforms amounts to

29、 INR400 billion and INR250 billion respectively. These initiatives are likely to add to the private disposable incomes, potentially raising consumption demand in the economy. Inflation is expected to remain elevated in the short run Consumer Price Index (CPI)-based infmation has risen from a 19-mont

30、h low of 2.0% in January 2019 to a 68-month high of 7.6% in January 2020 (Chart 3) as infmation in food has increased from (-) 2.2% to 13.6% over the same period. Recently, there has also been an increase in input costs for services such as telecommunication which has imparted cost-push pressures to

31、 core CPI infmation (excluding food and fuel). However, other factors such as the correction in energy prices may limit the pass-through to selling prices. Going forward, as per the RBIs February 2020 Monetary Policy Statement, CPI infmation is expected to ease from 6.5% in 4QFY20 to 5.4-5.0% in 1HF

32、Y21 and further to 3.2% in 3QFY21. Chart 3: Trends in CPI-based inflation 2.0 7.6 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Source: MoSPI Media and entertainment Government initiatives in the teleco

33、m and media and entertainment space The government has played an active role in supporting the media and entertainment sector, especially through various policies aimed at increasing digitization including development of digital communication infrastructure. With the objective of bringing in the nex

34、t generation technology, the government intends to hold 5G spectrum auctions in 2020-213. According to the government4, 5G based technology would help in the achievement of its Digital India vision. The economic impact of introducing 5G technology is estimated to reach US$1trillion by 2035. Some of

35、the other important initiatives undertaken by the government are given below. National Digital Communications Policy-2018 Both the telecommunications and the media and entertainment sectors are part of the current governments Make in India plan and therefore have been given special attention. In Sep

36、tember 2018, the government released the National Digital Communications Policy-2018 (NDCP 2018) catered towards the establishment of a “ubiquitous, resilient and affordable digital communications infrastructure and services”. Its key objectives include: (1) providing universal broadband connectivit

37、y at 50 Mbps to every citizen, (2) providing 1 Gbps connectivity to all gram panchayats by 2020 and 10 Gbps by 2022, (3) ensuring connectivity to all uncovered areas, (4) attract investments of US$100 billion in the digital communications sector, (5) training one million manpower for building new ag

38、e skills, (6) expanding the Internet of Things (IoT) ecosystem to fjve billion connected devices and (7) facilitating Indias effective participation in the global digital economy. Investment under NIP The government has targeted an investment of close to INR3.2 trillion in digital infrastructure ove

39、r the next six years from FY20 to FY25 as part of the recently proposed NIP, of which the private sector is expected to contribute 71%. The NIP has set a goal of digital services access for all along with a two-fold strategy to achieve this goal, namely: a) 100% population coverage for telecom and h

40、igh-quality broadband services for socio-economic empowerment of every citizen; b) digital payments and e-governance infrastructure for delivery of banking and public services. Further the NIP lays down Vision 2025 for development of digital infrastructure as given in Table 2. 3. As per exchange rat

41、e derived using data from IMF World Economic Outlook October 2019 4. https:/www.indiatoday.in/technology/news/story/5g- rollout-in-india-may-face-potential-delay-due-to- coronavirus-1646430-2020-02-14 Exchange rate fmuctuations are expected to be muted Starting February 2019, Indias exchange rate ap

42、preciated continuously reaching a 12-month high of INR68.8/US$ in July 2019 partly due to foreign portfolio infmows (Chart 4). However, it fell to INR71.1/US$ in August 2019 on account of domestic growth concerns and global trade tension. It has remained close to this level since then and averaged I

43、NR71.3/US$ in January 2020. Though the rupee depreciated to INR75/US$ due to the impact of coronavirus, it is projected to stabilise at an average of INT72.6/US$ in 20202. 69.5 70.7 71.2 69.4 69.8 69.4 68.8 71.1 71.3 71.0 71.5 71.271.3 68 69 70 71 72 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19

44、Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Source: RBI Note: exchange rate is depicted on an inverted scale Chart 4: Exchange rate movement 2. As per exchange rate derived using data from IMF World Economic Outlook October 2019 21 Table 2: Digital infrastructure vision as per National Infrastructure

45、Pipeline #TargetCurrent status 1 India ranks fjrst in terms of mobile phones with 100% tele-density, even in rural areas India ranks second in terms of mobile phones and has 89% tele-density 2 Higher internet penetration of more than 80% providing seamless connectivity of rural and remote through sc

46、hemes such as Bharat Net Internet penetration is around 40% 3 Availability of government services in real time on mobile access to quality education, healthcare facilities and fjnancial inclusion Issues such as poor connectivity and data speeds prevail due to poor operation and maintenance 4 5G tech

47、nology to fuel industry growth and innovation, harnessing the power of emerging digital technologies, such as IoT, cloud, AI, big data, payment gateways, FinTech 4G technology has enabled India to move towards a digital economy by providing faster internet connectivity at affordable prices 5 India t

48、o emerge as data-center hub fuelling growth of FinTech, ecommerce, OTT sectors Private business focusing to build massive data centers on the back of data localization, uptake of cloud computing and growing e-governance Source: National Infrastructure Pipeline, Ministry of Finance, GoI, TRAI Media a

49、nd entertainment Services FDI limit Approval condition Telecommunications Telecommunication services (basic, cellular, internet, national, international long distance, unifjed license, commercial V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communication Services (GMPCS), all types of ISP licenses, voice mail/ Audiotext/ UMS, Resale of IPLC, Mobile Number Portability services, etc.) Infrastructure providers Category-I (providing dark fjber, right of way, duct space, tower) except other service providers 100% FDI up to 49%: automatic ro