KPMG predicts Indian media and entertainment sector revenue to drop 20% in FY2021

FY2022 revenue to see strong bounce back

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KPMG
Disruptions due to Covid-19

The media and entertainment (M&E) sector in India is projected to see a significant decline of 20% in total revenues in FY2021, with deep cuts in print and films, followed by television, on account of Covid-19 disruption, according to a report published by KPMG on September 30.

The M&E sector’s revenue in FY2021 is expected to be Rs 1,402 billion compared to Rs 1,751 billion in the FY2020. In contrast, the sector’s revenue grew by 7% year on year in FY2020, according to the report.

With the global pandemic outbreak, India announced stringent measures to combat Covid-19 in March 2020 and headed into a long phase of lockdown. This led to pressure on supply chains, manufacturing, consumption and incomes as economic activity came to a halt and unemployment rose. As a result, India posted a steep 23.9% decline in GDP in Q1FY2021 as consumer spending and investments dried up.

In FY2021, the digital consumption segments, that is, digital (including OTT video) and online gaming are expected to be silver linings, with digital consumption across the board having seen a significant upswing owing to people working from home. While advertising revenues on digital have been impacted from last year’s hyper-charged growth, the subscription revenues have seen an upswing and could end up at an accelerated new normal once the pandemic subsides.

According to the report, the revenue for print is likely to drop by 38% in FY2021 to Rs 188 billion while for television it is expected to decline 9% to INR 708 billion. Digital and OTT revenue in FY2021 is expected to Rs 254 billion, up 17% year on year.

FY2021 adverting revenue in a bad shape

Advertising revenue is expected to show a similar trend as overall revenue. Digital is the only space that is expected to see a growth in advertising revenue.

Advertising revenue for the digital segment is expected to grow 12% in FY2021 to Rs 223 billion. For the print segment, the advertising revenue is likely to drop 46% year on year to Rs 107 billion while television segment will see a decline of 17% year on year in FY2021 to Rs 217 billion.

“Digital media advertising revenues are projected to overtake TV advertising revenues for the first time in FY2021 and will establish new leaderboard rankings,” the report said.

Strong bounce back in FY2022

According to the KPMG report, the M&E sector is expected to bounce back in FY2022 with a growth of 33.1% over FY2021 to reach Rs 1,866 billion, with gaming and digital being the fastest growing segments.

“Assuming the pandemic is under some form of control by the end of FY2021 and businesses learn to operate in the new normal, FY2022 will likely be a bounce-back year for the sector, with a 33% growth projected over FY2021,” KPMG report said.

Print revenue in FY2022 is expected to rise sharply by 57% year on year to Rs 298 billion. However, despite the sharp bounce back, the overall revenue for print in FY2022 will still remain below FY2020 levels of Rs 306 billion.

Television revenue in FY2022 will grow 9% year on year to Rs 769 billion. Just like print, television segment’s FY2020 revenue will still remain below FY2020 levels of Rs 778 billion, the report said. Digital segments revenue in FY2022 will jump 33% year on year to Rs 338 billion.

Advertising revenue for all media will see a much sharper rise than overall revenue. Print advertising in FY2020 will jump 73% year on year to Rs 186 billion. However, it will still be below FY2020 revenue of Rs 198 billion. Television advertising revenue in FY2022 will rise 19% year on year to Rs 258 billion. This will still be below FY2020 level of Rs 262 billion, the report said.

Digital advertising revenue will see the sharpest 31% year on year growth in FY2020 to Rs 292 billion, higher than both print and television.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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