Achche Din for M&E

01 Oct,2015

 

By Ajay Shah

 

India is expected to become the third largest economy in the world by 2030 — after the US and China — and the GDP per capita is expected to grow from $1600 to $4,500 by 2030. As seen globally, an increase in the GDP per capita increases the proportion of the M&E industry’s contribution to the GDP. With a triple fold increase in GDP over the next 15 years, the M&E industry’s contribution to the GDP is expected to increase significantly. But this isn’t all. Here are eight reasons the country will be an attractive destination for M&E investments —

 

1. Currently, the Indian M&E industry is growing at a CAGR of 13-14 per cent per year which is almost twice that of the global media industry. Despite the faster growth, advertising spends, which drive growth in M&E industry, as a percentage of GDP is 0.4 per cent, which is significantly lower than developed markets (0.7- 1 per cent). Over time, the M&E sector will witness increasing ad spends as a proportion of the GDP

 

2. With over half a billion people under the age of 25, India is witnessing a rise in disposable incomes. Increasing income levels have also led to increasing spend on M&E, as evident from the fast growth of multiplexes  and the success of various sporting leagues in the last five years

 

3. Compared to the most developed markets, India is a unique market with traditional media and digital media segments growing simultaneously. Traditional media is expected to continue on the growth trajectory because of the under-penetration of media segments in Tier II and III cities

 

4. Several government initiatives, like the digitisation of Cable TV, Phase III auctions of FM spectrum and increase in FDI limits, will aid the growth of traditional media

 

5. India is the second-largest internet market after China, with over 300 million internet users. Additionally, government thrust on the Digital India campaign will significantly increase internet penetration in the next decade, thus expanding the digital media opportunity

 

6. The mobile subscriber base of 900 million users, sub-$100 smartphones, and one of the lowest data cost globally, is expected to drive a surge in mobile data traffic from 88 TB/Month in 2014, to 1,100 TB/Month by 2019

 

7. With existing internet penetration lower than 25 per cent, India is already among the Top Five online video markets globally, in terms of viewership, and is expected to be the second largest market by 2017. As internet penetration increases, India will become one of the most important M&E markets

 

8. Currently, investors are interested in TV distribution, cinema exhibition and digital media sub-segments, and we expect this trend to continue for the next few years

 

Ajay Shah is Partner and Leader, Deal Advisory, Media and Entertainment at EY (Ernst & Young). Last week, EY released its 12th Media and Entertainment Capital Confidence Barometer

 

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