In the race to the top of M&E industry…

18 Jun,2018

 

By Indrani Sen

 

In early June, PWC released their Global Entertainment and Media Outlook 2018-2022 predicting that in India the Media and Entertainment(M&E) industry will grow at a compound annual growth rate (CAGR) of 11.6% growth of between 2018 to 2022 (https://brandequity.economictimes.indiatimes.com/news/media/indias-me-industry-to-clock-over-rs-353609-crore-by-2022-pwc-report/64477039). This growth rate will be 2.5 times the growth rate of 4.4% predicted for the global M&E industry. However, in terms of M&E revenue per capita in US$, the developed countries will be far ahead and in 2021 US M&E per capita revenue ($2260) will be 10 times of China ($222) and 70 times of India ($32).

 

Source: PWC Outlook 2018-2022

The PWC analysis also predicted that India will earn a place among the Top 10 countries in terms of absolute revenue for M&E industry by 2021, a fact which is extremely reassuring given the exchange rate of INR and US$. Among the BRICS countries, China, India and Brazil will be among the top ten countries in terms of absolute revenue of M&E industry. China will overtake all other countries and will be in the number 2 position after US, followed by Japan, Germany, UK, South Korea, Canada, India and Brazil.

 

Source: PWC Outlook 2018-2022

Last week, the Dentsu Agies Network predicted that adspend in India will grow by 12.5% in 2018, a substantial increase from 9.6% in 2017 and against a global growth of 3.6% in 2018, up from 3.1% in 2017 (http://www.mxmindia.com/2018/06/dentsu-adspend-forecast-for-2018-down-from-12-5-to-10-5/) The advertising market in India is forecast to grow by a further 12.5% in 2019. Ad spend is a component of the total M&E industry, but any small fluctuation in the affects the industry’s overall revenue and growth. It is reassuring to find that the DAN Global Advertising Forecasts (January 2018)based on data received from 59 markets, supports the trend predicted by PWC in their overall forecast for the M&E industry and particularly for India. Both the studies agree that the future growth will be driven by various forms of digital media. DAN forecasts that during the current year, digital media spend in India will increase by 30% with 43.6% growth in mobile spend, accounting for 47% of total digital spend in 2018.

In a comparison of the growth rate in adspends across countries the Dan report shows that only India will continue to enjoy a double digit growth rate over the period 2016-2018. Russia and Lain America, who had similar two digit growth rates in 2016, are going to experience declines in their growth rates over 2017 and 2018.

 

Global Ad Spends 2016-2018

Source: DAN Global Ad Spends Forecast (January 2018)

 

Going back to the forecast of PWC, after attaining a place among the first ten countries in terms of absolute revenue in 2021, India’s next goal should be to attain a position among the top five countries. Apart from the growth which will come from within the M&E industry fuelled by technological changes and ad spends growth, we will need to improve our exchange rates with other foreign currencies, particularly the US$ which is used as the currency for global comparisons. How much demand there is in relation to supply of a foreign currency determines that currency’s value in relation to the local currency.Other geopolitical and economic indicators that affect the exchange rates between two countries are changes in interest rates, unemployment rates, inflation reports, gross domestic product numbers, data on manufactured commodities, etc. So, in the race to the top of M&E industry we must have a robust economy and the solid financial infrastructure leading to a favourable exchange rate with US$.

 

 

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