EY-FICCI report rediscovers Indian Customer Segmentation

25 Mar,2019

 

By Indrani Sen

 

Indrani Sen

It has been nearly two weeks since the FICCI-EY Report on Indian M&E Industry “A billion screens of opportunity” was released at the 20th FICCI Frames held in Mumbai on March 12, 2019. Most leading financial newspapers and industry websites have carried the press release issued by FICCI with highlights of the findings.

 

This website www.mxmindia.com carried a report with highlights of the findings on March 13, 2019 http://www.mxmindia.com/2019/03/me-grows-13-rs-1-67-trillion-in-2018-ey-ficci-report/. The marketing and advertising industry experts have been busy analysing and internalising the findings and useful insights given in the report and their strategic significance.

 

To me, the most significant insight of the report is its estimate of the customer segmentation in India by their access to various media consumption platforms. Last year, EY introduced the idea of this type of customer segmentation by introducing us to three types of segments, digital only consumers, tactical digital consumers (Pay TV & Pay OTT) and mass consumers (Pay or Free TV & Free OTT) and projected that by 2020 there will be 4 million digital only subscribers, 20 million tactical digital subscribers and 500 + mass subscribers.  I was delighted to discover that EY has refined their estimation of the customer segmentation by introducing another segment “bundled digital” consumers (as provided by telecom services) and segregating the mass consumers from the free consumers as shown in the chart below:

Customer segmentation by media consumption platforms

Source: FICCI-EY Report 2019

The broad category of mass consumers accounting for 500 +million in 2020 has become more specific with 943 million subscribers in 2021 spread across three categories. This analysis of customer segmentation introduced in the FICCI EY report not only has strategic implication for marketers in the short run, but also will help to further accelerate the growth in digital advertising in the long run.

Digital media has been consistently contributing to the growth of M&E sector. It is expected that digital will overtake filmed entertainment (currently in number 3 position) in 2019 and print (currently in number 2 position) by 2021. TV clocked the highest share (44%) of the entire industry in 2018 and is expected to grow by 8.8% from 2018 to 2021 but its share is estimated to drop from 44% to 40%. Digital media, growing at 28% from 2018 to 2021, is estimated to have 15% share of the entire sector in 2021 from 10% in 2018. It is difficult to predict what will happen in the next ten years and EY has not ventured into that forecast, but it will not be surprising if digital media overtakes TV by end of the next decade.

In fact, MRUC should consider adopting this customer segmentation for revising their criteria for new socio-economic classifications as the current structure based on ownership of durables etc. is not reflecting the disposable income correctly, given the availability of easy financing schemes for purchase of white goods, etc. and the aspirations of the upwardly mobile population in rural and semi-urban areas.

Uday Shankar, Chairman of the FICCI Committee said in his opening remarks at the FICCI Frames    “… in my humble opinion, the great Indian media & entertainment story has just begun. We are standing at an inflexion point. In business strategic inflexion point is described as a period when the individually the organisations and collectively the industry needs to respond effectively to the disruptive change in the environment in order to survive and grow.  The Indian ME industry entered the inflexion point/ period in 2018, when Indian ME Industry was at the “Digital Tipping Point”. The scope of making a choice no longer exists for the various segments belonging to the Indian ME industry and in order to stay in the race they need to adapt to the disruptive changes including the customer segmentation based on access to media consumption platforms.

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