India’s Digital Media & Entertainment (M&E) sector is a site of vibrant growth potential with multiple key developments occurring across a few pertinent formats- namely OTT Audio, Video, Gaming and Short Form Videos. As the nation’s cohort of mature internet users is set to grow beyond 35-40 million, the Digital M&E sector is on its way to triple in size to US$ 12 bn by 2030. In the last two years, the sector has faced a few significant challenges in the form of reduced ad spending as well as regulatory changes in the Real Money Gaming (RMG) space.
01.The Digital Media & Entertainment sector is on its way to triple in size
It has also seen many positive trends in the form of increased paid users across multiple M&E segments, higher uptake of audiobooks and a significant growth in core gaming with scope for boosting the domestic eSporting ecosystem.
Here are the four key trends emerging across various formats in the media and entertainment sector.
02. Non-Real Money Gaming and OTT Video on a growth trajectory despite a dip in digital ad spending
Both the Non-Real Money Gaming and OTT Video categories have exhibited growth in the last two years. Factors such as subscription bundling, low-cost packaging, micro-payment and per-day views have contributed greatly toward the growth of the M&E sector at large. However, the challenges of higher Customer Acquisition Costs (CACs) and lower user retention remain for OTT Video platforms. On an average, it takes 2 years for OTT platforms to break even per user with individual CACs going up to $30-50. Additionally, there is a prevalent 1-5% Month-on-Month churn in the user base. Identifying long-term solutions to solve these critical challenges is the need of the hour.
Taking a creative approach towards monetization, exploring models such as keeping the first episode free on platforms, and even incorporating regional language content for Tier-2 audiences could change the game for OTT Video platforms. Once these challenges have been addressed, the OTT video sector can be expected to achieve profitability in the next 3-5 years.
03. Gaming sees a ~40% paid user penetration spurring increased livestreaming viewership and potential for eSports expansion
2023 saw the migration of a significant chunk of the gaming population from casual gaming into core gaming, capping the current core gaming demographic at 150 Mn. The placement of payment options at significant junctures of the gaming journey (for the purpose of levelling up and gaining access to specific costumes and accessories) has spurred the rise of in-game payments. The catalytic growth of the core gaming community has also translated into an increase in the viewership of livestreaming and also holds immense promise for organizers and sponsors of eSporting Tournaments. Interestingly, India’s first ever ‘Battlegrounds Mobile India (BGMI) Masters Series’ conducted in 2022 was livestreamed on a well-known sports channel, signalling interest in the nation’s relatively nascent gaming sector.
04. Homegrown Short Form Video (SFV) platforms amass a 250 mn user base, ~40% of which are online transactors
Indian SFV platforms have emerged as a platform for advertisers to tap into given their sizeable user base, 2/3rd of whom hail from Tier-2 geographies. The platforms also host 3.5 million influencers or new-age digital celebrities specializing in original and engaging content. As they appear to be prime targets for brands and advertising, opportunities for monetization are manifold. Currently, SFV platform monetization is in its nascent stages and is primarily restricted to ad revenue and influencer marketing.
05. OTT Audio sees the highest growth of paid users among M&E formats, fuelled by audiobooks
Immersive content experiences, competitive price points of Audio OTT platforms and the growth of non-entertainment regional content has led to the increased uptake of audiobooks as a category. In FY2022-23 alone, some of the leading players in the Audio series and Audiobooks spaces witnessed a ~9X growth catalysed by the availability of sachet payment options, engaging content and the increase in paid users. Across M&E segments at large, paid user growth is seen to have increased to 90% in FY23.
As the Indian Digital Media & Entertainment (M&E) is forging its way ahead, three key priorities emerge:
- Accelerating the growth of paid users across OTT Video, Audio and Gaming
- Nurturing a vibrant ecosystem of regional language content,
- Observing the increased digital ad spending by new-age and traditional brands.
Being selective and strategic about content, monetization and user retention models will pave the way for a rich and vibrant Digital Media & Entertainment sector in 2030.