Digital subscription revenue swells at the cost of TV subscriptions in 2022

• The contribution of digital media to M&E sector revenue grew to 27% in 2022 from 16% in 2019.
  
• Digital subscriptions grew 27% during the year, while TV subscription revenue fell for the third year in a row.
  
• The report predicts that the pay TV universe will continue to shrink to 116-119 million active households by 2025.
  

India’s media and entertainment (M&E) sector revenue grew at a healthy 19.9% in 2022 to ₹2.1 lakh crore — 10% above its pre-pandemic levels. Every segment in the vast sector — including music, radio, print and even online gaming registered a growth — with the exception of television subscriptions, says a FICCI-EY report on the sector.

Digital media registered the highest growth — rising 30% during the year. It now contributes to over a quarter of the sector as its share increased from 16% in 2019 to 27% in 2022.

“If one were to include data charges associated with digital consumption in sizing, its share would stand at 50% of the total M&E sector. While television remained the largest segment, digital media cemented its position as a strong number two segment, followed by a resurgent print,” said the FICCI-EY report.

The largest segment, TV, however, has been showing signs of stagnation as its revenue fell 1.5% in 2022. “Television advertising grew 2% to end 2022 just behind its 2019 levels, on the back of volume growth. Subscription revenue continued to fall for the third year in a row, experiencing a 4% de-growth due to a reduction of five million pay TV homes and stagnant consumer-end average revenue per users,” the report said.

This is a direct effect of growth in digital subscriptions, which grew 27% during the year. As many as 99 million paid video subscriptions across almost 45 million Indian households generated ₹6,800 crore. This is over 60% of broadcasters’ share of TV subscription revenues.

Over 8-10 million smart TVs are connected to the Internet every day, indicating that the demand for only linear and payTV is fast vanishing. The report predicts that the pay TV universe will continue to shrink to 116-119 million active households by 2025.

“The Indian M&E consumer base is large but heterogenous, hungry for content but willing to pay only for value, and more than ready to experiment with technology, be it streaming, digital payments, online education, virtual experiences, e-commerce, social media, or gaming. The diverse consumer base, coupled with favourable macroeconomic and demographic factors, have translated into a very exciting time for the sector,” said Ashish Pherwani, EY India media and entertainment leader.

Print subscriptions grow too

Almost half of the advertising pie – at 48%, falls into the digital kitty as it grew 30% last year. TV ad revenues, in comparison, grew at a severely sluggish pace of 2%, just behind its 2019 levels.

In comparison, its older cousin print saw ad revenue grow 13% as it remained a ‘go-to’ medium for more affluent and non-metro audiences. Moreso, print subscription revenue grew 5% on the back of rising cover prices even as digital revenue remains ‘elusive’ for most newspapers.

There is some respite in the films segment as well. The segment grew 85% last year and is at 90% of its 2019 levels. Over 1,600 films were released in 2022, theatrical revenues crossed ₹10,000 crore, and fewer films released directly on digital platforms. So much so, 335 Indian films were released overseas too – helping the box office recover.

Going ahead, the film segment will grow in two different ways according to the report. High-end cinemas will evolve into “experience zones” to cater to top-end multiplex audiences. The size of this segment is estimated at 100 million customers by 2025.

On the other hand, a set of lower-priced “cinema products” will emerge for the next 100-150 million audiences across the top 75 cities of India. “It will also require a change to the type of content being produced for these audiences, and which could even see regional OTT (over-the-top) products releasing in a windowed manner,” the report said.