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Media cos take the front seat with more ad spend, digital push

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By DK Aggarwal

The media and entertainment industry has now positioned itself on the cusp of a strong phase of growth, backed by digitisation, improving advertising revenues and increased consumer demand. Also, the industry has witnessed a relatively new trend in deal activity, with emerging segments such as gaming and digital gaining momentum.

The rising rate of investments by private players and foreign media and entertainment majors has improved India's related infrastructure to a great extent. If news is to believed, the size of Indian media and entertainment industry, which grew at 10 per cent between 2012 and 2017, has added over Rs 50,000 crore of revenue.

Of all the segments, digital content has started to account for an increasing share of growth in global entertainment and media revenues. Undoubtedly, digital technology will deepen its presence, leading to a shift in consumer behaviour across all segments, and continue to be among the fastest growing across the globe.

Ahead of strong economic fundamentals and steady growth in domestic consumption, coupled with growing contribution of rural markets across key segments, the industry is expected to see huge demand. The industry is expected to grow at an annual average rate of 11.6 per cent to reach Rs 2 lakh crore by 2020. Led by digital media, the industry reached Rs 1.5 lakh crore in 2017. Also, advertising is expected to grow to 43 per cent of total revenues by 2020, from the current 41 per cent.

Print media remained largely static, growing at 3 per cent to reach Rs 30,300 crore in 2017. It is estimated to grow at an overall CAGR of approximately 7 per cent till 2020, with vernacular publications at 8-9 per cent and English at slightly slower rates.

The industry normally sees advertisement growth in the first quarter of the financial year ahead related to education and in the third quarter ahead of festive demand. Brand investing will continue to be a big theme in everything.

Digitisation is setting new standards for industries in India as consumers are actively interacting with brands and businesses online. The industry is likely to attract revenue from the large advertisement spending sector such as FMCG, automobile, banking, telecom, financial services and insurance, real estate, jewellery and the like.

Besides, government advertisements will continue to be the biggest source of revenue for both print and electronic media ahead of general elections in 2019. The automobile industry will continue its new launches and hence, more advertising spends. Therefore, one may consider investing in companies such as Zee Entertainment, Shemaroo Entertainment, HT media and the like for the long term.

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