ANNUAL REPORT 2018-19 MANAGEMENT DISCUSSION AND ANALYSIS INDIAN MACROECONOMIC OUTLOOK India continued to be the fastest growing major development, job creation and banking However, consumption growth has remained economy despite the challenges faced during reforms will support growth. One of the biggest quite resilient throughout this period. During the year. In FY19, the GDP of the country grew structural reforms, Goods and Services Tax FY19, despite a slowdown in overall GDP growth, by 6.6% on GVA basis, a marginal deceleration (GST), despite transient issues, is already private final consumption (PFCE) accelerated to from the previous year. While the growth in the helping formalize the economy and will 12.0% from 10.6% in FY18. Over the last five-year first half of the fiscal was strong, it moderated go a long way in improving the business period, PFCE has grown at a CAGR of 11.8% during the second half due to liquidity environment in the country. in nominal terms. This, along with the trend of concerns and stress in the agriculture sector. organized businesses gradually gaining market This impacted consumption and discretionary While the Indian economy has expanded at share in various sectors, augurs well for the spending, especially in the rural markets, an average annualized growth rate of around growth of the media industry. during the latter half of the year. However, 7% over the past several years, there have after a strong mandate, the expectation is been patches of slower growth in-between. that the new government will address these concerns on priority and inject stimulus to India’s GDP growth GVA basis (%) Nominal growth in private final consumption (%) revive economic activity. Three consecutive interest rate cuts by the Reserve Bank of India FY16 8.0 FY15 11.9 and their accommodative stance will help FY17 7.9 FY16 12.1 revive consumption and growth in the near term. Forecast of a normal monsoon in 2019 FY18 6.9 FY17 12.2 also bodes well for the agriculture sector and is expected to drive rural consumption. FY19 6.6 FY18 10.6 From a medium-term perspective, the government’s focus on infrastructure FY20 (P) 7.0 FY19 12.0 Source: CSO and RBI Source: CSO INDIA’S MEDIA & ENTERTAINMENT INDUSTRY The Indian media and entertainment (M&E) expected to grow at a CAGR of 12.0% to and content on digital platforms. Print media industry witnessed another year of all-round `2,349 billion over the next three years, with continued to grow, albeit at a much slower growth. The pace of growth accelerated growth in all the segments. pace. The movie industry surpassed all the marginally in CY18 despite the challenges previous box-office records on the back of faced by the economy towards the end of During the year, television increased its reach strong performances in both domestic and the year. According to the FICCI-EY Report and engagement with the audience, retaining international markets. Radio, in addition to 2019, (the Report), the M&E industry grew by its position as the default entertainment entering new cities, is diversifying into new 13.4% YoY in CY18, to `1,674 billion. India is medium for Indian consumers. Growth in online business offerings like concerts and activations. witnessing a significant increase in content video consumption accelerated, helped by Growth in live events was led by premium consumption due to increase in availability the increased availability of affordable data properties, sports events and digital integration. and improvement in affordability. Be it the M&E Industry Composition growing number of mobile and television sets, improving multiplex penetration or CY18 CY21 (E) smaller cities getting their own radio stations, `1,674 billion `2,349 billion availability of content is improving across TV platforms and is expected to get better 12% 14% Print going ahead. However, India’s per capita 5% entertainment consumption is still lower than 5% Films & Music most of its peers, representing a significant 10% 41% Digital room for sustained growth which would be 44% 15% driven by rising disposable incomes and 11% Live Entertainment increasing access to content. According 11% Others to the Report, the Indian M&E industry is 18% 14% Source: FICCI-EY M&E Report 2019 42 CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS PAGE NO. :01-40 PAGE NO. :42-100 PAGE NO. :101-214 TV AND DIGITAL TO LEAD masses, leaving some of the entertainment Average daily time spent on video needs unfulfilled. Digital is now filling this gap INDIAN M&E GROWTH (minutes) by providing differentiated content and catering Of all the entertainment options at Indian to audiences not well served on television. 34 consumer’s disposal, content consumption 27 Digital platforms are also syndicating popular scores high on two important parameters - content from international markets. This availability and affordability. With these two expansion of content bouquet is bringing in new aspects becoming increasingly consumer- 219 226 viewers as well as raising content consumption friendly, we are witnessing an exponential Television of existing audiences. growth in content consumption, driven by Digital increasing choices and easy access. As FY18 FY19 ADVERTISING: TV AND DIGITAL consumption rises, more content producers are coming forward to meet the demand. Source: BARC All India (U+R) 2+, wk14’17 to wk13’19; VIDEO TO DRIVE GROWTH This virtuous cycle is fuelling India’s content Time spent on Digital video is based on data of a leading telco. India’s advertising spends grew by 13% in CY18 consumption story. and as per the Report, it is expected to grow at a CAGR of 11.4% over the next 3 years. Despite In India, due to low levels of penetration, all Improving ease of access forms of media are seeing an increase in the double-digit growth over several years, consumption. That said, television and digital India’s device penetration is low. With 66% TV India’s ad-spends are significantly low relative are appropriating an overwhelming proportion penetration and 35% smartphone penetration, to the size of the economy. India’s strong of this incremental growth. Television continues a large population has not even started economic growth, rising income levels, and to witness an increase in subscriber base as consuming content on a regular basis. As consequent increase in consumption provide a well as time spent, and remains the mainstay income levels in India increase and prices of solid foundation for advertising growth. In this for family entertainment. Digital, on the other these devices fall, penetration will improve, conducive macro environment, the emergence hand, is becoming the default second screen leading to higher content consumption. Digital of new advertising categories, increasing for many in the predominantly single TV also makes it possible to consume content share of organized sector, and tapping of SME household environment of India. Consumption anywhere and anytime. As such, it is taking advertisers will drive sustained growth in ad- on television as well as digital is on a secular away time from other activities like reading spends. growth path. or making it possible to consume content while travelling. Separately, increasing power India’s Ad Spend - Growth Drivers availability in small towns and rural India is ACCELERATED GROWTH IN giving a boost to television viewership. CONTENT CONSUMPTION TO CONTINUE Double-digit Penetration of TV and Broadband nominal GDP In India, television viewership has been steadily (March-19) growth growing for several years. The emergence of digital platforms has added another dimension Increasing to content consumption growth and is driving discretionary spends up the total video viewership. While television Increasing provides entertainment for every member of % % a family at an affordable price, digital offers 66 42 share of convenience and differentiated content. Both organized sector the mediums have unique value propositions Television 3G+4G subscribers New to the users and are well placed to grow. It is Source: BARC, IIFL categories like estimated that by 2021, India will have around BFSI, Pharma 5 million digital-only consumers, which is less and Travel than 1% of India’s viewer base. Improving ease More content equals more viewership Digital of access and production of more content will In the entertainment industry, offering more enabling drive consumption on both platforms, albeit at SMEs choices to consumer leads to higher sampling different rates. followed by a sustained increase in viewership. Content production in India is growing at an ever-increasing pace. On television, more original content is being telecasted, especially in regional languages. Indian television content is primarily family oriented and caters to the Growth Drivers 43 ANNUAL REPORT 2018-19 Television and digital offer different propositions to advertisers. Television’s high Reach of TV and Broadband (March-19) Advertising spends (` billion) engagement levels and a weekly reach of 780 million individuals makes it the default medium for reaching out to a large consumer 12.7% CAGR base. This makes television the preferred 105 media for brand-building. On the other hand, 780 544 68 digital’s ability to target consumers based million million 50 on their profile and interests is more suited 38 for a certain set of brands and transaction- Television (weekly) Broadband subscribers based advertising. Digital also enables small Source: BARC, IIFL enterprises to advertise, thereby expanding 267 305 333 403 the advertiser base significantly. It is estimated Globally, video is gaining share from all other that over 300,000 businesses advertised on forms of content consumption. This, in turn is digital as compared to 12,000 advertisers on driving higher share of ad spends to television television and 180,000 on print. Advertisers and digital video. India is also witnessing CY17 CY18 CY19(e) CY21(e) are leveraging the power of both the mediums similar trends, and over the next three years together to meet their marketing objectives.