India’s digital future Mass of niches KPMG in India’s Media and Entertainment report 2019 August 2019 home.kpmg/in 2 Thought leadership title © 2019© KPMG, 2019 KPMG, an Indian an Indian Registered Registered Partnership Partnership and anda member a member firm firm of ofthe the KPMG KPMG network network of of independent independent membermember firmsfirms affiliated affiliated with with KPMG KPMG International International Cooperative Cooperative (“KPMG (“KPMG International”), International”), a Swiss aentity. Swiss All entity. rights All reserved. rights reserved. © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Thought leadership title 3 India’s digital future Mass of niches We would like to thank all those who have contributed and shared their valuable domain insights in helping us put this report together. • The information contained in this TL report ‘India’s digital future – Mass of niches’ is of a general nature and is not intended to address the circumstances of any particular individual or entity. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. • Although we have attempted to provide correct and timely information, there can be no guarantee that such information is correct as of the date it is received or that it will continue to be correct in the future. • The report contains information obtained from the public domain or external sources which have not been verified for authenticity, accuracy or completeness. • Use of companies’ names in the report is only to exemplify the trends in the industry. 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All rights reserved. © 2019© KPMG, 2019 KPMG, an Indian an Indian Registered Registered Partnership Partnership and anda member a member firm firm of ofthe the KPMG KPMG network network of of independent independent membermember firmsfirms affiliated affiliated with with KPMG KPMG International International Cooperative Cooperative (“KPMG (“KPMG International”), International”), a Swiss aentity. Swiss All entity. rights All reserved. rights reserved. 1 Thought leadership title Table of contents 1. Foreword 6 2. Executive summary 8 3. India’s digital demography: A path to 2030 18 4. Segments 34 Digital - Crossing the Rubicon 36 TV - Waking to a new reality 54 Print - The oldest pillar still standing 66 Films - Content triumphs 76 Animation, VFX and post production - Turning imagination into reality 88 Gaming - Well played 102 Out of home - Embracing digital 112 Radio - Waiting to be heard 120 Music - In tune with the masses 130 5. The media and entertainment industry in ASPAC markets - 142 At the forefront of the digital revolution © 2019© KPMG, 2019 KPMG, an Indian an Indian Registered Registered Partnership Partnership and anda member a member firm firm of ofthe the KPMG KPMG network network of of independent independent membermember firmsfirms affiliated affiliated with with KPMG KPMG International International Cooperative Cooperative (“KPMG (“KPMG International”), International”), a Swiss aentity. Swiss All entity. rights All reserved. rights reserved. © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Thought leadership title 2 6. Themes 160 NTO - A paradigm shift 162 Regional markets - Moving into the limelight 170 Skill development - The learning imperative 176 Digital privacy - You are being watched 184 Digital content - Bridging the monetisation gap 188 Cord cutting - Early adopters embracing change 192 Original content on OTT platforms - Capturing mindshare 198 E-sports - One for the team 204 Monetisation of sports leagues - Show me the money 210 Centralised marketing system - Connecting the dots 216 M&A deal trends 220 Tax landscape 224 7. Technology trends in M&E sector 230 5G: What can M&E sector expect? 232 Future disruptors 240 © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019© KPMG, 2019 KPMG, an Indian an Indian Registered Registered Partnership Partnership and anda member a member firm firm of ofthe the KPMG KPMG network network of of independent independent membermember firmsfirms affiliated affiliated with with KPMG KPMG International International Cooperative Cooperative (“KPMG (“KPMG International”), International”), a Swiss aentity. Swiss All entity. rights All reserved. rights reserved. 6 Foreword Foreword We are delighted to share the KPMG in India’s media and entertainment report 2019. The report – in its eleventh year of publication – is distinctive this year as we explore what we believe will become one of the central themes of the industry in the near term; an examination of India’s digital demography from now to 2030. Why is the profile of India’s digital demography relevant? As KPMG in India’s media and entertainment 2018 report had outlined, digital disruption has made it vital for media businesses to pivot to a direct to consumer model. With this transition comes the imperative to invest in better understanding the end consumer. Segmentation and demographic, psychographic and behavioral profiling will all become increasingly important, as they have historically been in other consumer businesses. By 2030, we estimate that there will be a billion people in India who are connected to the internet. While there will expectedly be significant heterogeneity among consumers, it is still possible to draw insights into their behaviour and thereby develop broad archetypes. For example, the largest segment of the digital user base in 2030 will be what we are calling the ‘Digital Enthusiasts’; a category that will include a majority of the early adopters of the internet, as well as the Millennials and Generation Z who will be entering their prime working years. This group is accustomed to leveraging the power of the internet in their everyday lives from finances, travel, entertainment and livelihood. The Digital Enthusiasts also becomes more sizeable over time due to an upward progression of users from the ‘Digital Mainstream’ buoyed by their growing prosperity and greater comfort and confidence in going online. In 2030, digital media and entertainment expenditure in itself is unlikely to be perceived as a luxury. With digital consumption becoming ubiquitous, the differentiation across consumer archetypes therefore will be more around their level of digital sophistication, cultural factors, demographics etc. combined with the ability to spend on hardware and immersive experiences. In all, as our report outlines, while there may be bumps in overall consumption levels as economic sentiments shift and technology continues to disrupt, the secular trend for media and entertainment consumption in India is most decidedly favourable. We hope you find this report timely and insightful. Satya Easwaran Partner and Head Technology, Media and Telecom © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Foreword 7 Foreword There are telling signs that the Indian economy is slowing down. The government lowered its GDP estimate for FY19 from 7.2