The Shifting Landscape of The Indian Media and Entertainment Business
What changes are happening in film, TV, print, animation, music and other segments?
In Episode 6 of The Media Room, media expert and author Vanita Kohli-Khandekar speaks to Ashish Pherwani, EY India’s Media & Entertainment Leader. With the recent release of the FICCI-EY Media & Industry Report, they discuss some of the changes happening in film, TV, print, animation, music and other segments. Tune in for insights on the current landscape of the Indian media and entertainment business.
NOTE: This transcript is done by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
—
TRANSCRIPT
Vanita Kohli-Khandekar (host): The Indian media and entertainment business stood at 250,000 crore or just over 29 billion dollars in 2024. That's a growth of about 3.3 percent over 2023, a big fall from the 8.3 percent the previous year. Digital has finally overtaken TV and all sorts of changes are happening in films, TV, print, animation, music and other segments.
That is what the latest FICCI Frames report that maps the shape, size and texture of India's media and entertainment business says. To take us through it and the big changes the business has seen, I spoke to Ashish Perwani, media and entertainment sector leader for EY India. EY has been authoring this report for 8 years continuously.
And before that, they used to do it on and off. Over to Ashish.
Vanita Kohli-Khandekar: Hi, Pheru.
Welcome to the Media Room. I'm so, so happy to welcome you to this one because you and I work together and so much we talk about on the media and entertainment business. I'm really delighted to have you on this show.
Pheru, first of all, the FICCI EY media and entertainment report, you come out with it every year. You've been coming out with it for how many years now?
Ashish Pherwani: This is the eighth consecutive edition. It's been quite a journey. And I was looking back at the first report and I seriously cringe at what we have written out there.
Vanita Kohli-Khandekar: We all cringe when we look at our first pieces of work. So I think we should let that be. But Pheru, can you unpack this one for us in terms of the highlights, in terms of what stands out?
I mean, I've been reading the news. I've read the report partially. And I've been reading the news reports.
But for my listeners, could you just unpack a bit of it?
Ashish Pherwani: So way back in 2018, we had said that India will achieve its digital inflexion point by 2023. We were a year off. It happened in 2024.
By digital inflexion point, I mean that point when digital media revenues exceed the revenues of all other segments. So this year, digital crossed 80,000 crores in total revenues, 70,000 crores of advertising and about 10,000 crores of subscription income, and became the largest segment of India's media and entertainment industry. Digital is now 32% of all revenues of the country in the sector.
So that's the key takeaway this year. The other thing is that it's been a really topsy-turvy year. So on one side, you had digital growing 17%.
You had events growing 15%. You've seen all the kind of action we've seen around concerts and, and weddings and big government events in the country. So growth was driven by largely these two segments.
And of course, you know, out of home, again, digital out of home, growing very well. Radio continuing to grow, not on the back of FCT revenue, but you know, alternate revenue stream. So we've had a good set of growth happening in four segments, but five segments actually fell.
And that is the first time I'm seeing that since COVID. Right? And very different reasons.
Animation and VFX fell the most, almost 10%. And that's because a lot of the inbound work from the US stopped due to the strikes that were there for writers and other talent in the US. Gaming had a slightly bad year because when the 28% GST was imposed, all the gaming companies had to subsume that cost.
And therefore we netted it off from their top line, resulting in a net degrowth for the gaming sector as well. Though at a gross level, there would be a growth of single digits or maybe even 10%. But at a net level, gaming fell down as well, 6%.
Television is continuing to fall. Fewer advertisers, almost 10% drop in advertisers on television. And pay TV homes fell by about 67 million as well.
So television also continues, you know, growing down. And if you look at print, print actually held on. Advertising grew a percent, but subscription fell a percent.
I met about 20 print CEOs when I was doing the report one on one. 18 of them said the biggest challenge for them was either holding on to subscribers at the current level. In fact, many of them said they had started slipping, continue to slip a little bit every year.
A little bit, not a lot, but there is a bit of a degrowth on print subscription as well. So I think when you look at all of that put together, you get a picture where, yes, advertising did pretty well, it grew 8%. But subscription income, TV subscription going down, films not performing too well at the box office, music coming down actually a little bit because of the whole push in the industry to go pay a couple of free platforms shutting down, a couple turning from free to pay.
So all of that, you know, subscription actually fell 2%. So ad grew 8%, subscription fell 2%. Events did very well, but animation and VFX came down.
So there's a very big bag over here.
Vanita Kohli-Khandekar: If I was to ask you, what are the three things that stand out from the research? I know you guys do a lot of intense research. What are the three things that stand out, insights, in terms of trends, challenges, anything, the three things that stand out in your head?
Ashish Pherwani: I think one is very clearly that when the content is good, it doesn't matter what the medium, that gets the revenue. So whether you look at IPL, or you look at some of the shows on OTT platforms, or you look at some of the films, if your content is good, people are willing to pay. And that has never been proved more than in the last year.
It's very interesting when you look at it from a film point of view. Last year, what we saw is that the films either were massive hits, or they were very small films. And that just shows that if the movie is worth it, people are willing to go and spend for that big experience in the cinema.
But if it's not good, and there's information now, the information flow has increased so much. You go on social media, you talk to your friends, your family, whatever, you're not going to waste your money, if the film is not good. So good content is working.
I think that's the first trend. The power has clearly moved to the people. And they will decide what's good, and they will decide what's bad.
That is also being seen in terms of S word subscriptions. When the content is good, people are willing to pay. If the content is ho-hum, if the content flow is not too big, it's very tough to grow your subscriber video on demand.
That's point one. Point two is that consumption is clearly moving towards smaller screens. So we have today in India, just short of 200 million large screens that are television screens, but we have almost 560 million small screens.
So it's a ratio of three is to one in favour of smaller screens. And that has many implications. The first of that is that you cannot ignore the small screen, because people will consume your content there.
And that's largely short format, that social video, that is Instagrammable content and all the rest of it. So any company today has to have a small screen strategy. The second is that the most important difference between the small screen and the large screen is that you can have interactivity on the small screen very, very easily and efficiently.
We are heading towards a situation where almost 70% of the screens in this country, between large and small, are now capable of interactivity. So are media houses working on that interactive factor? Are they letting a consumer choose or modify or adapt or adopt different ways of watching?
Even if it's a news podcast, do I get a chance to say, okay, I want to watch business news right now on a news brand that I follow? Do I want to watch local news right now on my CTV? Why must I go through something you are curating when I have the choice to interact with you and I can demand what I want?
So again, second point, again, power moving to the consumer in a big way, interactivity and smaller screen. And maybe the third thing that really stands out is that there are still beautiful cash towels in India in the form of print and television. They're very profitable businesses.
They are very strong brands. But how much are we really investing in those? In fact, I mean, I must say that the same company that is spending 5 lakhs an hour on TV content is spending 1 crore an hour on OTT content.
I don't see why that's fair. And we have to invest back in television content. We have to go and invest back in television per se.
We have more than 20 million set-top boxes that are deactivated in this country. 20 million set-top boxes. Why is the industry not taking much more effort to deactivate all of that?
Instead of seeing a 5 million loss every year, you can slow down that loss or even negate it completely if you reactivate half of those boxes. So again, a lot of industry action required, in my mind, on a television side. On the print side as well, I think there's a bunch of these young promoters who's running the print industry now and I love them.
The passion at which they're running their business is, you know, it's fascinating the way they are trying new things, they're innovating on advertising and ad formats, building events, businesses out, they're building communities which are doing a lot more than just news. I think that entire passion that's there behind the print segment, I think it's the reason that print is still held so strongly in India, while it seems to be collapsing in many other countries of the world. But it's a wonderful situation to be when you meet all these young guys running the print companies of this country at state level.
It's fascinating to see just how much they're thinking ahead and how much they're innovating. So I think there are cash cows, they need the investment, they need the passion, they need evangelists right now. We shouldn't start writing off TV or print or anything right now.
I think there's still a lot of life left in both of the big traditional media. In fact, if you look at it, TV plus print today is still 40 percent plus of the industry. It's not a small number.
Vanita Kohli-Khandekar: Totally, totally agree you're there. But you know, just I'm using the word again to unpack what you've said. You're saying that TV, we need to, and this is something which late last year, long conversation with Uday Shankar who heads Jio Star, and he said the same thing that, you know, we are in this self-fulfilling prophecy thing.
People are saying TV is going down so they don't invest and therefore TV keeps going down. So that investment is not coming in because we are in this feeling of gloom and doom about TV. But the fact is, it does reach 900 million people.
When you say 200 million screens, the multiple is there. For the individual screens, that multiple doesn't exist. When you say 560 or 520 or whatever screens, that multiple doesn't exist.
In fact, coming to TV, one of the things that I found strange is that in your breakup of screens, it's pay TV, free TV and connected TV. But connected could also be free or pay. So I was not sure how that classification has happened.
Ashish Pherwani: Right. So that's a very interesting point that you brought up. And this has happened really, you know, I find it quite fascinating.
Today, if you look at it, cable is connecting, according to our estimates, about 60 million homes in the country. That's technology one. Right.
Satellite is connecting another 50 million homes on the pay side, roughly, including hits and everything. Free TV, free satellite, also connecting about 48 million homes in the country today. And you have wired broadband, which is now at around 46 million homes.
So what you have in an ecosystem is four relatively equally sized components of how content is getting delivered. You know, 60 million cable, 50 million pay satellite, 50 million free satellite and 46 million broadband homes in the country. Now, tell me something, if you have formed large sects, can you avoid anyone?
You have to have content that will resonate with each of those four sects. Right. And I think that's something which is probably showing in what the broadcasters have just done.
I think many of them have picked up channels on free TV again in the last set of auctions. Right. Many of them have given their channels and many aggregation platforms are coming up on connected TV.
So you should be able to see a lot more in that space right now, where people will say, hey, there are four equally important sets. I need to make sure I'm visible and doing well on all four.
Vanita Kohli-Khandekar: You know, you were talking about free TV, one of the things when you were talking, there's more interactivity on the digital screen, etc. But free TV, to my mind, and even the growth of fasts on connected TVs is a huge indicator. And this is not just in India.
I mean, I look at Omdia research also, globally. Huge indicator to my mind that a lot of consumption, there is some form of growth in passive consumption also. There's no value judgement attached to it.
Just people do not want to be in a situation where they have to choose all the time. I mean, the growth of YouTube, for example, on connected TV, to my mind, that's a very good indication. I just don't want the hassle of choosing.
So I'm just going to go to YouTube and watch something for 10 minutes.
Ashish Pherwani: It's all at the end of the day. See, Vanita, everyone's not cut out the same way, right? There are many types of people, right?
You know, we have something called social styles, which we learn in EY. It's a very interesting concept, where you have people who are drivers, right, who are always aggressive, they're looking forward, they want to do stuff. And you also have a whole bunch of leanback people, they call them the amiable styles, who want to be shown what to watch, who want to be guided out there.
And therefore, I think this leanback versus leanforward discussion that we've been hearing is never going to end because people are never going to all become one type. Now, you can ensure that even on YouTube, there's leanback and leanforward. If you like a certain channel on YouTube, which is live streaming or a fast channel that's live streaming, that's also leanback.
It's just the technology at the back end that's IP. Television tends to be more and more leanback viewing because you will like a channel or you like a certain time band on the channel, and you will sit there and watch what comes. I don't think that's the question.
I think it's having the option for those who want to lean forward, to be able to lean forward and choose what they want to watch. For the rest, television has always been there and it's a great format.
Vanita Kohli-Khandekar: Super. Again, on digital media growth, and then this is a question, I don't know if I put it to you, but I put it to civil people. Very nice.
I love the fact, all that democratisation that is happening, all the choice coming in. But the fact is, I mean, what are we at this year?
Ashish Pherwani: We are talking about 70,000 crore, 68,000 crore, digital advertised 70,000.
Vanita Kohli-Khandekar: A bulk of that is going to two companies. So, the fact is, legacy media in many ways and globally subsidises the growth of digital because that is the content which drives traffic and revenues on digital. And that sort of imbalance in the ecosystem doesn't look like it's on its way to correction anytime soon.
How would you address that?
Ashish Pherwani: I think the key question is that when you look at the breakup of the 70,000 crores, 69-70% roughly is search social short video. In that, there is a bunch of local players as well who have made forays, but none of them have really been able to scale. Another 20% is really going to e-commerce advertising, which is the advertising income earned by e-commerce platforms for being closest to the point of sale.
What's left is 10%. That's it. And that balanced 10% is what all the news and music and entertainment and sports companies are buying for.
Will that correct? It's going to be difficult. There is a different use for the 70%, for the 20% and for the 10%.
And therefore, it is imperative that again, companies need to see where their strategy lies and where they can excel. You can take the giant lion's share in the 10%, but you will still just be in the 10%. So, what is it that companies can do over innovations to get into some of the other buckets, the 70% social and short bucket or the 20% e-commerce bucket?
I think that's going to drive strategy for most of these companies over the next three to four years. It's going to be extremely difficult. We've got to redefine some of the business models.
You've got to get loads and loads of creators on your side before you can make a dent in that. Because India produced 2 lakh hours of content, curated content. They produced 10 lakh hours of UGC.
How are you ever going to compete and create content at that scale? The market has changed completely. What's driving viewership is no longer beautiful stories only.
You need different points of view. You need unique content. You don't have just five genres.
You have 500 genres in which content has been created. Almost impossible for the traditional media company to go into so many genres, to deal with so many creators. So, the only answer is platform.
And how will you build that platform to compete with some of the more established players is going to drive success in the future. Or you will remain part of that 10%. Maybe five years down the line that 10% becomes 15% or 20%.
We don't know how much that's going to grow. Honestly, it's a big question. But definitely that part will also grow.
The point is how much do you want to be part of that and how much do you want to be part of the balance 70%?
Vanita Kohli-Khandekar: For my listeners, I must say that the companies we are referring to is Google, Meta and Amazon. These three walk away with the bulk of all advertising revenues as far as digital is concerned. And that has globally been a point of contention that growth is going only to two or three players.
And the growth is not spread, but the content which is driving a lot of this growth could be coming from the companies which are operating in that 10% or 20% bracket. So, this is just to elucidate that.
Ashish Pherwani: I think you made a very important point, Vanita, which is that where is the curated content coming from and where is it being used? I think that's another big change that you can probably expect to see over the next year in terms of how syndication pans out. Who will be allowed access to all the content that some of the biggest Indian content companies are producing?
Will platforms be given free access like they have in the past, especially news? A lot of news was just being scraped off the web and repurposed, rewritten, etc. I think a lot of that will probably slow down or completely stop at some point.
Similarly, a lot of music content. We've seen something very clear. When does subscription grow?
Subscription goes when people have to pay for content to watch it and they don't get it on an alternative anywhere else. Now, let's look at this country. If you look at the 10,000 crores of digital subscription, 8,000 crores plus is sitting on video and news and music are completely subscale.
There's just no subscription income, very little subscription income out there. I think with the total number of subscriptions, probably less than 15 million between news and music. What's the reason?
People are paying subscription because content on Netflix is only available on Netflix. The IPL is only available on Jio Hotstar. You will pay for that because you don't have a choice.
But let's look at music. All the music is available for free, whether it's radio, whether it's YouTube, it's always available out there. Look at news.
You don't need to pay for news because anywhere near 80% plus of that you get on your regular search on the web. So if that's the case, how content gets windowed and how content gets sold to the end consumer to push for subscription, I think that's going to be the single largest change that you can expect to see over the next two, three years. A massive, massive focus on subscription income and how therefore content will need to get limited to where it's available.
Vanita Kohli-Khandekar: You know, it's strange you're saying that because I completely understand that. But the fact is the last year or so, we've seen a huge push towards a advertising video on demand. We've seen a huge, I mean, all the growth that we see on video consumption is coming from DD Fetish or it's coming from YouTube at the lower end.
It's coming from low-end smartphones. So one of the pieces of work we did recently was on the linearisation of streaming, how the largest subscription platforms are now doing more and more content to increase the reach. So, you know, you have a WWE or Netflix or you have Amazon aggregates almost everything.
It aggregates other OTTs. It does a pay-per-view model. So all of them are trying and pushing more for reach and also get into that ad tier.
Just like, you know, that Netflix did this 12 market ad strategy. And in the US, for example, one fourth of S-Word revenues now come from the basic advertising tier. And you are seeing that subscription, it's also you see a push for subscription.
And I'm very happy both is happening. But how do you see that panning out? Is what I was curious.
Ashish Pherwani: The basic difference between what we see abroad and India is the ad rate or the CPM, right? The rates in India are abysmally low on digital when it comes to comparing them with the US. You'll be like a one twentieth or one fiftieth of the ad rate, depending on platform.
And therefore, an A-Word model can work abroad to some level because you're earning 20 times more revenue from advertising. Here when your ad revenue is so low and you have a content cost that's going up year on year, the model will just never make sense in the long run. Therefore, you have to eventually push for subscription.
Yes, many platforms have been pushing A-Word over the last couple of years, but there are different reasons for that market share gains are one. Habit creation is one. I mean, it's the normal media playbook that gets activated out there.
But in the long run, with content cost going up, you have to work on two levers. One is bringing the content cost down, which is where the UGC and creator ecosystem comes in. And second is subscription.
If you can't grow subscription, it's never going to work out on the monetary side.
Vanita Kohli-Khandekar: Because it's one of my favourite segments, I want you to talk about films a little. You mentioned that the screen density in India is terrible. We all know it's like under 9,000 for all practical purposes, 5,000 of which are single screens and the rest are roughly multiplex screens.
You mentioned low-priced theatres as a solution, and this is something that's been discussed for many years in tier two, tier three towns. And even in large cities in lower income areas, you could do that. But we are not seeing enough of that.
And whenever I speak to even at the second and third level chains, which own screens, whether they own 30 screens or 300, they say that if there is no occupancy, then why should we be investing in screens? So, if you're talking at an average of 30% occupancy and in bad years, it could be 25%, 20%, then you and I both know that. But the fact is you cannot escape from the fact that you need more screens in this country.
Theatrical screens. If 60, 70% of your revenues is coming from theatrical, you need those screens. So, Saru, what is the way out here?
Because I don't, are you seeing projects coming up in low-ticket prices?
Ashish Pherwani: You know, this is the eighth edition of the FICCI report I released. And I think in all eight editions, I've made one statement that you will see the growth of low-priced screens, but it's just not happening. I have a feeling that, I think there's two aspects we need to really consider out here.
If you look at the country today with whatever, 1.5 billion people or whatever it is, we sold less than a billion tickets last year in such a big country, which means that if you look at the audience pool, it's just the top 100, 120 billion people who even step into a cinema in this country. Are you saying that the balance 1.3 billion people do not watch movies? That's not true either.
Where do they watch it? They watch it where they can afford it. Where do they afford it?
They afford it either on free online platforms, if they can afford data, or they watch it on TV, which is the lowest cost entertainment method in the country today. So what's the future? If someone were to take the leap and take a step and say, build out 100 low-cost screens, I'm pretty sure that business would work well, provided you get the right massive content along with it, not the multiplex content.
And that's where the crux of the issue lies. It's no point doubling our screen count unless we give the content that will work on that screen as well. See, why do we see so much more success in the South?
Because the movies tend to be that much more massive in the large language markets. But we in the HSM bed are more focused on South Bombay, South Delhi type of films. The concepts are different, the writing is different, may not appeal to the single screen audiences.
We've heard all of this and much more several times before. So if I were to go to UP or Bihar and build out a thousand more screens, it will not have footfalls in all probability unless the content changes to appeal to the masses. So it's going to be a bitter cold.
What's the interim solution? It has to be digital because anything else is just going to be too expensive. So hypothetically, can you take a certain film which is releasing say in the large metros, but make it available in smaller markets on digital at a fee which equals the ticket price in those markets?
That will probably be the salt, I feel, in the near term until such time as the per capita increases a little more and then people start investing in mass content and then the screen count will have some scope to grow. But till then, from this geo-block, digital, that will work.
Vanita Kohli-Khandekar: It is just a solution. If you remember in 2004, when digital cinema was started rolling out, it was sort of trying to leapfrog on the issue of prints not reaching smaller towns in time. You need another solution which does that.
In fact, I was at this thing, Cine Nastra in Chandigarh last week and I said, you know, at the theatrical end, where you really need innovation is at the theatrical end, you have to think differently, you have to think of taking screens to housing societies and towns and moving theatres. You could be, I don't know, pricing options. There are so many things you could do.
But I think somehow that disruptive innovation hasn't happened on the physical side of things, the theatrical side of the business and that's in many ways holding back. Because every film should be able to find its audience, whether it's a multiplex film, whether it's a 12th Fail or a Laapata Ladies or Pushpa 2 or Aavesham or whatever. Every film should be able to find its audience.
Ashish Pherwani: You know, I'm going to ask you a question, Lanita. What's the best way for a film to find its audience today?
Vanita Kohli-Khandekar: Oh lord, best way in what way? Best way for the filmmaker?
Ashish Pherwani: You and I produce a film. I'm the hero, you're the heroine. It's called The Media Movie, right?
You want to release this in a theatre or you want to release this somewhere else?
Vanita Kohli-Khandekar: Oh god, no, no, this is not a theatrical film. Definitely not a theatrical film.
Ashish Pherwani: No, but what they're trying to get at is that probably the best way of doing it is digital. And the reason I'm saying that is today you would see maybe 500, 600 films a year not even getting a release. Are we saying that all of them are so bad that none of them get a release?
I can't believe that, right? I think digital is a salt for a lot of these things.
Vanita Kohli-Khandekar: No, Ferru. Digital cannot support financially the films that are being made, all the films that are being made. I mean, it is impossible for a revenue source which is 20% of your overall to be able to support 1600 films.
It's just not. And you know what, that film will probably not even find. There are films which do very well on digital and which are meant for digital.
But I don't think digital is the only answer. I mean, this is my view. You are into it, so I should argue with you.
Ashish Pherwani: No, I completely agree with you. But in the short term, medium term, I think yes. It will take some time for screen count to grow.
It will take a change in the kind of movies we're making. We don't see a quick solve around this right now.
Vanita Kohli-Khandekar: Okay. You know, one of the things you mentioned is about advertising growth being 8%. Now, all I'm hearing in the last three months at least is distress, distress and distress.
I mean, Unilever has also cut its advertising budget, I think last quarter. So my point is, where is this 8% coming from? Because I've heard 7% and under.
And does that change the picture somewhat? I'm just very curious about that.
Ashish Pherwani: There is certainly stress, right? With some of the larger advertisers on the FMCG side pulling back, right? So if you look at the last two, three years, actually, you first had a lot of the high yield categories, the VC funded categories, so to speak, pulling back spends.
Last year, you even had some of the FMCG companies pulling back spends. But what has not stopped is the massive, massive amount of ad spend that the SMEs are doing. Today, we probably have a few lakh SMEs, maybe a few million SMEs who are actually spending on advertising, most of it, retail media and digital.
And that's really what's driving a lot of the ad growth that we're seeing. Just on digital, we estimate SMEs to be spending more than 25,000 crores a year. That's how big that number is.
But you need a platform to be able to reach out to all of them, you need a platform to be able to serve all of them. Most of the traditional media companies will peak out at 3 or 4,000 advertisers in terms of how much they can actually serve, you know, on a daily basis. But platforms will come in and we need to tap the SME ad opportunity, that's going to be huge.
Vanita Kohli-Khandekar: You know, I'm very happy you mentioned this because a lot of these spends, for example, you mentioned print and it was one of the points I wanted to bring out with you. Bhaskar says a lot of my growth is coming from local advertising. A lot of these newspapers, which you also mentioned, and in a lot of cases, growth is being driven at the local and the retail level.
Is it correct that much of these spends do not go through the media agency or the agency system and therefore do not get captured correctly? Is that fair to say? And is that why there is this dissonance on ad spends?
So I'm speaking to large platforms or small platforms and then I'm speaking to newspapers and smaller company legacy media companies and they're fine. So is that where the disconnect is?
Ashish Pherwani: I think that is one of the reasons for sure. Because a lot of the SME spend is the feet on the street of the radio companies or newspaper companies. And secondly, I think there's another aspect, which is that nobody can track this spend really, right?
Because it's so fragmented, right? You will have, you know, a typical radio company will have between 200 and 500 people selling ads for its feet on the street. A newspaper company probably more effectively, you know, because it goes far deeper into more and more districts.
You have papers like the Enadu, I don't know, they have like, I don't know, 70-80 editions in one state, right? And you're able to go and pick up advertising in all those different small towns and villages out there. So none of this, I think, can be captured.
It has to be seen at an aggregate level when you evaluate the top lines of all the print companies from their financial statements. I mean, that's the method we use. We look at actual financial data to see the growth of the print segment.
It's not a sample, it's an actual, you know, we track the top 20 media companies in detail on that cell.
Vanita Kohli-Khandekar: Fantastic. Speaking of print, it's remained phenomenally consistent in India. And even when I look at your report, you're talking about a 14% share of advertising consistently for print largely.
Of course, you have home delivery and low-priced editions in India, which have kept the market afloat. But is there any other secret sauce at work here? And do you see it as like a flash in the pan in the global scheme of things, or do you see that holding out?
Because I'm very happy it's doing well, by the way, I write for a newspaper.
Ashish Pherwani: No, I think print has one massive USP, which is it gives you an educated and affluent audience. Very, very sharp focus on affluence. I don't think you can launch a car today without print or a luxury watch or a phone.
You know, I mean, even if you're the most tech company in the world, in Google or Apple, you will use heavy print. Why are you using print? Because you're getting affluent audiences, right?
I think that is something that is the USP and is going to remain the USP because print readers are, on average, elder than digital consumers. And elder people generally tend to earn more. And that's why print will have that USP and that should stay for a while.
Apart from that, I think what print is doing very well now, the last 18-24 months, is an event strategy that they have created. More and more print companies are doing hundreds of events a year. In fact, I think some of the largest event companies in the country today are print brands, right?
The Times of India, Hindustan Times, Lokmat, phenomenal, phenomenal events, businesses, all of them are running. And with their trusted brands, you know, that creates a huge ability to monetise ad funded content. So we are going to see that become, I think, more and more important from a top line perspective, at least, for most print companies over the next three to four years.
Vanita Kohli-Khandekar: Last couple of questions. One is, you know, I'm fascinated by the role India seems to be playing in VFX, simply because DNA is owned by an Indian company, Prime Focus, and eight Oscar wins, etc. But do you see a larger role there?
Do you see more opportunity there? Because you talked about animation falling and animation, I think, I don't think we've reached anywhere. I've seen this over 20 years now.
But on VFX, we seem to be, you know, at least there's some sense of acquiring companies overseas and servicing those markets with talent from there. And from here, I can see a thing building up. And I'm very curious about, is there more scalability to this?
Can more stuff happen here?
Ashish Pherwani: So firstly, I must say hats off to Amit Malhotra and the company that he's built, right? I think we need 20 more Namits in India, all right, if we really have to achieve the potential. Just as you know, the IT giants, TCS, Wipro, and Emphasis and all the rest have made India the back office of the world.
I think companies like the AVGC companies that we have should aim to become the back office of the world from in post production, visual effects, AR, XR development, game development point of view. We've made good strides over the last few years. But honestly, I think a lot more needs to be done out there.
Now, I'll just give you some numbers, right? The Indian M&E sector is less than 30 billion. The United States spends over 200 billion a year on content.
All right, at least 35% of that, which is 70 to $80 billion is VFX and post production. Can you imagine our whole industry 30 billion and they're at 70 to $80 billion only VFX and post production. Should we not aim for at least 10% of that?
That should be a 7-8 billion market for us. I think that's the very least that we should be aiming for. But what will it take?
When will work come to India? Work will only come to India when we build technical IT. Just to give you an example, the way the fur moves on the back of a lion or the way the waves look in the sea.
All right, all that is heavy, heavy engineering. We need to invest, we need to go back and do lots and lots and lots of R&D as an industry and create technical IT so that people say, hey, I need India because they have this capability, which are not getting as well anywhere else in the world. Unless we do that, we're going to struggle.
We are like a 2 billion, 3 billion kind of number today. I mean, we should be looking at a 10-15 billion economy only on visual effects and animation. At the very least, I think that's what we should be aiming for.
I hope the industry will do a lot more about this.
Vanita Kohli-Khandekar: I hope so too. And last question on AI. Last year, you talked about huge amounts of cost savings possible with using AI.
What have you discovered in the research this year? I mean, I saw the use cases, you know, dubbing and on script writing and a whole lot of other things. But where are we practically speaking in terms of impact on bottom line or top line as far as use of AI is concerned?
Ashish Pherwani: Okay, so we did a survey of many company CXOs on AI and what they found. Interestingly, we still found only 56% of them wanting to do stuff in AI, right, which I find a little scary. I think we should all be putting AI into our lives in every way, whether it's Microsoft's copilot or chat GPT or anything else, daily, whatever.
But the interesting thing is that wherever in AI has been implemented, a majority have seen cost reduction or efficiency increases happening. And I don't think that's a problem. We've seen use cases working in print.
We've seen use cases working in music, in gaming, in video. I don't think AI is going away. It's just too powerful.
Animation, VFX, massive inputs of AI to automate repeated tasks and much, much more, including backgrounds, visual effects, sounds, whatever. I think where, again, we need to focus on is doing that R&D and creating AI IP, creating those models that can really do good quality, high quality work. It's going to be because we have so many languages in India.
It's going to be tough because, you know, we need lots and lots of money to create those models and do the research. I think what the government is doing, creating funds, getting subsidised GPUs into the country, that's going to be the big kicker over the next year or so. And you can expect to see a lot more innovation on the AI front.
I think we're just in the beginning of a very big change.
Vanita Kohli-Khandekar: You mentioned cost savings. Any estimates, any range within which, or is it very specific to industry? Something you can share on that.
Ashish Pherwani: See, it's very different across different companies. Some guys are seeing 5% reduction. Some guys in the more manual, intense space are seeing 50% reduction.
At an overall level, we estimate that within two to three years, actually content production costs can come down by 10% to 15% at the very least due to AI.
Vanita Kohli-Khandekar: Fantastic. That's it from my end. Anything you'd like to add, Pheru?
Anything that stands out that you think you need to mark for my listeners?
Ashish Pherwani: I think, you know, when you take a step back and look at the industry and you see that it's less than 1% of our GDP in terms of top line, that hurts. It hurts when you spend your attack career doing that and you realise it's really so small. And I'm hoping that we can, you know, through exports, through really good content that resonates across the world, I think we need to take the industry to its next level.
I think we have some of the most talented people in the world running the media businesses out here. We are some of the most passionate individuals I meet. I met, this is my record, I met a hundred CXOs this year while I was writing the report one-on-one.
I think just the passion is so high. The intelligence levels are so high. I'm sure we'll see this number increase.
It just hurts to see it so small.
Vanita Kohli-Khandekar: You know, that 1% thing has been, I've been covering the sector for 20 years and that 1%, less than 1% has been there ever since I, it was less than half, by the way. Now I think it's 0.7 or something, no?
Ashish Pherwani: Yeah, that's right.
Vanita Kohli-Khandekar: Yeah, 0.75. So, you know, and one of the reasons, one of the things which always attracted me, I thought this could become the next IT for India as far as, and this is, I'm talking about early part of the millennium, you know, I thought this is the next IT sector and that's what attracted me. But it hasn't become, I mean, the whole sector size, we have, what, 28 billion this year? Or 24?
Really 24? I mean, Comcast alone is, what, 130 billion. So, their companies are larger than our industry size, you know, so you always want that country to jump up as far as that is concerned, but it's just one of those journeys which is taking time, I think.
Ashish Pherwani: Vanita, Netflix's content budget is probably bigger than Indian M&E. That's how small we are.
Vanita Kohli-Khandekar: There you go. On that hopeful note, let me say thank you so much, Pheru, for talking to us. Thank you.
Ashish Pherwani: My pleasure. It's always awesome with you.
Vanita Kohli-Khandekar (host): As Charles Dickens said, it was the best of times, it was the worst of times. That is what the media and entertainment business feels like if you read and analyse the EY report. The strength of TV and print, the rising clout of Google Meta and now Amazon on the digital side, and then again, the possibilities with AI.
But really, it all boils down to one thing. In a deluge of shows, films, shorts, podcasts, and every other distraction you can think of, can you get consumers to spend time and money on what you offer? That is what makes a successful media business.
