The growing maturity of internet users coupled with increasing spend on digital media is expected to enable India’s digital media and entertainment (M&E) sector to recover from the recent slowdown in the market due to a dip in digital ad spending, among other macro challenges.
India’s current landscape of Internet users is dominated by a 450-500 million strong cohort of explorers, followed by 300-320 million transactors and 35-40 million mature users. Redseer’s Research estimates that India’s volume of mature users will outpace that of the USA by 2030 as the digital media and entertainment landscape, which is valued at $12 billion, will triple in size. Non–Real Money Gaming (Non-RMG) and the rise of OTT across audio and video are among the contributors to the sector’s current growth trajectory despite the slowdown in digital ad spending and regulatory changes affecting the RMG space.
OTT Video, OTT Audio, RMG and non-RMG gaming saw a rise in paid users and expanding average revenue per paying users (ARPPU)
In FY23 alone, the media and entertainment landscape saw accelerated growth in the paid user base and the average revenue per paying user (ARPPU). Across M&E segments, paid user growth went up to 90% in FY23. Subscription bundling, low-cost packs, micro-payment and pay-per-views were the key factors propelling this growth.
However, the sector continues to face challenges in terms of higher customer acquisition costs (CAC) and low user retention. Finding creative solutions to overcome challenges will place the sector on the path toward profitability in the next three to five years. Typically, it takes two years for OTT video platforms to break even on CACs for individual customers. Long-term solutions such as innovative monetisation models, localised and regional content for tier-2-plus demographics, and models such as keeping the first episode of original properties free could work in the favor of OTT platforms.
Audio series and Audiobooks draw in more paying users for the OTT Audio sector
Leading players in India’s audio series and audiobooks grew approximately nine times in FY2022-23 fueled by a growth in paid users, engaging content with experiences as well as sachet payment options. The increased supply of both immersive entertainment and non-entertainment regional content and the competitive price points of subscription models can be credited to the growth of the audiobook category.
The rise of core gaming, eSports and live streaming places India’s gaming industry in good stead
India is looking at a 150 million-strong community of mid-core/ core gamers in 2023 alone, a portion of which have graduated from casual gameplay. With components such as in-gaming payments opening access to costumes and accessories, the gaming segment is seeing approximately 40% paid user penetration. The levelling up of gamers from casual to mature gaming is spurring an increase in the viewership of live streams and has opened multiple possibilities for the development of a domestic e-sporting ecosystem. 2022 saw Nodwin Gaming conduct a one-of-its-kind e-sporting tournament ‘Battlegrounds Mobile India (BGMI) Masters Series’ which was live-streamed on a mainstream TV channel.
Short-form video platforms emerge as media of interest for brands for tier-2-plus access and monetisation
India’s Short-Form Video (SFV) platforms boast a sizeable user base of 250 million, of which two-thirds hail from tier-2-plus cities. Approximately 40% of the use base was also observed to be online transactors thereby providing brands and advertisers with scope for monetisation, and an opportunity to reach out to a larger volume of tier-2 audiences. Monetisation is nascent on Indian SFV platforms and it is restricted to ad revenue and influencer marketing.
The growth of ‘Made for India’ content is oiling the wheels of India’s digital media and entertainment industry. The increased uptake of core gaming also adds to the sector’s growth potential. Creatively solving the challenges of CAC, user retention and subscriptions can enable the sector to grow exponentially in the years to come.
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