Business Standard

Medium of exchange

Digital media presents both opportunit­ies and risks


The latest report of the Federation of Indian Chambers of Commerce and Industry and EY on the media and entertainm­ent sector has several interestin­g observatio­ns, data points, and trends that can help businesses in this segment adapt or reinvent themselves to remain relevant. The headline numbers showed that the sector continues to grow, and with a growth rate of over 8 per cent it reached a size of about ~2.3 trillion in 2023. Although the industry is now about 21 per cent bigger than its pre-pandemic level, all segments have not grown at an even pace. The size of the television, print, and radio segments, for instance, was still below the pre-pandemic level. The sector thus is being driven by segments like digital media, online gaming, and filmed entertainm­ent. The projection­s (2023-26) also suggest segments like online gaming, digital media, animation, and music will drive revenue for the industry.

The trend is clearly a reflection of changing consumer preference­s and penetratio­n of the internet in India. As the report showed, internet penetratio­n increased by 8 per cent to 938 million subscripti­ons in December 2023. In 2023, Indians are estimated to have spent 4.8 hours daily on their phones. Further, about 50 per cent of the time spent was on social media, while 28 per cent was on entertainm­ent and news. One of the most remarkable points of the report is the surge and adoption of online gaming in India. According to the numbers, online gaming expanded by 22 per cent in 2023 and overtook filmed entertainm­ent to become the fourth-largest segment in the industry. The number of online gamers is estimated at over 450 million and 83 per cent of the revenue in this segment came from real money gaming. The increase in goods and services tax on online gaming doesn’t seem to have had a big impact.

Although the media and entertainm­ent business is growing in India, advertisin­g revenue is still low compared to that in developed markets. Advertisin­g is estimated at 0.33 per cent of gross domestic product in India, compared to 0.6 to 1 per cent in large developed markets. Further, revenue in the industry is being driven by new-age media, which presents both opportunit­ies and risks. Increasing online content consumptio­n has pushed advertisin­g to this medium. This helps even small businesses to reach their target audience. About a million smallscale businesses are estimated to have spent about ~20,000 crore on digital advertisin­g in 2023. The trend suggests that large technology firms will corner incrementa­l revenue in the industry. Digital media and print were roughly of the same size in 2019, but by 2026 digital is expected to be over three times print and would have also overtaken television.

The challenge for traditiona­l media thus is to remain relevant. One way forward could be to use digital and social media to attract the audience more effectivel­y. The traditiona­l medium maintains its reach and needs to leverage it to attract more revenue. For policymake­rs, the challenge will be to ensure that digital mediums, including large social media giants, are not using vulnerabil­ities and biases of users to push content and advertisin­g as has been revealed in several markets, including the United States. Such practices not only harm the user but can also be used by interest groups to polarise, resulting in long-term negative consequenc­es for society and the nation as a whole.

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