M&E Special: Holding Its Own

The year 2020 should have had been a year of new normal for the broadcast sector in India. The rollout of the new tariff order 1.0 brought transparency and growth in distribution revenues in FY20. However, even as stakeholders were coming to terms with the new pricing regime, the outbreak of the pandemic and the subsequent lockdown directly impacted advertising revenues.

The television broadcast sector was included among 'essential services', but the complete cessation of television production, cancellations of live sporting events and also the interruption in scheduled advertisements pushed the industry towards a sharp decline nearing 80 per cent in ad revenues.

On the one hand, in terms of sheer audience numbers, the pandemic indicated that television was the first screen for many Indian households. On the other hand, ad dollars continued to fall leading to a case of viewership growth but revenue cuts. The sector suffered a further setback when it failed to receive support from the government in Covid stimulus package for economic relief and regulatory flexibility.

Deep Cuts in Short Term
As per KPMG's 2020 Media & Entertainment Report, the television segment's revenue was estimated at Rs 778 billion in FY20, a CAGR growth of 9 per cent between FY16-FY20. This market size included advertisement revenue of Rs 262 billion and subscription revenue of Rs 516 billion. The report indicated that across all major channels, ad revenue decline in Q1FY21 is to the tune of 70-80 per cent. The decline in Hindi general entertainment channels (GEC) genre alone was in the range of 50-80 per cent in this period, and news genre ad revenues de-grew by 30-50 per cent.

While this also impacts the full-year FY21, some signs of recovery made way. This, however, presents the short-term picture. The long-term fundamentals of TV remain robust with no cannibalisation seen against other media. Ad spends are expected to recover in FY22 and beyond. Since July-August, TV viewership began seeing strong recovery reaching pre-Covid levels in all genres and even growth in some.

As per Elara Capital, overall TV viewership remains higher than pre-Covid levels. News genre viewership shot up during the pandemic at 15 per cent share of total TV viewership, and currently it has settled at 8 per cent. On the other hand, GEC (general entertainment channels) has seen a hockey stick-type recovery, as ad revenue too started flowing in from July, with growth in some pockets while all regaining pre-Covid levels.

"In terms of realisation, initially ad rates had to be cut to fill up ad inventory during uncertain times. However, once advertiser demand returned in tandem with resumption of original programming, including high-end festival programming, sectors beyond FMCG also have ramped up advertising. Due to this, not only has ad volume increased
but ad yield also has revived strongly," explains Karan Taurani, VP - Research Analyst (Media), Elara Capital.

TV & Digital Both Grow
In 2020, the overall entertainment content consumption increased significantly. Digital media, including OTT video platforms, significantly benefitted from lockdown and remote working. The fact that TV held its own, and witnessed unprecedented viewership, further indicated that both media will continue to grow in the year ahead.

"There is great optimism about higher adoption of digital over the next few years. But irrespective of the me-dium, television is a relevant screen for the households, for the mass of India, effective in its reach and its larger screen messaging impact. If the evidence of lockdown consumption is any indication, the audience, the content that sticks, and the viewing behaviour for OTT and TV is very different and hence, both mediums will co-exist and thrive, riding on strong and relevant content. Television, however, will retain its pre-eminence. It will remain the primary screen of the household and the preferred medium to reach out to mass audiences," comments Sunil Lulla, CEO, BARC India, the television audience measurement body in India.

On the whole, advertisers have not shifted from TV to digital, as TV remains the primary brand-building medium unlike most other mediums. TV ad spend returning to normalcy proves TV has not lost ground as much as other traditional media, such as radio and print, to digital medium. In 2021, this trend should grow. The experience of big-ticket properties such as Indian Premier League boosts the expectations from the year ahead.

Even in terms of subscription revenue, 2021 should spell good news. With reverse migration, constrained disposable income and collection challenges, subscription revenues will be adversely hit in FY21. India, however, still remains under-penetrated as far as cable and satellite households are concerned. Firms such as KPMG assert long-term growth prospects on this count as well.

Some of the other silver linings in the year was seen in the growth of regional channel genres over the years, and expected to continue, even as English and niche channels face challenges. News genre too exhibited strong performance in the year. Sports is expected to make a comeback as well.

To sum up, even as TV faced one of its worst years in 2020, the importance of the medium has secured its place in the marketer's 2021 plans. As the sector will adapt to restore its content supply chain, strong recovery will not be farther behind.