Creative Eye Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) REPORT

Indian Media & Entertainment (M&E) Industry Global Industry Overview

The Media and Entertainment (M&E) sector is one of the fastest-evolving sectors of the modern economy. It includes film and television production, Over the television and digital streaming, music, radio, publishing, advertising, gaming, animation, visual effects (VFX), live events and sports entertainment advertising.

The Media & Entertainment (M&E) sector has demonstrated considerable resilience amid global economic uncertainties, geopolitical tensions, inflationary pressures, changing consumer spending patterns and technological disruptions. Unlike several traditional sectors that are highly dependent on physical infrastructure, commodities or capital expenditure, M&E benefits from its ability to generate revenue through digital content, advertising, subscriptions, licensing and intellectual property.

Global economic growth is projected at 3.0% for 2026. The media and entertainment industry is expanding at a 4.6% rate this year, driven by a $4.2 trillion long-term trajectory through 2030, powered heavily by Al-driven advertising, live experiences, and tech-media competition.

Indian Economic Overview

The Indian economy has a direct and significant influence on the Media & Entertainment (M&E) sector, as growth in disposable income, consumer confidence, advertising expenditure, digital adoption and overall economic activity influences demand for entertainment and media services.

Indias M&E industry has shown strong resilience and has increasingly become an important contributor to the countrys consumption and services economy. According to the latest FICCI-EY 2026 report, the Indian M&E sector grew 9% in 2025 to ?2.78 trillion and is projected to expand to INR 3.3 trillion by 2028.The Indian Media and Entertainment sector continues to benefit from the countrys economic growth, rising consumer spending, increasing digital adoption and expanding advertising expenditure. The sector has demonstrated resilience amid global economic uncertainties and evolving consumer preferences, with digital media, advertising, OTT, live experiences and content-led businesses emerging as key growth drivers. Indias growing middle class, expanding internet and smartphone penetration, increasing disposable income and strong demand for regional and vernacular content provide a favourable foundation for the sectors long-term growth.

At the same time, the industry remains exposed to economic cycles, inflationary pressures, changes in consumer spending, advertising trends, regulatory developments and rapid technological disruption. Traditional media formats are increasingly being complemented or replaced by digital platforms, requiring companies to continuously innovate their content, distribution and monetisation models. Overall, the structural shift towards digital consumption, experiential entertainment and technology-enabled content creation is expected to provide significant opportunities for sustainable growth in Indias Media and Entertainment industry.

Key Growth Drivers

1. Rapid Digitalisation and Internet Penetration

Increasing smartphone usage, affordable high-speed internet and wider broadband access are shifting audiences from traditional media towards digital platforms. Digital media has become the largest segment of Indias M&E industry, crossing ?1 trillion in revenue in 2025.

2. Growth of OTT and Video Streaming

OTT platforms are transforming content consumption by providing on-demand movies, web series, sports and other entertainment. The availability of affordable subscription and advertising-supported models is helping platforms reach audiences across urban as well as Tier-II and Tier-III cities.

3. Rising Demand for Regional and Vernacular Content

Indias linguistic and cultural diversity creates significant opportunities for Hindi, regional-language and hyperlocal content. Platforms are increasingly investing in local stories and talent to reach audiences beyond major metropolitan markets.

4. Young and Digitally Engaged Population

Indias large youth population, particularly Millennials and Gen Z, is driving consumption of short-form videos, OTT content, gaming, music, social media and creator-led entertainment. This demographic is also increasingly seeking personalised and interactive experiences.

However, it can be summarized as Digitalisation and internet penetration, growth in digital advertising and OTT, increasing demand for regional content, a young and digitally active consumer base, expansion of live entertainment, gaming and e-sports, adoption of AI and emerging technologies, diversified monetisation models, and growing global demand for Indian content.

These drivers are expected to support continued expansion of Indias M&E industry, with digital media, live experiences, filmed entertainment, and animation/VFX identified among the key growth engines over the medium term.

Segment Reviews

Television Industry:

As Per EY Report The shift towards Connected TV (CTV) continued to accelerate, with weekly active Connected TV homes increasing to more than 40 million in 2025, compared with approximately 30 million in 2024. CTV advertising revenues grew by approximately 42% to ?99 billion, partially offsetting the decline in linear television advertising. Consequently, when linear TV and Connected TV advertising are considered together, overall TV advertising revenues remained broadly stable at approximately ?362 billion.

Overall, 2025 marked a transition from conventional linear television towards an integrated television and digital ecosystem. While Pay TV and traditional television advertising faced continued pressure, the rapid adoption of Connected TV, increasing large-screen consumption and growth in CTV advertising created new opportunities for broadcasters and content owners. The sector is expected to increasingly focus on cross-platform content distribution,

Factors impacting growth of time spent on television include:

1. Continued strong mass reach of television - Television remained a major mass-reach medium in India, reaching approximately 745 million individuals each week in 2025, supporting continued engagement despite competition from digital platforms.

2. Growing popularity of Connected TV (CTV) - The increasing adoption of smart TVs and Connected TV is expanding television consumption by combining traditional linear TV with OTT and digital content. Connected TV reach increased to approximately 40 million units in 2025, from around 30 million in 2024.

3. Availability of high-quality OTT content - Premium films, original series and sports content on OTT platforms are competing for viewers time. Digital subscriptions increased by 60% in 2025, with paid video subscriptions reaching approximately 216 million.

4. Growth of YouTube and short-form video - YouTube, social media, reels and short-form video platforms compete directly for consumers leisure time and have contributed to fragmentation of viewing habits.

5. Growth in social media and gaming - Increased engagement with social media, short-form video and gaming has diversified entertainment consumption and reduced the amount of discretionary time available for linear television.

Government Initiatives Supporting the Media & Entertainment Sector 2025-26:

The Government of India has undertaken several initiatives to strengthen the Media & Entertainment (M&E) sector, promote the creator economy, attract investment, develop talent and position India as a global content and creative-services hub.

WAVES Bazaar

It provides a platform connecting Indian creators, producers and content owners with global buyers, investors and collaborators. In 2025, the platform recorded transactions worth more than ?1,328 crore, strengthening opportunities for international distribution, co-productions and content licensing.

Create in India Challenge

The Create in India Challenge was introduced as a platform to identify and promote creative talent across areas such as animation, gaming, VFX, music, digital content and emerging technologies. The initiative aims to encourage innovation and create opportunities for Indias creator community.

Indian Institute of Creative Technology (IICT)

The Government has established the Indian Institute of Creative Technology (IICT) as a National Centre of Excellence for the AVGC-XR (Animation, Visual Effects, Gaming, Comics and Extended Reality) ecosystem.

The initiative is intended to address skill gaps, promote research and innovation, and develop specialised talent for Indias rapidly growing creative economy. IICT began operations from the NFDC campus in Mumbai in July 2025.

Promotion of the AVGC-XR and Creator Economy

The Government has increasingly recognised Animation, Visual Effects, Gaming, Comics and Extended Reality (AVGC-XR) as important components of Indias emerging creative economy. The focus is on developing skills, infrastructure, technology and global partnerships to make India a competitive hub for creative content and digital production.

State-Level Investment Promotion

State governments are also playing an increasing role through film policies, production incentives, infrastructure and investment promotion. For example, the Government of Maharashtra signed MoUs worth approximately ?8,000 crore in the M&E sector during WAVES 2025, highlighting the increasing role of states in attracting creative-industry investments.

Company Overview:

Media & Entertainment Sector: Creative Eye Limited operates in Indias Media & Entertainment sector with its principal business activity being television content production. The Company operates in a rapidly evolving media environment characterised by the convergence of traditional television, OTT platforms, digital media and Connected TV. The Indian M&E sector continued its growth trajectory during 2025, expanding by 9% to ?2.78 trillion, while digital media emerged as the largest segment of the industry. Against this backdrop, the television content-production industry is witnessing a gradual shift towards multi-platform content consumption, increasing demand for differentiated and quality programming, regional and vernacular content and digital-first formats. Creative Eye seeks to leverage its experience in content creation and production, while adapting to changing consumer preferences and emerging distribution platforms. The Companys focus on creativity, digital content strategy, production capabilities and revenue diversification provides opportunities to participate in the evolving television and broader digital entertainment ecosystem.

Business Performance:

Development in business during the year:

Creative Eyes business needs to be viewed against the broader transformation of Indias M&E industry. The Indian M&E sector grew 9% in 2025 to ?2.78 trillion, with digital media crossing ?1 trillion and becoming the industrys largest segment. At the same time, the growth of Connected TV and OTT is changing the way television content is produced, distributed and monetised.

For a television content producer such as Creative Eye Limited, the ongoing transformation in the Media & Entertainment sector presents both significant opportunities and challenges.

Challenges

• Competition from OTT platforms and digital-first content creators.

• Increasing cost of producing quality content.

• Pressure on traditional television advertising and subscription revenues.

• Fragmentation of audience attention across TV, OTT, social media and short-form video.

• Increasing need for innovative formats and differentiated storytelling.

• Greater emphasis by broadcasters and OTT platforms on commercially successful and data-driven content.

While the evolving industry landscape offers vast opportunities for growth through digital platforms, OTT, Connected TV, regional content and diversified content monetization, it also presents challenges that may impact business sustainability and long-term competitiveness. However, these challenges can be effectively addressed by adapting to changing consumer preferences, embracing technological advancements, strengthening content capabilities and diversifying revenue streams. With the right strategic approach, challenges can be transformed into strengths and competitive advantages, enabling the Company to build resilience and achieve sustainable growth in the evolving Media & Entertainment ecosystem.