Mukta Arts Ltd Management Discussions

The global Media and Entertainment (M&E) Industry reached nearly $3 trillion in 2024 as per PWCs outlook powered by strong growth in advertising (6% CAGR) as well as connectivity increases and consumer spending habits particularly on subscriptions and live events. Video games generated approximately $224 billion and are on track to surpass $300 billion by 2029.

Artificial Intelligence (AI) personalisation fuelled a digital and internet ad boom especially in retail, social and connected TVs driven by hyper-specialised algorithms which contributed to consumer spending. China, India and other Asia Pacific regions showed faster growth driven by rising digital infrastructure and mobile adoption.

Challenges though remain given the relatively uncertain macroeconomic environment ahead which could have an effect on consumer spending. Intense competition and saturation in the streaming space plus rising content acquisition costs could lead to more inflated customer acquisition costs in the medium term. The decline of traditional media formats is also a concern with broadcast and Pay TV declining and the Film business in flux.

The concern around AI and especially generative AI remains a challenge as there are complex issues around copyright, creator compensation and regulation which need to be addressed. This could accelerate or disrupt monetisation strategies.

Digital media has become the largest segment of the Indian M&E industry in 2024, reaching over 32% and generating 17% growth to stand at about Rs. 80K crs. The industry stood at $ 29.4 billion which was a YoY growth of 3.3% in a slowdown from 2023. Main growth segments apart from Digital were Advertising, Live Events and Out of Home. Radio too saw a steady growth of 9% from 2023.

More traditional segments like Film, Television and Music saw declines in growth with the film industry seeing solid revenues but admissions dropping and despite 1600+ releases, only 11 films passing the Rs. 100 crs. barrier. Television also saw Pay TV homes drop even though connected TVs grew.

Similar to the global scenario, increased advertising, especially on digital as well as revenue from OTT subscriptions has been a major factor for growth. Live Events and Experiential Media has also seen a boom in 2024 and E-Sports and Online Gaming has also double digit growth and is expected to continue to grow at above 20% till 2028. Further recent mergers and consolidation could lead to opportunities to drive scale and content synergies as well as cross border projects and platforms.

The Film industry in India had a muddled year with revenues hitting the second highest after 2023 but overall a drop from approx Rs. 12.2 K crs. to Rs. 11.8K crs. More concerning was the 6% drop in admissions and even 6 years later, admissions still being below pre-pandemic levels. Ticket prices rose modestly over the year to stand at Rs. 134 on average.

There were some stellar hits including Pushpa 2, Stree 2, Bhool Bhulaiyaa 3, Singham Again and Kalki 2898 AD. However, despite a slew of releases, fewer films broke the Rs. 100 crore barrier and Hindi films saw their box office drop over Rs. 700 crs. with almost 31% coming from dubbed South Indian titles.

The continued outflow of consumers from theatres to OTT platforms coupled with a huge boom in advertising in the digital and OTT space has seen a shift in revenues from film to streaming and digital and despite a silver lining of growth in regions like Malayalam and Gujarati, overall 2024 saw the industry struggle.

Beginning with Mukta Arts as a standalone, the Company saw revenue at Rs. 34.70 crs. which is a drop from last year due to the series ‘Jaanki wrapping up production in May. EBITDA margin saw a growth from 45% to 50% this year on account of better efficiency from production and rights sales and overall PAT margin was relatively stable at 21% totalling to Rs. 7.44 crs. The Company also saw the completion of its real estate property in Bandra at Guru Nanak Park, which will bring in additional rental income to the business.

Mukta A2 Cinemas, the domestic film exhibition company, I saw a fall in total revenue of 25% due to the issues 1 related to performance of films in theatres and the drop in f admissions. At the same time, expenses were controlled i and therefore a drop was seen of about 21% YoY. An I experiment in pricing on Food & Beverages saw a lower I than expected income from this segment and this has led I to a drop in the EBITDA margin from 13% to 9%. On the I plus side, new properties launched in Behror, Kalyan and I Vadodara have started off extremely well though their I influence on the current year under review was limited due 1 to the timing of their launches. Spending per head and - Average ticket price continued to rise for the year to offset some of the low admissions numbers.

MA2 Bahrain, the subsidiary which operates film exhibition centres internationally, saw an improvement in its revenue growth, coming in at 15% YoY and seeing the total revenue at Rs. 24.24 crs. Improved performance saw losses in the subsidiary narrow by 70% coming to Rs. 16 lac for the year. The Company continues to operate 6 screens and manage a further 10 screens in the country as well as managing a further 5 screens in the Kingdom of Saudi Arabia.

Whistling Woods International, the companys education subsidiary involved in media and creative arts training, saw an increase in revenues by 7% seeing revenues come in at Rs. 58.29 crs. The increase in expenses on account of higher marketing costs and some one time payments saw expenses rise by 9% YoY and led to a marginal EBITDA fall from 11% to 9%.

In conclusion, 2024 has been a challenging year for the company in a difficult macroeconomic and industry environment but having worked through this phase, there are some green shoots of opportunity for the year ahead.