Observations from 2023 FICCI-EY Report

12 May 2023 , 10:28 AM

 

• Overall ad revenue grew at ~6% CAGR between 2018 and 2022, marking a sharp deceleration from mid-teens CAGR between 2014 and 2018. This is despite digital ad revenue more than doubling between 2018 and 2022. Digital’s share of total ad revenue jumped from 17% to 48%.

 

• Ad revenue ex-digital declined at 2% CAGR between 2018 and 2022. TV was relatively better off among the rest, witnessing 1% CAGR. However, its share of total ad revenue has fallen from 37% to 30%.

 

• TV subscription revenue grew 7% YoY in 2019 on NTO 1.0 implementation, driven by 15% growth in ARPU even as pay TV households (HHs) shrank. However, TV subscription revenue in 2022 was 16% below 2019 level.

 

• The above TV subscription decline was led by a drop in pay TV HHs, on account of pressure from DD Free Dish at the lower end of the market and cord-cutting at the upper end. On the other hand, ARPU was flattish since broadcasters and DPOs could not raise channel/pack prices; given that NTO 3.0 was sub-judice.

 

• Implementation of NTO 3.0 w.e.f February 2023 should improve the TV subscription revenue trajectory. Once consumption spending improves and raw material costs abate, TV ad revenue prospects should improve. However, considering the relative position of weakness of TV versus digital, analysts at IIFL Capital Services expect TV subscription and ad revenue to clock low-to-mid single-digit CAGR, going forward.

 

• 20% sports fans watched sports exclusively on digital in 2022. This number could rise with IPL being shown free of cost on JIO Cinema and could put pressure on TV sports revenue (both subscription and ad).

 

• Subscription video on demand (SVOD) revenue has risen to Rs. 69 billion in 2022 (5x of 2018), due to a jump in paid subscriptions even though ARPU has halved.

 

• Out of the Rs. 89 billion advertising-based video on demand (AVOD), analysts at IIFL Capital Services understand that YouTube accounts for 75-80%, with the rest split between MX Player and broadcaster OTT apps.

 

• Share of regional content for OTT has increased from 30% in 2020 to 50% in 2022.

 

• Though domestic theatrical revenue in 2022 was only 10% below 2019, Bollywood remained a laggard with just ~50% recovery rate. Just six Hindi films crossed Rs. 1 billion gross box office collections in 2022 versus 20 in 2019.

 

• 48% of total screens in India are in the South. With South having a higher single-screen salience and regional movies doing well, PVR-Inox targets to add 40% of screens in South versus its current footprint at 31%.

 

• TV viewership of movie channels, especially for large film premieres, fell significantly in regional markets as TV was caught between resumption of theatres and direct digital releases. Consequently, satellite rights market was subdued in 2022 (~45% of 2019 levels). This also explains Sun TV’s reduction in guidance for theatrical rights spending during FY23.