Indian digital segment expected to approach $3bn by 2020

Thursday, January 12th, 2017 
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Indian digital segment to cross INR 20,000 crores by 2020: EY-vdonext report

MUMBAI — The Indian digital segment is expected to cross INR 20,000 crores (~$3bn) by 2020 from INR 8,490 crores (~$1.25bn) in 2016, according to an EY-vdonxt report titled Digital Opportunity: India Media and Entertainment, released at the vdonxt asia event in Mumbai.

The industry is pegged at INR 8,490 crores in 2016 and includes the 4 key areas of digital revenues – OTT and digital advertising, video OTT subscription, music OTT subscription and gaming (in app/ paid subscription).

According to EY estimates, smartphone penetration is expected to be up to 59% by 2020 from 31% in 2015 and digital ad spend is slated to be INR 185 billion by 2020, constituting a larger pie of the overall media spends.

Raghav Anand, Head – Digital, Media and Entertainment, EY India says, “Digital in India is at the cusp of exponential growth, aided by increasing smartphone and broadband penetration, increasing user base across urban, semi-urban and rural centres, and the proliferation of mobile wallets. An evolving, young user base and a higher per capita income presents very viable avenues for digital advertisers and service providers to reach their target audiences.”

Tier II and tier III cities present the next wave of growth in India’s internet population, with wireless mobile internet playing a pivotal role. The Indian rural internet user base will surpass the urban user base by 2020, thus enabling the growth of vernacular and regional content.

The report also highlights the increasing acceptance of digital video, with the online video audience in India expected to reach 450 million users, and replacing US as the second largest market behind China. This growth will be driven primarily by the youth, with 80% of the users between the 15 – 34 age group.

Sreekant Khandekar, Co-founder afaqs! and Curator, vdonxt asia, says, “EY has been an industry leader in the Media and Entertainment sector, and has consistently delivered relevant insights which have defined the trends for the industry. The EY report highlights the most important areas of focus for the M&E sector – video is the next area of focus for digital media. It is slated to drive revenues from advertising and subscription and contributes significantly to the overall digital pie.”

The digital advertising market is expected to reach INR 18.5 billion in revenue by 2020, with the online video advertising market expected to contribute close to INR 8 billion. Advertising video on demand (AVoD) and Subscription video on demand (SVoD) are both slated to register high double digit compound annual growth rate (CAGR) of 38% and 64% respectively between 2016 and 2021.