BCG-CII Big Picture Final Report Dec 2020

LIGHTS, CAMERA, ACTION…
…THE SHOW GOES ON
December 2020
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2 CII Big Picture

AUTH RS
Kanchan Samtani
Managing Director and Partner,
Boston Consulting Group
Mandeep Kohli
Partner,
Boston Consulting Group
The Indian M&E industry in 2020: A snapshot of the year that has been 3
Foreword
Welcome to the 2020 edition of CII Big Picture Summit’s Knowledge Covid-19 has had a major impact on how we consume content both
Report, in partnership with BCG, on the future of the Indian Media & in-home and outside and some of these will have long term implications
Entertainment industry. In line with the broader theme of this year’s for the industry. Going forward we expect the digital trend to intensify,
event, “Big to Bigger”, the report discusses how, despite the Covid-19 OTT adoption to continue rising, and the emergence of new business
pandemic and the resultant stresses, the Indian M&E industry is models better suited to the new reality.
continuing its trajectory of strong historical growth into the foreseeable
future. The Indian M&E industry, at USD ~24 bn in 2020, already has a sizeable
impact on the Indian economy. However, given India’s diverse local
During the toughest weeks of the year, our industry provided much audience base, international appeal of content, large diaspora and
need succor to the country’s citizens, as seen by the massive surge in existing cultural influences in many parts of the world there is significant
viewership during the weeks of lockdown and beyond. From a demand headroom for growth.
point of view, it is heartening that M&E consumption remained resilient.
However, as was the case with other industries, this past year has been The industry faces key imperatives for the near future to ensure that it can
a challenging one for the M&E industry as well. There have been many reach its full potential. We need to build new revenue sources, deliver a
operational challenges, with hurdles in content creation and distribution better value proposition to our stakeholders (consumers and advertisers
through conventional platforms. These challenges were made worse by alike), focus on our human capital base to develop the requisite talent
the accompanying financial blow of declining ad spends across different base and invest in technology to improve our productivity. Adversity is a
media (digital being the notable exception). Looking back now though, we great unifier, and this is the time for the industry to come together and
can confidently say that the most difficult times are behind us. Operations deliver.
are returning to normal with best-in-class safeguards and SOPs being
established, and a recovery in ad campaigns has taken place. CII and BCG thank our stakeholders for their valued perspectives and support
towards enriching the content of this Knowledge Report. We look forward to
your continued feedback in enhancing the usefulness of this publication.
Kanchan Samtani K Madhavan Mandeep Kohli

Managing Director and Partner, Chairman, Partner,
Boston Consulting Group CII National Committee on Media & Boston Consulting Group
Entertainment and Managing Director,
Star & Disney India
India continues its unique multimodal growth
story, with digital video being the fastest
growing media platform over the last 2 years.
Not surprisingly, this trend is expected to
continue for the foreseeable future led by
the ever-increasing smartphone and data
penetration on the demand side and improving
consumer experience with high quality and
wide variety of content, and innovative pricing
models on the supply side.
EXECUTIVE During lockdown, both TV and smartphone

video consumption surged as people spent
SUMMARY more time at home. OTT continued its onward

march, increasing its presence in Tier 2-4 cities.
SVOD subscriptions continued to see strong
growth rates on the back of high quality original
and local content being created and marketed
using free trial periods. Covid-19 accelerated
the subscription trend as a result of out-of-
home spending moving to in-home, and this is
expected to be sticky due to the proliferation
of platforms and content that is now available
to consumers. Further, innovations in the
form of India specific pricing have also helped
make the proposition stronger and encouraged
consumers to subscribe.
Advertising revenues saw a sharp decline as a to diverse audiences, provide better data and
result of the pandemic and are expected to be flexibility to advertisers, create content to
~16% lower than in 2019, with ads on all media tap the global market, focus on up-skilling of
except digital expected to experience double- existing talent and development of new-age
digit rates of decline in 2020. The recovery has talent, and investment in technology. Progress
been differential across sectors, compounded along these dimensions will ensure that, the
by a need to show higher ROI and control over effects of the pandemic notwithstanding, the
advertising campaigns. This has led to higher 2020s will be extremely fruitful for the Indian
allocations to digital media, which is expected M&E industry.
to reach a share of ~15% in 2020, ahead of
most pre-Covid projections. Though a cautious
recovery seems to be underway and marquee
events such as IPL have been able to grow over
their 2019 levels, smaller events may continue
to face pressure for some more time.
While the Indian M&E industry already has

a significant impact on India’s economy,
benchmarking with other countries indicates
plenty of untapped potential. Most segments
still have headroom for growth, while segments
like OTT are growing at a steep rate and
making a significant contribution. However, to
achieve the industry’s true potential, there are
a few areas where concerted effort needs to
be made. These areas include creating more
original and local language content to cater
Overview of
the report
8 Lights, Camera, Action… The Show Goes On

SECTION 1 SECTION 2 SECTION 3
Indian M&E in Economic Key imperatives to
2020: The year impact and growth realize potential
that has been potential of M&E • Create value for
• Consumption and • M&E industry’s consumers and
advertising trends impact on GDP and advertisers
• Impact of employment • Identify new sources
Covid-19 • Potential for of revenue
• Outlook for the further growth • Invest in skilling and
near future technology
The Indian M&E
industry in 2020:
A snapshot of the
year that has been

Consumption of M&E resilient
during pandemic; Covid-19
accelerated trends towards
subscriptions

Growth in India continues to be
multi-modal
• Digital continues to be the fastest
growing medium
Covid-19 led to a surge in consumption of both

TV and OTT
KEY • TV consumption saw initial spike, now stabilized to
MESSAGES
pre-Covid levels
• Non Prime Time viewership a major driver of growth
• OTT saw strong growth across both rural and
urban areas
Covid has further accelerated the trend towards

OTT subscriptions; expected to be sticky
• Subscriptions grew 55-60% for the top
OTT platforms

India’s growth story continues to be multi-modal
# hours/day
2018-20
CAGR
1.25
1.25 -0.4% Per capita media consumption
Radio4 continues to grow simultaneously
1.26 0.73 across all forms
0.73 • Multi-modal growth story
1.26 0.3%
expected to continue for the next
0.73 Print3 few years
0.73 2.95 Digital video continues to be the

2.41 14.5% fastest growing medium clocking
Digital 14.5% CAGR
2.11
(video)2
1.84 Print and Radio expected to
remain flat5
• Growth in regional newspaper
4.43 readership has compensated for
4.17 decrease in national dailies
3.88
3.66 6.7%
TV1
2018 2019 2020 2022 E
1. TV: ages 18+ who use at least once per month; includes live, DVR, and other prerecorded video (such as video downloaded from the internet but saved locally); includes all
time spent watching TV, regardless of multitasking. If all population with age 18+ is considered, average hours per day is 3.2 hours 2. Digital: ages 18+ who use at least once per
month; includes all time spent with online video activities, regardless of multitasking; includes viewing via desktop/laptop computers, mobile (smartphones and tablets) and other
connected devices (game consoles, connected TVs or OTT devices) 3. Print: ages 18+ who use at least once per month; includes magazines and newspapers; includes all time spent
with print mediums, regardless of multitasking; offline reading only 4. Radio: ages 18+ who use at least once per month; includes all time spent listening to radio, regardless of
multitasking; excludes digital radio 5. Circulation went down to 20-25% in Apr and May, back to 80-90% levels now
Source: eMarketer database. Estimate differs from previous versions of the report due to changes in population definition, we have only considered the population who uses the
platform in question
Consumption for TV & digital surged as India stayed indoors
TV consumption ~20% higher than pre-Covid till Sep; has been reverting to pre-Covid levels
Oct onwards
Weekly viewing minutes (in billion)
NPT viewership
drove spike in Wk of
Peak increase 15-Aug vs. pre-Covid
37% during lockdown
(Wk of 28-Mar)
1,400
Stabilized spike post- Return to
1,266 lockdown (Wk of 15-Aug pre-Covid levels
to Wk of 26-Sep) (Wk of 14-Nov)
1,200
44%
1,071
1,045 2% Non-Prime Time
inc. in viewership
1,000
906
887
887
800
Pre-Covid
(11-Jan to 31-Jan) 3%
0 Prime Time inc.
in viewership
Pre-Covid Mar Apr May Jun Jul Aug Sep Oct
• Viewership spiked at 37%; steadily reverted to pre-Covid levels

• Post-lockdown spike primarily driven by NPT (44% increase)
1. 13-Jan to 2-Feb taken for pre-Covid levels

Note: Aggregate minutes per day spent on video streaming calculated by multiplying average daily time spent on VOD for given week with number of internet users in 2020
(post-Covid) and number of internet users in 2019 (pre-Covid)
Source: BCG Analysis, [BARC Nielsen Crisis Consumption An Insights Series into TV, Smartphone & Audiences, Prime-Time: 18:00-24:00, Non-Prime Time: 06:00-18:00], Ovum

Smartphone media consumption supported by increase in time spent on video streaming
% increase
Weekly in media consumption
viewing minutes (Aggregate minutes per day)
(in billion) on smartphone vs. pre-Covid1
Video
Streaming
Peak during
lockdown
(Wk of 15-Apr)
21 37%
Stabilized
post-lockdown 18 13%
(Wk of 15-Aug)
TV and OTT subscriptions continue to grow
OTT growing at a faster rate than TV
SVOD adoption has spiked on account of trials;

TV subscriptions expected to continue
consumer survey shows 50%+ new users likely to stick
growing at ~3% post-Covid…
TV Households (in million)
+3% +3%
55-60%
Growth in SVOD
50%+
New users likely to
subscribers in 2020 continue subscribing
over previous year to the SVOD service2
...and that the growth rate of new users in tier-2/3/4

207 regions was 1.5x that of the growth rate in Metro & Tier 1
194 200 during Covid
Metro & Tier 1 Tier 2 - Tier 4

Overall growth
rate in new users
(AVOD and SVOD)3,4 x 1.5x
2018 2019 2020
1. [Counterpoint – Top 5 Indian metros account for more than half of the OTT video content platform user base, June 18, 2019] 2. [Among urban consumers only. Question text:
“Which statement best describes your usage behavior since the Lockdown?” Question text: “You mentioned that you have started below activities since the Lockdown. How likely
are you to continue below activities even after the Lockdown gets lifted” Source: BCG COVID-19 Consumer Sentiment Survey (India) August 2020 (N=3000)] 3. Growth in new users
that have accessed any platform in the category at least once since the lockdown. Pre-Covid split of OTT users was ~90% in Metro/Tier 1 and ~10% in Tier 2/3/4. 4. Metro is >40
lacs, Tier 1 is 10-40 lacs, Tier 2 is 5-10 lacs, Tier 3 is 1-5 lacs, and Tier 4 is <1 lac
Source: BCG Analysis

Customer speak
Male, Female, Male,

22 years old 40 years old 30 years old
College student IT professional Chartered Accountant
I was encouraged to use I was against the idea of Nothing can beat the variety
OTT after the new paying for OTT as I already of content on OTT platforms.
lower priced plans were had a cable TV connection I have been subscribing to a
introduced! I was able to at home. However, during platform for some time now,
get a flavor of the content Covid, with the entire family but only recently started
on different platforms and at home and just one TV, delving into international
chose the one best for me. I it was often difficult to language offerings since
cannot do without my OTT watch my favourite shows I could not find fresh
subscription now! on TV. OTT platforms came interesting content. Korean
to the rescue, offering the cinema has blown my mind!
convenience of watching at I cannot wait to explore
any time on any device. In more languages.
fact, I now spend more time
watching OTT on my phone
than TV!
Industry speak: Viewer first approach key to drive explosive growth
Punit Misra
President - Content and International Markets,
Zee Entertainment Enterprises Ltd
“In today’s day and age, a healthy obsession on understanding consumers intimately, and
then creating and serving content that delights them wherever and whenever they consume
the content is what will differentiate winners from also ran’s. So moving away from a content
or platform first thinking, and doing viewer first thinking is the key skill to develop for
explosive growth. Quality supply rather than demand is the key for growth. The viewer is ready
- are we is the question.”
Gaurav Gandhi
Director and Country GM – Amazon Prime Video India
“Video streaming is increasingly playing a pivotal role in the growth of the Media &
Entertainment Industry in India. With a huge base of connected customers with an insatiable
appetite for entertainment; a rich pool of creative talent creating diverse and differentiated
world class content; increasing disposable incomes and a discerning customer base seeking
more personalised and best-in-class experiences; and a steadily improving telecom,
broadband and payments infrastructure are all contributing to make India one of the most
exciting streaming markets in the world”

However, advertising has
seen a decline in 2020
driven by the pandemic

Ad spend took hit given Covid; digital still expected to grow in 2020
Advertising Revenues (in USD billion)

Large hit in
+13% April-June
-16% quarter a big
9.0 driver of the 2014-19 2019-20
0.1
drop Growth in Growth in
0.5
7.2-7.9 41% -40 to -60%
0.05-0.08
0.2-0.3 Cinema
2.7
1.7-1.9 9% -35 to -50%
5.0 0.3 OOH

0.0 0.18-0.21
0.3
6% -31 to -36%
2.1
2.0 2.3-2.4 Print
0.2
12% -30 to -40%
0.5 Radio
3.4
2.8-2.9 12 to 18%
31%
1.9
Digital
12% -12 to -17%

2014 2019 2020 TV
TV Digital (video) Radio Print OOH Cinema
Source: Pitch Madison Advertising Report 2020, Expert interviews, Note: 1 USD = 75 INR

Green shoots visible and a strong bounce back expected, given the high
co-relation to GDP growth
India view only
Indian economic
% change
slowdown
Total Ad Spend % Change
in India Financial Crisis India Real GDP
15 Demonetization 40
30
10
20
5
10
0 0
2005 2007 2009 2011 2013 2015 2017 2019
Accelerating GDP and Ad Decelerating GDP and Ad

YoY % Change in Total Ad Spend YoY% Change in Real GDP spend growth spend growth
Source: MAGNA India Media Forecasts, BCG analysis
Most sectors are already increasing ad volumes on TV
Signs of recovery emerge as Latest monthly ad volumes for most sectors have exceeded
ad volumes on TV rise steadily pre-Covid levels
post lockdown
Total Ad Volumes on
% growth Oct’20 vs. Jan’20
Television 2020 (in million seconds) 200 V-Shaped Recovery Durables Agriculture Resilient
+23%
+46% Fuel
Personal Accessories
Education
100 Apparel
-24% 164 Auto Retail
Real Food &
Telecom
133 Estate Beverages
Hair Care
0
Cosmetics
119 BFSI Media
Personal
Healthcare
91 -100
-200
U-shaped Recovery
-300
-125 -100 -75 -50 -25 0 25 50
% growth Apr’20 vs. Jan’20
Total Ad Volume (in million) in January, April, October

January April July October
Source: BARC Nielsen Crisis Consumption An Insights Series into TV, Smartphone & Audiences [Jan-11th Jan-7th Feb, Apr – 18th Apr-15th May, Aug -25th July-21st Aug]

Increase in number of advertisers across sectors post October
Many sectors have more # of advertisers Recovery led by increase in number of

in Oct’20 as compared to pre-Covid advertisers and entry of new-to-TV advertisers
7 out of top 10 new advertisers from
Change in # of advertisers post education & healthcare
lockdown (Oct’20 and Jan’20) Eg: White Hat Jr Technologies
• Using TV as a medium to target the 65%
60 user base that lies outside top 10 cities
Education • 30% of total budget on TV and 70%
~1300 on digital
new advertisers Eg: Practo Technologies
40
Agriculture Household In Oct’20 vs. • Campaigns on TV - #HelloDoctor,
products Sep’20 #BeingADoctor
• 500% increase in online consultations
20 during lockdown period; 44% from non-
Auto metro cities
Personal care
0
Cosmetics
Marquee events surpassed 2019 levels, merits
Telecom
Food &
Beverages
Durables Fuel
cautious optimism
Media
Big-ticket marquee events have bounced back but smaller
-20 Apparel
Real Estate events may face continued pressure; there is cautious optimism
BFSI
that ad spending on TV is expected to recover in H2 2020
-40
-60 -40 -20 0 7%
Increase in # of advertisers for
Change in # of advertisers during IPL 2020 vs. 2019
lockdown (Apr’20 and Jan’20)
Source: Press Search, BARC Nielsen Crisis Consumption An Insights Series into TV, Smartphone & Audiences [Jan-11th Jan-7th Feb, Apr – 18th Apr-15th May, Aug -25th July-21st
Aug], TAM AdEx
Share of digital in ad spend increasing,
however still lags consumption growth
2019 2020
Change from 2019 levels
+2pp +2pp
18% 13% 20% 15%
82% 87% 80% 85% Advertising continues

India to lag consumption
on digital
+2pp +4pp
25% 31% 27% 35%
75% 69% 73%

China 65%

However, gap is narrowing
+3pp +4pp on account of improved
ROI and targeting
18% 22%
31% 34% • Improved ROI and
targeting
82% 78%
US 69% 66%
Consumption Advertising Consumption Advertising
Digital TV
Source: PQ Media, MAGNA Global, TAM AdEx, Expert interviews

Covid has accelerated shift to digital: Share of digital expected to grow to
15% almost 2 years ahead of earlier projections
With increasing budget constraints during Covid, advertisers looking for high returns, low wastage
Improved “We are rapidly increasing our allocation to digital because digital makes
targeting it easy to target customers most likely to purchase our product“
Real time “Real time visibility can help us dynamically optimize our campaign
tweaking parameters and help us get more bang for our buck”
Better return “Brand managers are scrutinizing every rupee spent on advertising
metrics campaigns, measurement of ROI from each campaign is a must given
the constrained budgets”
Lower outlays “We would never consider advertising on TV with our scale; digital helps us
reach the right audience in a cost-efficient manner”
Source: MAGNA Global (Pre-Covid: Dec’19, Post-Covid:Jun’20), Expert interviews, BCG Analysis

Digital video to reach 2022 forecasted share of total TV & digital video
ad spend in 2020
Share of digital revenues in advertising (%)
19%
15% share forecasted for 2022,
to be achieved in 2020
16%
Post-Covid
forecasts
15%
Pre-Covid 15%
forecasts
14%
13%
2020 2021 2022
Subscription models
gaining traction

Strong growth in SVOD revenues as number of subscriptions rise;
TV subscription revenues remains flat
Subscription revenues growing on SVOD growth driven by significant

account of growth in SVOD increase in # of subscriptions
Revenues (USD million) 50-60%
+9% Number of subscriptions 100-125
2-year (in million) 78
7,154 CAGR 49
1,181
6,558
72% ARPU
2018 2019 2020
6,067 (USD per $0.68 $0.76 $0.78
716 month)
SVOD
400
Marginal increase in TV subscriptions;
however ARPU has remained flat
5,973 Also impacted by regulation
5,667 5,842 changes e.g. NTO +3%
3% 200 207
Number of subscribers 194
(in million)
TV
2018 2019 2020

2018 2019 2020
SVOD TV subscription ARPU
1. Includes subscriptions that are purchased through the 100% cash
(USD per $2.9 $2.9 $2.9
back route month)
Source: Ampere analysis, SNL, Expert interviews, BCG Analysis

Growth of SVOD to give fillip to overall OTT growth
AVOD sustainable only at very large scale
SVOD contribution per user 3-4x of AVOD

Average monthly
realization per
subscription Given lower
3-4x realizations, AVOD
Average monthly $0.76
$0.78 successful only at
realization large scale
per user
AVOD sustainable only at very large
$0.18 $0.23 scale
• Requires 3-5x the subscriber base
of SVOD to break even
Achieving advertisement driven

2019 2020E 2019 2020E scale made challenging given the
AVOD SVOD competition for digital ad spend with
the likes of YouTube and Facebook
Online video
viewers/ # of However, both AVOD and SVOD
subscribers 100- models need to co-exist
(in million) 291 340 78 125 • AVOD critical to increase OTT
penetration and drive awareness
for SVOD
2019-20 growth
in viewers/
15- +50-
subscribers 20% 60%
Source: Ampere analysis, Expert interviews, BCG Analysis
SVOD subscriptions growing as out-of-home spending moves to in-home,
coupled with introduction of low-ticket size plans & enhanced ease of
payment
Decline in footfall in Different subscription tiers introduced to increase
retail & recreation places propensity to pay
in Nov’20 vs. Jan’201 Disney+
NETFLIX Hotstar ZEE5
1 Mobile only plan at
Rs. 199 per month VIP pack at
Zee5 Club pack at Rs. 365 per year
Regional packs at Rs. 49 per month
-27% Rs. 399 per year
Limitations on offerings like access to limited content, cap on number of
screens, or low video quality
Increase in Pay per view model gaining traction

subscriptions to
Online users Testing
SVOD platforms ZEE5 one-time pass
would not
2 59% pay average
price charged
Shemaroo Me model for
movies with
YouTube price ranging
50-60% for video
subscription3 Apple TV from Rs. 79 –
Rs. 299
% of subscribers likely Ease of payment through integration of UPI

to spend same or more
on SVOD platforms2 ZEE5
Year-on-year Players
Billion ALT Balaji
3 10.8 transactions
in 2019 done 3x
growth in
value of UPI Sony LIV
starting to
offer UPI
~90%
transactions payment
through UPI4 Disney+
in 20194 option
Hotstar
1. [Google COVID-19 Community Mobility Report, 24 Nov, Jan – 3rd Jan-6th Feb] 2. [Question text: “How do you expect your spend to change in the next 6 months across the
following areas?” BCG COVID-19 Consumer Sentiment Survey (India), Aug 2020 (N=3000)], 3. [Ovum 2019; Amdocs commissioned survey, 2,102 respondents in India],
4. [National Payments Corporation of India]

Pricing innovations have helped make proposition stronger
Realization of ARPU though slightly lower given bundling
Global players are now offering India specific price points
Average monthly price of global streaming services
(Netflix, Disney+, Amazon)1
$9.66
Pricing of global
services made
more affordable
Actual realization of ARPU
$8.25
$4.02
than earlier to
drive adoption further driven down by
bundling of services
% of OTT video
US UK India
Avg. monthly price of
global streaming in country
compared to price in India
2.4x 2.1x x
Pricing
differential
similar for
commodity
~30% subscriptions coming
from telco-bundled
like Big Mac; partnerships
Price of Big Mac in country suggests low
2.3x 1.7x x scope for
compared to price in India further price
reduction Most Telco players have OTT
Pricing of local OTT platforms in line with global spending partners like Amazon, Netflix, Zee5,
Monthly price for lowest available plans for top 6 OTT players in India Disney+Hotstar, etc. which helps drive
$2.65 their subscriber base. For example:
$1.72 Telco OTT partner2
$0.44 $0.41 $0.44 Netflix
$0.33 Disney+
Jio Zee5
Prime video Hotstar
Disney+
Netflix Amazon Disney+ Zee5 Eros ALT Airtel Prime video Zee5
Hotstar
Prime Hotstar Now Balaji
Price of streaming
services as % of avg. Compared to 0.3%
0.2% in US and
monthly income1 0.3% in UK
1. [Ovum 2019; Amdocs commissioned survey, 2,102 respondents in India]. 2. Zee 5 bundled with Jio Fibre
Note: 1 USD = 75 INR
Source: Press Search, BCG Analysis, Economist Big Mac Index, 1. [Finder, streaming services considered – Disney+, Amazon & Netflix]
Marginal increase in TV subscription driven by increase in penetration of
TV across Households; however significant headroom for growth remains
% Households with TV cable connection in each country
India US China
98.7% 99.3%
92.8% 92.7%
66.4% 67.2%
2019 2020 2019 2020 2019 2020
ARPU $2.9 $2.9 $76.0 $75.9 $3.24 $3.10

(USD per month)
Source: BCG Analysis, SNL, Ovum database

TV subscription base growing as penetration of DTH increases,
ARPU holds steady
TV Households (in million)

DTH subscribers increased during the
194 Mn 201 Mn 207 Mn
pandemic as people stayed indoors;
14% 13% 13% Free Dish ARPU remained flat
• DTH subscribers surged initially in lockdown but
53% 52% 51% Cable over time consumers started optimizing channel
subscriptions due to limited fresh content
– Subscribers expected to increase by 6-7% as
fresh content has returned to TV and cable TV
34% 35% 36% DTH subscribers move to DTH
• DTH ARPU to remain flat as players launched
incentives such as discounted bundles and free
2018 2019 2020 VAS to retain subscribers
ARPU (in USD)

Cable TV DTH Cable TV revenues impacted due to
Covid as a set of subscribers downgraded
subscription packs
• Cable subscriptions suffered due to migration of
$3.1 $3.1 $3.1 workforce outside metros and downgrading of
$2.7 $2.7 $2.7
subscription packs (FTA channels preferred)
• Muted growth in subscribers as competition
2018 2019 2020 2018 2019 2020 from DTH intensifies
Source: BCG Analysis, SNL, Press Search
Impact of the
M&E industry
on India

Impact of the M&E industry on India 41
Indian M&E industry creates three levels of impact through
both tangible and intangible means

DIRECT
TANGIBLE IMPACT THROUGH
Employment generation | Contribution to GDP
INTANGIBLE IMPACT CREATED THROUGH:

Taking Indian culture to the world | Connecting the Indian diaspora to the country
INDIRECT
TANGIBLE IMPACT ON UPSTREAM INDUSTRIES SUCH AS
ADVERTISING, EQUIPMENT MANUFACTURERS ETC.
Employment generation | Contribution to GDP
TANGIBLE IMPACT ON INDIAN TOURISM AND OTHER ALLIED

INDUSTRIES
INDUCED
JOBS, WAGES AND OUTPUT GENERATED AS A RESULT OF EMPLOYEES IN
DIRECT AND INDIRECT SPENDING WAGES IN THE COUNTRY
Indian M&E industry at $26 Bn showcasing 11% growth…
India’s M&E Industry seeing a healthy
growth rate with video industries
(TV & OTT) the key drivers CAGR 2014-19
Indian M&E industry market size
(USD billion) 4% VFX & Animation Export
$26 Audio
Bn 10%
+11% $24
3% Bn
3% 3% 13% Others
6% 3%
4% 9% Cinema
$16 11% 6%
Bn 5%
7%
9% 72% OTT
4% 9%
3% 10%
6% 11% 40% Gaming
12% 17%
1% 17%
2%
4% 31% Digital Ad (excl. AVOD)
23%
39% 39% 3% Print
46%
7% Television
2014 2019 2020E
1. Methodology explained in subsequent slides 2. Contribution to GDP is in nominal terms.

Note: Others includes OOH, live events
Source: MagnaGlobal, PQ Media, Ampere, SNL, Ovum, Pitch Madison, EIU, BCG analysis

…with a significant impact on India’s economy
% Contribution to India’s GDP 2020
1.3-1.5%
OTT contribution
increased 3x
0.9-0.95%
3-3.5% between 2018
and 2020
0.8-1%
Employment generated by M&E in India, 2020 (Mn)1
1.7-2
1-1.2 50-60% new jobs

created by M&E
4-4.5 in 2020 expected
to be due to OTT
1-1.5
Direct Indirect Induced

However, significant headroom for growth in direct contribution to
economy when benchmarked with other economies
India’s M&E industry has significant headroom for growth basis global benchmarks
M&E % Contribution to GDP, 2019
4
High contribution & low growth High contribution & growth
UK
Japan
3
France South Korea
US
Australia
Germany Brazil
2 Canada
Spain Mexico
Italy
China
1 India
Low contribution & growth Low contribution & high growth

0
0 5 10 15
M&E CAGR 2009-19
Note 1: Both M&E and GDP numbers are nominal
Note 2: M&E industry includes both consumer spends and advertisement revenues
Source: PQ Media, Magna Global, EIU, Expert interviews, BCG analysis

South Korea had the highest M&E contribution to GDP vs others
in 2009, and has shown significant growth till 2019
Initially propelled by the rise in internet penetration & the gaming wave,
Korea’s M&E industry is now being driven by the global success of K-wave -
enabled by government support and overall talent/ infrastructure development

S. Korea | Hallyu (K-Wave) has taken Korean culture to the world & created
significant economic impact for S. Korea
Multiple elements of their culture have experienced

phenomenal success on a regional and global scale
Creating significant impact on
Regional scale hit Global scale hit phase the economy
phase (‘00~15) (‘15~’20 and future)
BIG BANG,
SUPER JUNIOR
BTS In In
2004 2019
Asia focused: Market value $5B, #1 in 90
MUSIC “regional star” countries: “global star”
DAE JANG GEUM, MR.

JU MONG SUNSHINE K-wave $12.3
contribution
$1.8 Bn
~60 countries, ~190 countries, to GDP
DRAMA ~$10M revenue ~$100M revenue Bn
RUNNING THE MASKED

MAN SINGER
#1 Ent. show in SEA countries, ~40 countries worldwide,
REALITY licensed to Chinese cable licensed to US and Europe K-wave %
0.75%
contribution
to GDP 0.27%
OLD BOY PARASITE
Cannes awarded Not only Oscar, but also

MOVIE “artistic success” “massive success”
Source: Invest Korea – Cultural Contents; Korean Educational Statistics Services , EIU, Press Search, Expert interviews, BCG Analysis

S. Korea | K-Wave proactively driven by government with active private
participation; originated in the late 90s, went global around 2010
Non exhaustive
Distribution
Culture direction Funding Production & retail
The govt has been leading the Encouraging public-private Markets concentrated with South Korean cultural goods are
strategy for development partnerships (with funding to some large companies driving distributed both physically and
Ministry of promote start-ups in 2015) economic growth through digital platforms (local
Culture, Sports KOFICE The Korea Chamber and international)
and Tourism SAMSUNG CJ Group
KOSA of Commerce &
Industry LOTTE YouTube
Regulation, research & promotion Glocal content
Public agencies responsible for intellectual Korean Copyright K-dramas are based on family values & have a modern
property rights and copyrights protection Commission approach which resonates with both SEA and western markets
State-sponsored non-profit organizations and some

Arts Council
private institutes engaged in research efforts on Korea
the creative industries
Sustained effort has led to K-wave going from regional trend to global phenomenon
2004: Jewel in the palace won ‘Best Foreign Program’ at TVB 2012: Psy’s Gangnam Style took 2nd place on Billboard’s Hot 100
Anniversary Awards; #1 show in Taiwan, Hong Kong when aired in US and became most watched video on YouTube
2009: Wonder Girls entered US and became the 1st Korean idols 2019: Parasite won the Oscar for Best Original Screenplay, Best
on the Billboard Hot 100 chart with the song ‘Nobody’ International Film, Best Director, and Best Picture
Source: ‘Strengthening the creative industries for development in the Republic of Korea’, UNCTAD (2017); Press search; BCG analysis

Additionally, the M&E industry creates intangible impact on Indian
culture and tourism by creating a connect with the Indian diaspora
M&E industry can have a holistic impact on …as is evidenced by multiple OTT
India’s economy beyond its direct reach… series and shows over the years
Man vs Wild:
Appearance of India’s PM Narendra Modi
Food & on the show featuring an adventure trail
Tourism Beverage in Jim Corbett National Park increased
the popularity of the region
In Vir Das’ Jestination
Unknown
the comedian travels to various
destinations in India to understand the
culture, heritage, history and of course,
the local sense of humour
MEDIA &
ENTERTAINMENT Netflix’s Street Food
successfully brought Delhi’s famous
chaat to a global community of viewers
Connect Export of
with Indian Indian culture Amazon Prime’s
diaspora Bandish Bandits
showcases Indian Classical music in its
true form with an interesting pop fusion
Source: Press Search, BCG Analysis

Industry leaders believe that M&E has the potential to have a huge direct
as well as indirect impact on India
Blaise Fernandes
CEO – Indian Music Industry
Impact on GDP and employment
“M&E sector in developed markets like the United States contribute around 4% towards GDP.
[With the right policies] there is no reason why we can’t reach a 4% GDP contribution given
our demographic dividend, a 450 million smart phone base going up to 900 million by 2029,
and cheap data.”
Global connect
“The soft power of content is unquantifiable. Today brands like Nike, Levis, Apple are
aspirational due to the content from US studios that have touched every corner of the world.”
Megha Tata
MD – South Asia, Discovery Networks
Skills and technology imperatives
“We need more government initiatives such as Skill India and Digital India initiative which
were introduced to transform our country into a digital empowered society and knowledge
economy. More importantly, the industry needs to work hand in hand with the government to
upskill talent, to create employment opportunities and to provide a platform for them.”
Creating an Indian “Hallyu”

“The creation of the Hallyu wave is story of rapid growth of the South Korean soft power
through a fierce discipline and focused manufacturing of talent. While there are many
admirable lessons to learn, especially in the way the K-wave has been marketed across the
world, what is even more important is that we truly start taking pride in the talent we have
right here in our country and provide them with the right platforms and resources to develop.
It is on the back of this talent that we will be in a position to craft a powerful, unique and
singular national identity making it easier for the world to recognize.”

Key imperatives: Support
needed to realize the
potential economic
impact of M&E

Key imperatives: Support needed to realize the potential economic impact of M&E 53
5 key pillars to grow the impact of the Indian M&E industry (I/II)
Impact of M&E industry (GDP, employment, intangible impact etc.)
Continued Advertiser Identifying Investment Investment in

investment in value new sources in skilling technology
content enhancement of revenue
Media consumption
Content monetization - advertising and subscription

5 key pillars to grow the impact of the Indian M&E industry (II/II)
Identifying new
Continued sources of revenue
investment in Advertiser for the industry Investment in Investment in
content value creation and country skilling technology
• Create more • Aid campaign ideation • Broaden reach of • Set up aided • Invest in
original and local in collaboration with Indian content and and specialized technologies such
language content to advertisers culture to global institutions with as AI and VR that
cater to the tastes • Provide clearer ROI audiences curated curriculum blend the physical
of diverse audiences metrics – Build larger for technical skills and digital worlds
and increase – Create a high- scale for content • Tie up with tech and offer unique
stickiness fidelity metric investments and enabled educational ways to interact
• Create content to that provides create indirect institutes and with consumers
increase size of de-duplicated value through set up vocational
niche audiences audience induced sectors training centers
measurement such as travel to broaden talent
• Build deeper content • Make India the pools and upskill
integration models export hub for current workforce
VFX, animation,
post production by
leveraging media,
tech skills
Continued investment
in content

Vernacular & original content will be the key differentiators as
competition intensifies in the OTT space
Local content consumption expected to grow Proliferation of platforms has intensified
further as rural internet users outgrow urban competition for eyeballs…
Rural Urban
Share of Internet
30+ 2.4
Users in Mar’20
52% 48%
Growth in Mar’20
vs. Mar’19 +23% +11%
OTT players offering Average #
# of villages/towns
from latest census6 ~650k ~8k content in multiple
local languages
apps/video
app user4
Effectively serving widely dispersed Rural audiences will
require creation of content in multiple languages
…however disproportionate share of viewership
Originals are the ‘hero’ content on OTT
garnered by top 3 platforms5
driving exclusivity for platforms
Consumers rated original &

30+% platform exclusive content as 65% 25%
their most watched genre2 2019 10%
(Followed by Sports, TV shows, Top 3 AVOD/ Top 3 SVOD Remaining

Movies and Originals) Freemium players players players
Source: 1. [IRS Jan’19-Mar’19, Jan’20-Mar’20, Nielsen- Internet users defined as individuals aged 12 years & above who have accessed internet in last one month], 2. [MoMagic
Survey conducted Jan-Aug 2019 (N=7500), Question “What do you watch the most on online streaming platforms like AmazonPrime, Hotstar, Netflix, Voot, SonyLiv, Zee5,
etc.?”], 3. App Annie 4. [Average calculated using Nielsen data on numbers of apps per user assuming users install at most 4 video streaming apps], 5. [Share of urban internet
connected smartphone android users that use video streaming applications]. 6. Census 2011 for # of rural/urban units.

Major OTT players continue increasing investment in original and
regional content to drive consumption
Investment in regional content through
Explosive growth of original content in the last 2 years
producing & acquiring content
Number of
hours of original 1,400-
35-
Consumption from
content
1,000- 1,800 40% local languages
~3x 500- 1,200 on OTT1

600
Growth in
2020 vs. 2018
ZEE5 MX Player
2018 2019 2020 2 Originals Hoichoi, SunNXT
per month partnerships
In Tamil, Telugu, Partnership with
Marathi, Bengali regional OTT players
Increase in the release of India focused original & Kannada for to gain access to
web series by major OTT players premium customers vast content library
Estimated approx. number of episodes from 2018 -2020
Sony Liv Prime Video
Disney+ Prime
Total Netflix Hotstar Video 15-20 Originals Acquired content in
in 2019 3 new languages to
2020 - 90 N/A 110 In Tamil & Telugu, reach a total of 10
along with acquiring languages
2019 600+ 80 70 100 TV content & dubbing
Malayalam, Punjabi,
Hindi shows
Marathi added in 2019,
2018 300+ 30 07 90 with over 7 languages
already present
11. For 2020 # of episodes calculated by multiplying the number of originals with the average number of episodes per original in 2019 1. [Zee Annual Report 2019-20]
Source: Press Search, Expert interviews, BCG Analysis
Niche players focused on few markets have also gained good traction
SUN NXT Languages on platform: Tamil, Telugu, Kannada, Malayalam, Bengali
50,000+ hours of content including live TV, movies, originals, kids’ content, music
Main draws for the platform have been:
17.5
Unique users in
• Large library of ready content made for TV & movies in southern languages 2020 (in million)
• Premiering new content on platform like trailer of a song from Tamil film Sarkar
Launched a Bengali TV channel, content from which also features on
the platform
11
Subscriptions in 2019
(in million)
HOICHOI Languages on platform: Bengali
50+ original shows, 500+ movies, 1000+ songs

Main draws for the platform have been:
13
Subscriptions in
• Series featuring prominent Bengali actors such as Raima Sen (Hello!) and 2020 (in million)
Anirban Bhattacharya (Byomkesh)
• Retelling of classic stories from prominent writers such as
Rabindranath Tagore (Laboratory) 40%
Share of subscriptions
Launched in Bangladesh to capture the large Bengali-speaking market in the country
from foreign markets
Source: Press search, BCG Analysis, [Indian OTT Platforms Report 2019, Communication Crafts]

Increasing content partnerships among players as they diversify their
offerings whilst managing costs
Benefits from partnerships Multiple types of partnerships seen in the market

Type of partnership Example
Netflix | Dharmatic Entertainment
Long-term partnership to create a
Increasing exclusivity of content created

broad range of new fiction and non-
Growth in subscriber/viewer base Exclusive fiction series and films exclusively
Subscription for both players has
content
creation Netflix | Viacom 18
potential to see uptick due to increased 3 new original series in partnership
content diversity with Tipping Point, ranging from
thriller to romance to drama
ZEE5 | ALT Balaji

Content Co-creation of 60+ Original content
co-creation series available exclusively to SVOD
subscribers of both platforms
Decreased cost pressure
Disney+ Hotstar | HBO
High cost of content (Rs. 50 lakh- Rs.
2 crore per episode) shared by players, | Sony LIV
Content Embedded content in app offering
thereby improving profitability
licensing viewers access to content from HBO
(in case of Disney+ Hotstar) and
Lionsgate (in case of Sony Liv)
Source: Press Search, BCG Analysis
Advertiser value
enhancement

Re-imagine value proposition for advertisers, evolve selling models to
build strategic partnerships
Move from tactical inventory selling to participating in

media planning phase with advertisers
Drive N=1 marketing through Big Data and

Advanced Analytics instead of Big Data and analytics
Provide real-time visibility to advertisers & media

planners to fine tune their campaigns

Enablers for effective implementation:
Single currency for

measurement across TV
& OTT
Standardizing
measurement metrics
across digital platforms
Leveraging
ad-tech platforms
Move from tactical selling to thought partnerships with advertisers
1 Provide bundled solutions across all platforms

Excerpt from industry players implementing a
combined solution
Involvement with Disney+ Hotstar
partners right from Bundled advertising deals for IPL - “With digital platforms, viewers
media planning stage have become seamless in viewing content on TV and also indulge
in private viewing on small screens so the business models need to
dramatically evolve in line with it”
– Uday Shankar (President, Walt Disney Company Asia Pacific,
Chairman, Star and Disney India)
Understanding the
brands’ needs – target
audience, value
proposition, objectives
2 Invest in data & technology to offer better
targeting capabilities
Comcast Roku
Nielsen’s DMP to provide data Adobe DMP customers can
& insights to help advertisers target the more than 32
Providing customized target and optimize campaigns million Roku households using
solutions best suited to in real time their own first-party data
achieve the marketer’s
3
goals & objectives Build trust by ensuring transparency & offering
real-time solutions helping create long-term
engagement with clients
Source: Press search, BCG Analysis, IAB OTT Streaming Video Playbook for Advanced Marketers 2019

Push for standardized measurement metrics to facilitate
performance measurement across devices and platforms
Challenges currently Rating agencies & TV networks Way forward for the
faced by advertisers globally trying to create a solution Indian media industry
1
NBCU collaborated with Develop consensus
Nielsen, comScore and Moat to US on standard
Measuring combined
create a composite “score” to measurement
ROI across platforms standardize linear and digital process
viewership across its properties
2
BARB launched a 3-phase
Drive collaboration
program for multiple-screen UK between players
Removing duplication
audience reporting in 2018. In to create a unified
in cross-device 2020, the agency has started currency for cross-
measurement to release multiple screen platform advertising
reach & time spent viewing
3
In Jan-2019, IMDA launched
Quick execution &
Limited transparency adoption to facilitate
new release of SG-TA system Singapore
on metrics and their touted to measure unduplicated growth of digital
definitions TV viewership stats across advertising
digital platforms
Identifying new
sources of revenue:
Globalize Indian
culture and content

Increasing acceptance of Indian content among global audiences,
including but not limited to Indian diaspora
Large Indian diaspora of 32+ Mn spread across multiple countries and consuming Indian content
32+Mn 50+% 10-15%

Additionally, countries with
significant Indian language
speaking population also
consume Indian content:
• Bangladesh (Bengali),
Indian diaspora Of the Indian Of India’s film • Mauritius (Bhojpuri),
spread across diaspora pay for industry revenues • Nepal (Maithli &
Bhojpuri),
multiple countries Indian content3 in 2019 came • Singapore (Tamil),
from oversees4 • Sri Lanka (Tamil) etc.
1. Based on App Annie data for ATLBalaji, ErosNow, Hungama, Zee5;

2. Based on Google trends data for Sacred Games, Mirzapur, Delhi Crime, Lust Stories, Inside Edge;
3. Entertainment Goes Online, BCG-Google Report, 2018 ; 4. FICCI Report, 2019
Source: Ministry of External Affairs, Govt. of India, Expert interviews, Press Search, BCG Analysis

Thereby creating global demand for India-based content
No. of active users of Indian OTT apps 2019 (‘000)1

164
51
Indian OTT apps are
21 indicative of increasing
14
popularity of Indian content
UAE Australia UK Canada
~3 ~0.5 ~1.5 ~1
Size of Indian diaspora (million)
Global YouTube search volume for Indian originals - Indexed with

100 being the max & 0 being lowest2
99
65
24 21
14 8 7 6 6 5 3
India Pakistan UAE Bangladesh Canada New Nepal Australia UK Singapore USA
Zealand
Globalization of Indian content enabled by OTT platforms through their
global reach and high-quality content
OTT platforms offering high-quality original …are increasingly enabling local Indian
content with international distribution… content to reach global audiences
Increasing original hours of India-based content Sacred Games, an India-based Netflix
web series
• Gained traction in Latin America, US and
Europe
• 2/3 viewers for Season 1 from outside India
500-600 1,000-1,200 1,400-1,800
#original • Overseas viewership mainly non-resident
content hours 2018 2019 2020 Indians and people of Indian origin
Availability of high-quality content

Amazon Primes’ original Made in Heaven
International Emmy Nominations for Sacred Games,
Inside Edge, Made in Heaven, Delhi Crime & Four More
• % of viewers from outside India higher than
Shots Please!, Inside Edge usual 20% observed for other series
IMDB top 50 most popular web series include Kota
Factory, Made in Heaven, Flames, Yeh Meri Family, TVF
Tripling, Little Things & Permanent Roommates
Mighty Little Bheem
A Netflix animated series viewed by ~27 Mn
Extensive global reach of OTT players households outside India
Amazon MX Other Shows

Player Netflix ErosNow
Prime Player
Such as Delhi Crime, Paatal Lok, Mirzapur,
Four More Shots Please!, Inside Edge, etc have
#Countries >200 >190 135 8 received global viewership
Source: Expert interviews, Press Search, IMDB rankings (as of September 2020), BCG analysis

Additionally, globalization of content can create a trickle-down effect to
boost the Indian tourism ecosystem as evidenced by the ‘Netflix Effect’
Spain
Money Heist
Fans visiting filming locations such as Consejo Turkey
Superior de Investigaciones Científicas (CSIC) Netflix | The Protector
Money Heist Experience in Madrid, escape room Tourism grew after declining for two years
offering a jewel heist with full costumes
South Korea
Columbia Hallyu tourism
Netflix | Narcos
estimated at ~$16 Bn
Former crime capital
Multiple tours offer visits
and stronghold of Pablo
to sites where Netflix’s
Escobar, Medellin witnessed
Crash Landing on You
a steady increase in tourism
was shot
by nearly 25% in recent years Netflix | Street Food
Korea Tourism
Chiayi, Taiwan: Bookings to Chiayi exploded
Organization released
Osaka, Japan: Often overshadowed by Tokyo & Kyoto, a tourism promotional
it found its place as Japan’s street food capital video ‘Explore Korea’,
made in collaboration
with Netflix
India’s rich cultural heritage and scenic beauty offers diverse offering to content creators
Growth of India-based OTT content will aid in export of Indian culture and in the process
boost industries such as tourism
Source: Press search, BCG analysis
Case study: Global success of Spanish content enabled by Madrid
Content City through its end-to-end production ecosystem
Cast, crew and extras working on Economic Output

Netflix originals (% contribution to GDP)
2018 2019 2015 2018
25k 0.04%
Overview:
13k 0.03%
Madrid Content City
Poised to become Europe’s 2nd largest production space by 2021, providing upscale content
for the Spanish speaking world and beyond
Content:
• Money Heist, La Templanza, White Lines, 30 coins: by Netflix, Amazon & HBO
• Netflix, Viacom, Columbia production units, 40-50 international films shot annually
Infrastructure:
• Complete 140,000 m2 ecosystem with offices, postproduction services, warehouses, leisure and sports facilities
• Netflix’s first European Hub at Tres Cantos’ Secuoya Studios (22,000 m2 campus)
• Other major players like Mediapro Studio, Mediaset España, Viacom International Studios, Dynamo, Beta Film
and Federation Entertainment
Intellectual Capital:
• Innovative university campus with capacity for >7,000 students to be managed by Grupo Planeta; UG & PG with specialization in
audiovisual creation, management and production
Incentives (Financial):
• Most expensive shows cost ~$1.5M/episode vs. $3-4M in US for TV shows (avg. cable drama)
• 30% tax rebates for international shoots’ first $1.1 million spend, and cap a shoot’s total tax deduction at $10.8 million

High potential to take Indian content and culture to global audiences
India can cater to …by creating an end-to-end

international demand… production ecosystem
Some initiatives around these
already underway
Business and production- Production

Target the ~20 friendliness: ecosystem will:
• Improve EoDB rank from 63
million strong
currently (vs. 8th for the UK)
• Encourage foreign
Indian diaspora • Create efficient logistical producers to create
processes – simpler access content in India
permits to shooting locations,
easier incentive claims, etc. • Make India a major
Target markets
that have language
• Enable ease of movement content exporter
similarity with India • Boost ancillary
(eg. Bangladesh, Sri Infrastructural Development: industries like
• Creation of end-to-end
Lanka, other South- production ecosystems through tourism
East Asian countries) creation of content cities
And hence,
Create presence in Talent Building: Enable Indian content to
the global market • Specialized training to create
- original content skilled workforce to handle high-
reach audiences across
with focus on end projects from international the globe
production houses
‘glocal’ stories
• Exposure to foreign studios,
production work, domestic
industry through training,
internship opportunities
for students
Source: United Nations; World Bank; BCG analysis
Identifying new sources
of revenue: Case study

Importance of post-production activities such as VFX rising in value chain;
presents opportunity for Indian M&E industry
DEVELOPMENT PRE-PRODUCTION PRODUCTION
• Planning and • Finalize cast, crew, financing • On site shoots a

conceptualization of script and budget, shooting location, operations relat
logistics production of th
• Hiring for production

management for creating
schedule, managing budget
• Get necessary approvals
1. Budget >USD 100 million)

Source: Technicolor Capital Markets Report Feb 2020, BCG analysis

N POST-PRODUCTION DISTRIBUTION
and all • Review and editing of footage • Distribution through traditional

ted to or new media to enable the
he content • Music recording, sound design content to reach audiences
and mixing
• Addition of Animation, Visual

Effects
Detailed in this report
Budget allocation to VFX in High

Budget films expected to rise to 30-
35% by 2023 from 25-30% currently1
If India can capture 20-25% share of global VFX and Animation market it
can create 75-120k jobs by 2025
India has <10% of the global market share in Potential to scale this up to 20-25% through
VFX and Animation structural interventions
1.3
Market Size, India ($ Bn) Indian VFX & animation experts cost ~1/5th the
cost of western counterparts
0.3 However, other global hubs have emerged
1.1
+17% offering highly skilled intellectual capital and
0.2
incentives of upto 40%
0.9
• Montreal, Canada grew at 27% CAGR
0.8 0.2 between 2009-16
1.0 • UK has emerged as the primary VFX hub
0.7
0.2
0.8 in Europe
0.2 0.7 VFX & animation can be the next IT-BPM boom
0.6 for India and play a fundamental role in India
0.5 becoming a $ 100 Bn M&E country by 2030
By 2025, India can aspire to capture 20-25%
2015 2016 2017 2018 2019 market share
Market Share: <10%
Animation VFX & Post Production
1. Indirect & Induced Employment Coefficient for Other Services, Impact of Investments in the Housing Sector on GDP and Employment in the Indian Economy, NCAER, 2014;
Extrapolation based on revenue to jobs ratio in India’s film industry, MESC Skills Gap Report 2014, Industry Reports
Source: Montreal International, Quebec Film and Television Council, SODEC, Expert interviews, Press Search, BCG Analysis

Potential job creation and
economic activity in next 5 years
Direct & indirect jobs:
75-120k
45-60k New jobs created
by 20251
Jobs in 2019
Direct contribution to GDP:
0.06-0.08%
0.05% Additional contribution
by 2025
2019
Growing trend of globalization of VFX & animation studios - despite cost
disadvantage, countries have attracted work due to tech/ talent capabilities
~10%
~3.5%
United Kingdom
Canada Tax Incentives (~20%)
Tax Incentives (30-40%)
Language and cultural
Language and cultural similarity
similarity
Strong domestic TV and
~2.5%
Same time zone as US commercials market
Talented workforce & Skilled workforce, strong Australia
high-end infrastructure tech capabilities Tax incentives (~40%)
~30% Presence of foreign players Presence of Language and cultural
High cost labor foreign players ~10% similarities
United States Small domestic market High cost labor Talented workforce
India
Tax incentives for High cost labor
post-production
Small domestic market
Strong local market
Skilled workforce,
technical & physical
infrastructure Global footprint of VFX & Animation Studios:
High-cost labor Prime Studio: India (7,000), UK (1,000), Canada (600), US (~100), Australia
Framestore: India, UK, Canada, USA
Industrial Light and Magic: USA, Canada, Singapore, UK, Australia
xx% Market share
Sources: Annual Reports, Press Search, BCG Analysis

India is not far behind…
Increasing trend of globalization of studios – foreign players are
expanding to other geographies to take advantage of lower costs &
ensure 24*7 employee availability
India must leverage its advantages:

• Competitively priced talent
• Strong technology skills
• Lower language barriers
India must explore talent and tech capability

development to not only attract more work,
but also to move up the value chain
States like Karnataka, Telangana and Maharashtra are already working
towards improving India’s AVGC industry
Strong push for AVGC sector

by Central & State Govt. Karnataka Telangana Maharashtra
Central Govt. Events: Bengaluru GAFx, IMAGE Centre of Excellence 2015 IT/ ITES Policy:
Karnataka AVGC Summit, (CoE), 2020
• Recognized as Champion Sector • Establishment of Private
Digital Art Symposium
(2018) IMAGE Policy 2016 AVGC Park in Maharashtra
(DAS) & International Trade
• Plan to expand SIES Incentive Meets organized • Aiming to provide • Establishment of Fine
infrastructure, initiate Art School / College i.e.
• Plan to open FDI, Budget 2019 2017-22 policy aiming to
talent building, bring Digital Art Centre
stimulate growth of 100
State Govt. in fiscal incentives and
KAVGC companies, create • Set up of a Venture
promote SC/ST and
• Maharashtra, Haryana, 15k jobs, talent building Capital Fund
women entrepreneurs
Karnataka, Telangana, Assam through 120+ training
• Fiscal Incentives &
have curated policies to promote institutes and push for
Concessions for
AVGC sector 75% of total revenue from
AVGC units
exports
AVGC is a promising and fast-growing sector that India has great The government is looking to act as a facilitator,
opportunity to develop. Like Bollywood, music, and IT, this is soft not regulator in the AVGC sector since the area
power that can emerge as a major revenue generator. is creative and largely private-led.
– Union I&B minister Prakash Javadekar – Amit Khare, secretary, I&B ministry
Source: Expert interviews, Secondary Research, BCG Analysis

India should focus on developing infrastructure, lucrative incentive
structure, and building intellectual capital to boost its VFX &
animation industry
Incentives Intellectual Index for

Infrastructure
(Financial) Capital EoDB
Develop state-of-the- Necessary to retain Setup universities / Overall production

art facilities: competitive advantage courses: friendliness
of low cost over other
• Physical infra: • UG & PG courses
countries Organizations that
studios, universities
• R&D, especially with promote overall
• Technical infra & foreign studios and industry globally
capabilities universities
Regular events to
• Industry exposure:
Key enablers: display domestic
internship, exchange
capability and to
• Foreign investment
• Business courses provide a platform for
• International to promote networking
partnerships entrepreneurship
• Non-monetary aid
The industry needs to nurture specialized technical and soft skills to
build the required intellectual capital to compete with other global hubs
Non exhaustive
VXF ARTIST ANIMATOR
Budgeting, planning, Animators use software to create
conceptualization, designing 2-D/ 3-D animation for websites,
& editing, coordination & film, video, gaming, and
collaboration with all stakeholders mobile media
are the daily tasks of a VFX artist
Technical Skills: Technical Skills:

JavaScript, Adobe Creative Suite, UI Adobe Photoshop, Adobe InDesign,
design, Linux/Unix, Houdini, MAYA, Graphic design, Adobe Illustrator,
Realflow, Nuke-X 3D modelling, Adobe AfterEffects, User experience
Prototyping, Photoshop, Microsoft wireframing, Interaction design,
Office packages Motion graphics, Prototyping
Soft Skills: Soft Skills:

• Creativity to envision scenarios that • Creativity to develop new ideas,
will be translated to content unique characters and styles
• Attention to detail to add nuances that • Art of storyboarding to create unique
make content more realistic stories
• Good visual awareness to understand • Attention to detail to understand
relevance of spaces, distances and details like light movement to
coloring improve the impact
• Team player as work is mostly • Emotive communication to evoke
collaborative emotions with content & create
• Organization skills to manage connect with audience
deadlines, communications & • Organization skillWs to manage
documentation effectively deadlines, communications &
documentation effectively
Sources: Expert interviews, Secondary Research, BCG analysis

Investment in skilling

Future trends in M&E driving upskilling for traditional roles and creating
demand for new-age talent
Trends driving upskilling of Trends creating demand for

Key Imperatives
traditional roles new-age roles
• Demand for original and • Increasing use of technology

Continued regional content to drive content curation
investment in • Increasing diversity of content and discovery
content across languages, forms, and
formats
• Moving from tactical to strategic • Monetizing niche audiences

Create
selling - solution selling, bundling • Increasing use of ad-tech platforms
advertiser
• Performance measurement • Hyper-segmentation of audiences
value
across TV and OTT for improved targeting
• Creating stories for • Global export hub for VFX and

Identify new global audiences Animation, moving up the
sources of revenue • Integration of AR/VR to create value chain
for industry and immersive content & streamline
country production process

Upskill workforce across content creation & monetization to facilitate
growth in consumption & advertising
Revamp production process with new Re-skill sales workforce to become problem-
technologies enabled by upskilling employees solvers & leverage ad-tech platforms
Role Key skills required Soft skills

Consulting approach to client problems
• Knowledge of planning and instead of transactional support
budgeting software to increase
Production process efficiency Specialized agents with in-depth knowledge
of client business
• Integration of immersive
Technology upskilling
media such as VR into content
• Streamlining workflow using AI Increase familiarity and expertise in
Screenplay 1 programmatic advertising
• Leveraging advanced camera

Drive insights from data driven hyper-segmentation
technologies (4K/8K video, VR, 2 of consumers
autonomous drone cameras)
Cinematography
Working knowledge of analytics and AI to
• AI & analytics-based software
3 communicate business needs to technology teams
for video curation, editing &
sound engineering
Post-production
Build talent pool for new age roles in technology & analytics by enhancing
value proposition of the M&E industry to attract top talent
M&E ranks low on preferred jobs Attract best-in-class talent by providing value proposition in line
by analytics professionals with other industries
Compensation
<10% Benchmark monetary compensation with sectors
attracting best talent like BFSI, Telecom
Analytics roles in India come from

M&E industry
Sectors such as BFSI, IT, Fintech high

on the preference list because: Key needs from
• Early adopters of analytics, clear job profile
career path defined
• Skilled peer group offering
opportunity for learning (<10% Growth opportunities Learning
Revamp organization structure Bridge the gap with
analytics roles in India from M&E2) with a specialized analytics legacy sectors such
• 20-40% higher monetary function to offer leadership as BFSI through on-
compensation in sectors like BFSI, roles in the-job training, global
career trajectory mentorship programs
Telecom, Pharma
1. [Data Science Recruitment Survey 2020 by Analytics India Magazine & AnalytixLabs],
2. [Analytics & Data Science Jobs in India 2019, AIM & Great Learning],
3.[Analytics India. Salary Study 2020, AIM & Jigsaw Academy, figures mentioned indicate median salary]
Source: Expert interviews, Secondary Research, BCG analysis

New tech-based roles require specific profiles with specialized skills in
analytics & relevant experience
Business Analyst Data Scientist Data Technologist

Relative Relative Relative
importance Tech skills importance Tech skills importance Tech skills
of skills of skills of skills
Operational Leadership Operational Leadership Operational Leadership
Business sense Business sense Business sense
Sample profile
2-6 years of 2-6 years of 2-6 years of
MBA B.Tech B.Tech
experience experience experience
(Engg.) (Engg.)
Skills needed Skills needed Skills needed
Technology Technology Technology
Working knowledge of technologies such as Hands-on exp. on latest tech. like SQL, Exp. deploying tech. like SQL, NoSQL, R,
SAS, SQL, Oracle, SAP NoSQL, R, C, Java, SAS, Hadoop, Pig C, Java, SAS, Hadoop, Pig
Leadership Leadership Leadership
Stakeholder management, skills to Stakeholder management, team Collaborate with data scientist, BUs, and
influence and command management third parties requiring data
Business sense Business sense Business sense
Expertise in process, business model, or Ability to convert business problems to Translate analytical problems into questions
industry domain & strong analytical skills analytical problems and converting output concerning technology and data platform,
Operational to business solutions align big data systems with business
Presentation skills, attention to detail, Operational Operational
strong business documentation skills Expertise in handling large quantum of Expertise in Big Data Analytics systems
data, data mining, analytical/ statistical and arch., understanding of big data tools,
techniques & solution design knowledge of DB management etc.
There are concrete steps that stakeholders can take to ensure creation of
a robust talent pipeline
M&E industry bodies Government of India Large media houses
Online skilling building platforms Industry bodies along with the Set up government aided
can be created corporates can set up training specialized institutes for media and
centres and/or vocational courses entertainment education
Mentorship and skill dev. program • E.g. UK has a Screen Skills –
for SMEs by industry bodies industry-led skills body for the Customized training programs for
UK’s screen-based creative faculties and students
Industry focused skill development
programs designed in liaison with industries – animation, film, Specialized programs in liaison
industries by IEEE, NIIT etc. games, television including with industry e.g. proposed summer
children’s TV and high-end internship program
drama, VFX and immersive
technology
VFX and immersive technology

investment in captive training
centres

Industry-academia partnerships should also be leveraged for upskilling
Classroom learning On-the-job training Global mentorship
• Short duration courses • Trainings & workshops by • Collaborate with

focused on new skills seasoned professionals international companies
required formulated with • Short-term assignments to to offer projects and
industry inputs acquire new skills apprenticeships with
leading professionals
Up-skilling in
traditional roles
• Collaborate with top • Cross-functional exposure • Foreign exchange

universities to build M&E for deep understanding of opportunities with leading
focused courses within business as well as tech universities in the world
curriculum for development of
Building a specialized skills
talent pool for
new-age roles
Industry speak: An industry driven initiative needed for developing high
quality talent
Punit Misra
President - Content and International Markets,
Zee Entertainment Enterprises Ltd
“Given explosive demand for quality video content, a key focus area has to be talent - writers,
directors, production houses, animation artists et-al. An industry driven initiative to bring
high quality talent through organized , scaled up initiatives is the need of the hour.”
Megha Tata
MD – South Asia, Discovery Networks
“With the increasing demand for production and post-production work, I believe it would
benefit us if we, as a country, invest in creating formal educational courses focusing on
technical aspects of media and entertainment. At the moment, production, VFX, animation
are taught largely by private schools and firms. With the increasing demand, we should look
at providing these subjects as vocational training topics to young people to explore. And
investment in skilling the youth will go a long way in helping India achieve this goal.”

Investment in
technology

Multiple technology-driven use cases emerging basis the key imperatives
fueling the need for investments in technology
Continued investment Advertiser value Build newer sources of

in content creation revenue for the industry
Audience insight generation, churn Hyper-segmentation for Content production

reduction targeted advertising • Topic monitoring &
Hyper-personalized content • Ad personalization recommendation basis diverse
recommendation engines • Campaign performance needs of user base
• Video & image annotation and management by providing real- • Automated video editing & sound
search time visibility and user targeting engineering
• Content analytics Programmatic advertising • Content generator
• Customer segmentation Data enrichment to drive targeted AI curated content supply –
Content greenlighting campaigns identifying potential ‘hero’ content
• Content acquisition
Video engineering for fluency and Standardized impact measurement • Intelligent document recognition
definition optimization across across platforms
multiple devices Enabling consumers to experience
Using VR to enhance spectator content/products advertised through
engagement in live sports immersion of VR/AR
User acquisition and conversion
from AVOD to SVOD

Major players investing in hyper-personalized content recommendations
to increase engagement on OTT platforms
Netflix
Several billion ratings

by members for over
Spotify
13,000+ titles Personalized
recommendations
for each user
Custom playlists
like “Discover 31%
Weekly” and “Daily
“Based on your interest in…” Mix” by identifying
Usage statistics and your taste profile
granular level preferences and finding similar Share of ML
for 159 million viewers songs you haven’t based playlists in
listened to overall listening
activity
Metadata related to titles

in their catalog like genre, 80%
director, actor, rating, etc.
YouTube
“Up-next” videos
70%
recommended
Percentage of shows based on previous
watched due to content viewing history,
recommendation demographics, time, Percentage
External sources like box office
location, etc. of videos
information, performance
viewed due to
and critic reviews
recommendations
Source: Press Search, BCG Analysis, [BusinessofApps, 2020], [Spotify Technology, S. A, March 2018 IPO Prospectus]
Building advertising solutions at scale with N=1 marketing efficacy
key to raising the bar on advertiser value proposition
Endless opportunities for data collection to Offer data-driven solutions to marketers to drive
improve targeting with digital platforms better monetization opportunities
AdSmart | Sky’s leading Addressable TV
SKY
Demographics, location, advertising solution unified with NBCU 2019
time of day, etc.
1 Campaign targets can be defined

based on Sky’s own customer data
Behavior & interest: category, brand and information from consumer 1.8k Advertisers
preferences, hobbies & interests profile experts
Content verticals broken out

by publisher
2 STB build-in dynamic ad server
technology pulls ad campaign
Advertisers
First and third-party data like creatives and overlays based on 70% return rate
panel-based STB data from individual household data (audience
Rentrak, DMPs, etc. attributes)
Cross-device maps for all

devices like TV, mobiles,
tablets and laptops Companies
3 Live insertion of targeted ads during have used TV
linear ad-break of 100+ AdSmartable
channels in UK
>1k for first time
Unique opportunity to build digital identity of because of
end users & leverage it to drive higher CPMs AdSmart
1. [Data Science Recruitment Survey 2020 by Analytics India Magazine & AnalytixLabs],
2. [Analytics & Data Science Jobs in India 2019, AIM & Great Learning],
3. [Analytics India Salary Study 2020, AIM & Jigsaw Academy, figures mentioned indicate median salary]
Source: Expert interviews, Secondary Research, BCG analysis”

Creation of immersive user experiences revolutionizing content
consumption & monetization
Enhanced spectator engagement in live sports using VR by Intel
TV/Video
• Movies and broadcasts can be Olympics PGA Tour National Football Major League National Basketball
2018 League Baseball Association
watched in holographic view
Pyeongchang
Intel NFL True VR enables fans to experience the story of the game.
2018 olympic
In VR, fans feel like they’re actually part of the action
Facebook improves the performance

of its digital ads through augmented reality
• Newsfeed and messenger

Advertising Michael Kors Sephora
ads include a “tap-to-try”
Leather/Clothes Make uo and buy option on mobile
• VR/AR enable consumers to
experience content/products • Brands using AR ads claim
advertised 30% to 80% improvement in
Samsung Renault Google engagement rates
Qantas Jaguar Honda Pottery Barn NYX
Home Decor Make up
Imperatives for
media companies

Imperatives for media companies
Support content diversity with personalized

recommendations for consumers by leveraging
advanced analytics
Create a unified viewing experience for

consumers by aggregating share of consumption
across TV & digital video platforms
MEDIA COS.
For consumers
Integrate different formats such as gaming,
music, short-form video into one unified
platform to drive engagement
Invest in strategic content partnerships to ease

monetization pressure, drive content diversity

Engage with advertisers as strategic partners
selling integrated solutions rather than just
inventory selling
Enhance value proposition for advertisers

through bundled selling across platforms, MEDIA COS.
hyper-personalized user segmentation & real- For advertisers
time performance tracking
Invest in ad-tech to build data &

analytics capabilities and automating
ad-buying process
Appendix: Sources used in the report
Ampere analysis MAGNA India Media Forecasts

Analytics India Magazine MoMagic Survey
Analytics India Salary Study 2020 Montreal International
Analytics & Data Science Jobs in India 2019 NCAER
Annual reports of publicly listed companies Ovum
App Annie Pitch Madison Advertising Report 2020
BARC Nielsen Crisis Consumption An Insights PQ Media
Series into TV Smartphone & Audiences Quebec Film and Television Council
BusinessofApps, 2020 SNL
Data Science Recruitment Survey 2020 SODEC
Economist Big Mac Index Spotify Technology, S. A, March 2018 IPO Prospectus
EIU TAM AdEx
eMarketer database Technicolor Capital Markets Report Feb 2020
FICCI Report, 2019 UNCTAD (2017)
Finder United Nations
Google COVID-19 Community Mobility Report World Bank
IAB OTT Streaming Video Playbook for Advanced
Marketers 2019
IMDB
Indian OTT Platforms Report 2019
Invest Korea – Cultural Contents; Korean
Educational Statistics Services
IRS (Indian Readership Survey)
MAGNA Global

Appendix: Methodology for employment calculations
Economic Impact of M&E industry has 3 different

components: Direct, Indirect & Induced Methodology to calculate employment
multipliers
Direct Employment: Employment multipliers are calculated using:
Jobs created in the core
M&E industry ecosystem
including both formal
and informal sector
Indirect Employment
National Input-Output matrix/ Supply-use table:
and Multiplier:
Jobs created in industries Describes the inter-industry trade relationships based on
like communication, which the multiplier effect is calculated; dependency of one
electronic equipment, sector on every other sector as a supplier and as a consumer
electricity, financial are quantified
services, infrastructure,
transportation etc. due Calculation of Leontief Matrix
to the M&E industry;
multiplier used to evaluate Input-Output matrix is converted to Leontief matrix to convert
number of indirect + direct absolute monetary terms to relative outputs; this enables
jobs annually isolation of relative impact created y increasing output in any
industry
Induced Employment and Multiplier: Direct, Indirect and Induced Employment in M&E
Jobs created as a result of spending done by the
workforce that is directly and indirectly serving the Direct employment impact is estimated at a sub-sectoral
M&E industry; multiplier used to evaluate number of level which is then extrapolated using indirect and induced
induced + indirect + direct jobs created annually employment multipliers
Source: Impact of Investments in the Housing Sector on GDP and Employment in the Indian Economy, NCAER, 2014
For Further Reading
Boston Consulting Group publishes reports on related topics that may be of interest to senior executives.
Recent examples include:
Winning the Media Subscription Battle

A report by Boston Consulting Group, September 2019 Digital Consumer Spending: A $100 Bn Opportunity
A report by Boston Consulting Group, February 2018
Pay TV still has room to grow
An article by Boston Consulting Group, September 2019 The New Indian: The Many Facets of a Changing Consumer
An article by Boston Consulting Group, March 2017
Winning in Media in the Digital Era
An article by Boston Consulting Group, February 2019 Television’s $30 Billion Battlefield
An article by Boston Consulting Group, August 2018
One Consumer, Many interactions
A report by Boston Consulting Group, December 2018 Convergence: The New Multiplier for India Media &
Entertainment’s @100 Billion Vision
Entertainment Goes Online A report by Boston Consulting Group, October 2016
An article by Boston Consulting Group, November 2018
Powering Up Smart Machines in Media
The Digital Revolution Is Disrupting the TV Industry A report by Boston Consulting Group, December 2017
An article by Boston Consulting Group, March 2016
Note to the Reader
ABOUT THE AUTHORS FOR FURTHER CONTACT

Kanchan Samtani is a Managing Director If you would like to discuss the themes and
& Partner in the Mumbai office of Boston content of this report, please contact:
Consulting Group
Kanchan Samtani Nitin Chandalia
Mandeep Kohli is a Partner in the New Managing Director and Partner Managing Director and Partner
Delhi office of Boston Consulting Group BCG Mumbai BCG New Delhi
+91 22 6749 7074 +91 124 459 7120
[email protected] [email protected]
ACKNOWLEDGMENTS Mandeep Kohli Kanika Sanghi
Partner Partner and Associate Director
The authors thank and acknowledge
BCG New Delhi Center for Customer Insight
the support provided by Anchita Bagga,
+91 124 459 7435 BCG Mumbai
Mallika Singla, Danvir Suri and [email protected]
Mallikarjun Vaddi in preparing this report. +91 22 6749 7134
Nimisha Jain [email protected]
A special thanks to Ashok Rajani for
orchestrating the creation of the report, Managing Director and Partner Ashok Rajani
Jasmin Pithawala for managing the BCG New Delhi Project Leader
marketing process and Jamshed Daruwalla, +91 124 459 7210 BCG Mumbai
Saroj Singh, Pradeep Hire, Nitesh Tirkey, [email protected] +91 22 6749 7522
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LIGHTS, CAMERA, ACTION…

…THE SHOW GOES ON

2 CII Big Picture

Kanchan Samtani K Madhavan Mandeep Kohli

EXECUTIVE During lockdown, both TV and smartphone

SUMMARY more time at home. OTT continued its onward

While the Indian M&E industry already has

8 Lights, Camera, Action… The Show Goes On

10 Lights, Camera, Action… The Show Goes On

12 Lights, Camera, Action… The Show Goes On

Covid-19 led to a surge in consumption of both

Covid has further accelerated the trend towards

14 Lights, Camera, Action… The Show Goes On

0.73 2.95 Digital video continues to be the

2018 2019 2020 2022 E

• Viewership spiked at 37%; steadily reverted to pre-Covid levels

1. 13-Jan to 2-Feb taken for pre-Covid levels

16 Lights, Camera, Action… The Show Goes On

SVOD adoption has spiked on account of trials;

...and that the growth rate of new users in tier-2/3/4

Metro & Tier 1 Tier 2 - Tier 4

18 Lights, Camera, Action… The Show Goes On

Male, Female, Male,

20 Lights, Camera, Action… The Show Goes On

22 Lights, Camera, Action… The Show Goes On

Advertising Revenues (in USD billion)

1.7-1.9 9% -35 to -50%

5.0 0.3 OOH

12% -12 to -17%

24 Lights, Camera, Action… The Show Goes On

India view only

Accelerating GDP and Ad Decelerating GDP and Ad

Source: MAGNA India Media Forecasts, BCG analysis

Total Ad Volume (in million) in January, April, October

26 Lights, Camera, Action… The Show Goes On

Many sectors have more # of advertisers Recovery led by increase in number of

18% 13% 20% 15%

82% 87% 80% 85% Advertising continues

25% 31% 27% 35%

75% 69% 73%

Change from 2019 levels

Consumption Advertising Consumption Advertising

28 Lights, Camera, Action… The Show Goes On

30 Lights, Camera, Action… The Show Goes On

Share of digital revenues in advertising (%)

2020 2021 2022

32 Lights, Camera, Action… The Show Goes On

Subscription revenues growing on SVOD growth driven by significant

2018 2019 2020

34 Lights, Camera, Action… The Show Goes On

SVOD contribution per user 3-4x of AVOD

Achieving advertisement driven

Increase in Pay per view model gaining traction

% of subscribers likely Ease of payment through integration of UPI

36 Lights, Camera, Action… The Show Goes On

% Households with TV cable connection in each country