India's $12Bn digital media market to triple by 2030: Redseer

Redseer Strategy Consultants has come up with a research that sheds light on India’s digital media market. India’s current landscape of Internet users is dominated by a 450-500 million strong cohort of explorers, followed by 300-320 million transactors and 35-40 million mature users. Redseer’s Research estimates that India’s volume of mature users will outpace that of the USA by 2030 as the Digital Media & Entertainment landscape, which is currently valued at US$ 12 bn, will triple in size. Non–Real Money Gaming (Non-RMG) and the rise of OTT across audio and video are among the contributors to the sector's current growth trajectory despite the slowdown in digital ad spending and regulatory changes affecting the RMG space. 

As the sector looks to chart its way forward, three key factors will prove to be critical to its growth:

1. The continued increase of paid users across OTT video, audio and gaming 
2. The rise of regional content
3. The growing share of digital ad spend across new-age and traditional brands.

The following are a few important trends that have taken over the Indian Digital Media and Entertainment (M&E) landscape in the last two years. 

OTT Video, OTT Audio, RMG and non-RMG gaming saw a rise in paid users and expanding Average Revenue Per Paying Users (ARPPU)

In FY23 alone, the Media & Entertainment landscape saw an accelerated growth in the paid user base and in turn the Average Revenue Per Paying Users (ARPPU). Across M&E segments, paid user growth went up to 90% in FY23. Subscription bundling, low-cost packs, micro-payment and pay-per-views were the key factors propelling this growth. However, the sector continues to face significant challenges in terms of higher Customer Acquisition Costs (CAC) and low user retention. Finding creative solutions to overcome these challenges will place the sector on the path toward profitability in the next 3-5 years. Typically, it takes 2 years for OTT Video platforms to break even on CACs for individual customers. Long-term solutions such as innovative monetization models, localized and regional content for Tier-2+ demographics, and models such as keeping the first episode of original properties free could work in the favor of OTT platforms. 

Audio series and Audiobooks draw in more paying users for the OTT Audio sector 

Leading players in India’s Audio series and Audiobooks grew ~9X in FY 2022-23 fueled by a growth in paid users, engaging content with immersive experiences as well as sachet payment options. The increased supply of both immersive entertainment and non-entertainment regional content and the competitive price points of subscription models can be credited for the growth of the audiobook category.

The rise of core gaming, eSports and live streaming places India’s gaming industry in good stead

India is currently looking at a 150 Mn-strong community of mid-core/ core gamers in 2023 alone, a significant portion of which have graduated from casual gameplay. With components such as in-gaming payments opening access to costumes and accessories, the gaming segment is seeing ~40% paid user penetration. The leveling up of gamers from casual to mature gaming is also spurring an increase in the viewership of livestreams and has opened multiple possibilities for the development of a vibrant domestic eSporting ecosystem. 2022 saw Nodwin Gaming, a leading eSports organizer, conduct a one-of-its-kind eSporting tournament ‘Battlegrounds Mobile India (BGMI) Masters Series’ which was live streamed on a mainstream TV channel.

Short-form video platforms emerge as media of interest for brands for Tier-2+ access and monetization

India’s Short-Form Video (SFV) platforms boast a sizable user base of 250 million, of which 2/3rd hail from Tier-2+ cities. ~40% of the user base was also observed to be online transactors thereby providing brands and advertisers with ample scope for monetization, and an unprecedented opportunity to reach out to a larger volume of Tier-2 audiences. Monetization is relatively nascent on Indian SFV platforms and it is currently restricted to ad revenue and influencer marketing.

The growth of ‘Made for India’ content is oiling the wheels of India’s Digital Media & Entertainment industry. The increased uptake of core gaming also adds to the sector’s growth potential. Creatively solving the challenges of CAC, user retention and subscriptions can enable the sector to grow exponentially in the years to come.