22/01/2019 India: An Entertainment Giant in the Making
A new report by Standard Chartered indicated that it’s likely that India will become a larger economy than the US in just 12 years time. The US will sit in 3rd place behind the world’s superpower China in first.
India’s growth is accelerating at the quickest pace (around 7%) and by 2025 is set to a trillion dollar manufacturing economy meaning export demand will drive future growth.
Incredibly though, its existing and growing infrastructure in entertainment is driving notable interest in Hollywood as the fight for digital dominance begins. The Hollywood Reporter outlines that the streaming market is estimated to reach 550 million users by 2023, just under 70% of the entire US population.
So with a high proportion of the population under 30 years of age and an advertising boom with a predicted 46% surge in ad spending during 2018-2021, we should see the world of Entertainment get an enormous boost. The expectation is that there will be more disposable income and that digital media will continue to grow both in reach and consumption
With that in mind, it’s unsurprising to learn that major players such as Disney, Netflix and Amazon all have more than a keen eye on the market and have started to create an investment portfolio that will see each of them emerge as key players in market growth. Of course, all of these businesses have access to technology but it is the investment in content and scaling with a price conscious model that will drive ultimate success.
Whilst the prize could mean taking a market share of a television and digital video market worth an expected $18 billion by 2023, the road to getting there is paved with complication. This is a market where more than 20 different languages are spoken and where education and wealth can differ significantly in large numbers.
Netflix however believe their next 100 million subscribers will come from India and one of the key reasons Disney overpaid for 21st Century Fox was their opportunity to own Star India which controls 60 TV channels and India’s leading streaming platform Hotstar. Amazon are stepping up production in local content and have a dedicated Hindi language version of their platform which they offer at shockingly low cost.
Some key numbers:
Smartphone adoption: 36% rising to 58% by 2023
Online video audience: 225m rising to 550m by 2023
Affordability will unquestionably play a key role as AVOD services such as YouTube accounts for 40% of total online video revenue. This is because the average wage is still very low meaning players coming into the market who want to charge high fees will struggle to get off the ground. SVOD pricing will need to be affordable with the knowledge that volume is the play vs a high cost high reward strategy. This means Netflix will have to somehow subsidise the cost which currently stands at $9 a month for a standard package vs Hotstar ($3 a month) and Amazon ($1.90 a month).
It will be interesting to see how this plays out alongside organic cinema growth in China which still has enormous room to grow in terms of potential screens. One thing is for sure, that whilst there may be less studios moving forward, there will be an ever growing demand for content to fill the various pipes be they mobile or video streaming platforms. This in theory will be a balance of global content that plays locally, local content that plays globally and local content that plays locally. Usually, those who win the content war, win the consumer war.