Increasing contributions from the digital segment are projected to drive approximately 8% annual revenue growth for media players, reaching around Rs 60,000 crore by fiscal 2027, according to a CRISIL Ratings analysis. This growth follows a compounded annual growth rate (CAGR) of about 5% over the past five fiscals, with revenues estimated at Rs 47,000 crore in fiscal 2024.
The analysis encompasses 20 companies representing around 55% of the media industry’s revenue, including segments like broadcasting, print, out-of-home advertising, radio, and television, all of which are expanding into digital channels such as text, audio, video, and interactive media on various platforms.
Despite slower growth of 5% between fiscals 2019-24, attributed to a shift in consumer preferences towards digital content, the increasing number of smartphone users, rising internet penetration, and the affordability of mobile data (~$0.2 per GB) are expected to catalyze a change in this trend.
Manish Gupta, Senior Director at CRISIL Ratings, noted that media companies are now focusing on over-the-top platforms, social media, and mobile apps to better leverage the digital wave. Consequently, the digital segment’s share of media players’ revenue is anticipated to rise from approximately 12% in fiscal 2024 to over 18% by fiscal 2027.
While the digital segment drives overall revenue growth, it has also posed profitability challenges due to high initial expenditures for manpower, content creation, and marketing. Competition has limited margin improvements, as consumers have numerous free content alternatives. However, targeted advertising campaigns leveraging analytics could enhance ad revenues, leading to a projected breakeven in operating profitability for the digital segment by fiscal 2027.
With continued revenue increases from traditional sources and breakeven in the digital segment, operating margins for media players are expected to improve by about 500 basis points to approximately 18% by fiscal 2027. Nevertheless, these improvements remain sensitive to fluctuations in key raw material prices, such as newsprint, which constitute 30-40% of overall costs, and could lead to volatility in profitability.
