The advertising industry is likely to grow 10-12 per cent in the next fiscal, with the digital media segment set to be the fastest growing medium, report from Fitch Group Company India Ratings and Research said.
The rating agency expects e-commerce and auto to remain the primary contributors to the industry’s ad revenue growth, and believes the 4G roll out by telecom operators shall provide a further thrust.
It added that the digital media segment is likely to remain the fastest growing medium, with around 50 per cent year-on-year growth.
The rating agency expects the vernacular print media to grow around 10-12 per cent and their circulation revenue to grow by 8-10 per cent in FY17, driven by growing circulation as well as an increase in cover prices.
For the television, it expects the third and fourth phases of digitisation to be major revenue growth drivers for broadcasters in FY17.
It added that the profitability margins of the four listed broadcasters is likely to grow in the coming financial year, as they have already incurred incremental costs for content fragmentation in FY16.
“The television distribution market would stabilise in FY17, after digitisation in the phase-III market. However, the industry needs to resolve revenue sharing and last mile addressability issues between multi-system operators (MSOs) and local cable operators (LCOs) to increase average revenue per user (ARPU), which in turn would improve the financial profile of market players,” the report said.
MSOs are yet to realise the full benefits of cable TV digitisation in India as the industry is still grappling with issues over last mile connectivity.
“We believe FY17 should see better harmony in the MSO-LCO value chain, translating to growth in subscription revenue for MSOs. Additional efforts such as targeted channel packages and HD channel roll-outs would support MSO ARPU, which has remained low and ranged from Rs 80-100 during FY16,” it said.
As the post-digitised phase-III market stabilises in FY17, direct-to-home players could gain market share from cable TV operators due to better customer service and a well-packaged bouquet of offerings, it added.