A Seismic Shift in Media & Entertainment in India
India’s media and entertainment (M&E) sector is on the brink of a significant transformation, fuelled by the emergence of GenAI and a seismic shift in consumer content consumption patterns.
As an investor across the UK, Silicon Valley and India, and a participant in the media sector’s evolution through Pocket Aces and founding a content studio, I’ve witnessed the dynamism of this vibrant industry first-hand.
The first part of our exploration covers the evolving landscape, market sizing, and sector-specific insights that define the current state and future prospects of India’s M&E sector.
Market Sizing and Future Projections
Projected to grow at a CAGR of 10–12%, India’s M&E industry is expected to reach a valuation of $30–35 billion by 2025. This remarkable growth trajectory is supported by widespread digital adoption and the proliferation of internet connectivity nationwide. The OTT market in India, for instance, is poised to exceed $5 billion by 2027, thanks to a surge in digital infrastructure development and an impressive smartphone user base that currently exceeds 700 million.
Sector-Specific Dynamics
Interestingly, market dynamics vary greatly when you segment the market by format:
Video Streaming: Both TV and OTT are facing challenges when it comes to monetisation given changing consumer preferences and strong competition, despite heavy investment. These platforms are leveraging cricket broadcasting rights and localized content to compete aggressively with global counterparts like Netflix and Amazon Prime Video. But the merger of TakaTak with Moj and alliances such as Zee-Sony and Reliance-Disney India are indicative of a wave of consolation in the industry.While the market for short-form video platforms is projected to grow significantly in India, presenting an $8–12 billion opportunity by 2030, driven by increased internet access, affordable smartphones, and the popularity of user-generated content on these platforms- and the ban of Tik Tok- Youtube Shorts and Instagram Reels remain the clear winners, despite earnest competition from homegrown solutions such as Chingari.
Audio Streaming: On the other hand, the audio segment is gaining increasing investor interest. Over the past three years, the audio OTT industry has witnessed a surge of ~1.6X in daily streams to reach 460 Mn in 2023. Although the audio streaming sector is represented by giants like Spotify and Gaana, startups such as PocketFM and KukuFm are scaling rapidly, both in India and abroad. The untapped potential in podcasts and localized music content suggests new avenues for revenue through advertising and premium subscriptions. Models like microtransactions in gaming, pay-per-view for premium content, and patronage systems for artists and creators could also offer new revenue streams.
Gaming: This is the most exciting sector. Estimated to reach over $7 billion by 20235, the gaming sector in India is witnessing rapid growth, giving rise to innovative infrastructure and distribution plays in mobile gaming. Behemoth real-money gaming platforms like Dream11 are facing regulatory challenges, making room for new formats. Relatively simple games such as as “Battlegrounds Mobile India,” “Ludo King,” “Candy Crush Saga,” and “Carrom Pool: Disc Game.” capture the market, even as studios mushroom to cater to a wider range of gaming preferences, from mid-core and casual games to sports simulations. GenAI is set to transform the industry, by making games more real and immersive than ever before.
Innovation Highlights
A few emerging trends worth calling out are:
Digital Transformation of Giants: Reliance Jio’s pivot towards digital through JioTV and JioCinema and the myriad of acquisitions it has made, even as older industry giants consolidate, to build and leverage its extensive content libraries underscores the traditional media conglomerates’ response to the digital era- and that digital is here to stay.
Vernacular Content: Pratilipi’s success in promoting vernacular and niche content illustrates the potential of digital platforms in forging strong connections between writers and readers across India and building creator communities. There is scope to explore licensing and building IP across formats and geographies, as unlikely creators are brought to the fore.
E-sports: Although regulatory challenges persist, the rising popularity of e-sports platforms such as MPL not only showcases the sector’s growth potential but also its capacity for innovation, blending competitive gaming with digital entertainment.
GenAI breakthroughs: While it’s still early,GenAI is set to transform content creation, distribution and monetisation, by enabling the production of highly personalized and engaging content at scale. This leap forward in technology is democratizing media production, allowing even startups to innovate in content personalization and user engagement.
Concluding Thoughts
India’s M&E sector presents a fertile ground for venture capital, characterized by an increasing demand and willingness to pay for more vernacular, personalized and on-demand content. The journey ahead, while filled with challenges, offers substantial rewards for those prepared to leverage emerging technologies and understand local consumer behaviors.
Check out part 2 of this series for a deep-dive into how GenAI will reshape this sector.
