Three vectors have the potential to unlock media consumption, and represent true opportunity pools that serious media players would need to target in a focused manner. These focus areas have higher probability of driving break-out growth for the industry as a whole. They can also push erstwhile growth rates to signicantly higher levels than the current ones arising from secular trends that are already seen to be unfolding.

The Digitally Connected Consumer

Internet penetration in India has so far led to a signicant increase in per capita media consumption. Digital media consumption, which has been seen as a threat by traditional players is in fact additive to media consumption and not a substitute, particularly for video consumption. While there seems to be a limited reduction of television consumption attributed to digital video consumption, the total media consumption in hours has been shown to grow 50 percent with Internet access availability.

This trend holds true for consumers across any age, income, or gender. The only variable that truly determines how much online consumption is the digital-age, i.e., how much time you have spent online. Today, the prole of a digital media consumer is skewed toward the young, male population and driven by the early adoption of Internet access by this demographic.

However, since Internet access is fast penetrating across all demographic segments and as Internet availability becomes more ubiquitous, media consumption is expected to increase across all digitally connected demographic segments.

The Internet is fundamentally changing the way people consume media. Traditional forms of media consumption have been more household or family oriented – with one cable connection or newspaper subscription per household. The rapid penetration of the Internet via mobile phones has now made content consumption a democratic, individual activity.

Digital has two types of impacts – allows media companies to reach a segment of one and makes it possible to spread content faster and across a wider spectrum of audiences. Globally, we have witnessed an explosion in the volume of content created for digital consumption with the barriers of shelf space being shattered and the possibility of unlimited hours of content.

Content hours are no longer limited by bandwidth of MSOs, inches of print, or reels of lm. The volume of digital content produced annually has grown 500 percent between 2010 and 2015 and continues to display exponential growth. We believe that traditional content creation models will not prove to be sustainable options for the pace and scale of the necessary content that needs to be created for digital. Newer models of content creation as well as curation will need to evolve in order to continue the tapping of a digital user's consumption potential.

A shift from traditional content models to technology-driven models is imminent to drive speed and scale in content creation

News and publishing content providers have been at the forefront of using technology and analytics innovations across the value chain to create digital content. New age technology not only allows for faster content creation on a larger scale but also provides for a low-cost method of doing so.

The adoption of new technology in publishing has begun to change the erstwhile traditional newsroom. We see the use of bots to source stories and ag trending topics through social media chatter, as well as initial uses of algorithms to create stories for generic and repetitive topics such as sports coverage, nancial earnings coverage, etc. For example, the Los Angeles Times uses automatic data retrieval and analysis algorithms to create content based on scouring of public records databases. Automated text generation tools have also been developed and deployed.

While Indian players have not yet adopted these innovations into mainstream content creation, it is a matter of time before technology-driven content models become table stakes for the creation of digital content.

The realm of possibilities for the future is endless as technology continues to evolve. We can expect greater access to structured data in the future, thereby allowing stories to be found from large datasets. This is also expected to improve the ability of processing written language and unstructured data. The use of articial intelligence (AI) is expected to improve native language capabilities and create deeper narratives while improving the speed of news dissemination. Editing and curation processes are also set to change into an automated sourcing mode with easy compilation of complementary content.

Use of predictive algorithms is increasing and can improve content strike rates

Digital consumption of media represents a large database of consumption patterns, viewing habits, and consumer content preferences. Leveraging this data intelligently can help content creators customize new content to consumer tastes and preferences to create targeted hits and subsequent success. Validation for the efficacy of this is observed in global case studies wherein players have successfully leveraged big data and analytic capabilities to increase the hit rate of content across media sectors.

  • lNetix has reduced its cost of content per hour viewed by ~50 percent per hour streamed through identication of consumer preferences and streamlining their library of procured content.
  • lThe music industry has also attempted to leverage big data so as to predict the success rate new content, e.g., Music XRay, a company launched in 2009, boasts of an 80 percent accuracy rate in predicting the success of music. In the past, data scientists from the University of Bristol, have also developed machine learning algorithms mining the top 40 hits from over 50 years to identify features that drive success

The successful mining of big data to predict success rates of content hinges upon a deep understanding of content contexts to correctly identify and log predominant features. This deep understanding of content, coupled with data science expertise in developing machine learning algorithms, can unveil insights into what makes content successful.

Reaping the Rural Dividend

Unlike China, ~65 percent of the Indian population will continue to be centered in rural areas even in 2025. While we are a nation of many cities, media consumption in rural areas is much lower, unlike many other consumption categories. There is no homogeneous RUrban market as a consumption pattern and consumer behavior differs starkly between both markets.

Rural consumption in recent times has been growing at a faster pace than urban consumption patterns, given the realization of pent-up demand driven by increasing penetration and the willingness of rural consumers to trade-up to latest technologies such as HDTV channels and 4G mobile devices. We see two waves of consumption growth in rural – penetration and per capita consumption. With the exception of radio, media penetration in rural areas is currently 30 percent (TV) to 60 percent (Internet) lower than in urban centers and represents a signicant scope for future growth.

Apart from structural trends, such as increase in penetration of TV, smartphones, and newspapers due to rise in income and literacy, industry-led initiatives such as DTH expansion into cable-dark areas, investment in infrastructure for 3G/4G Internet, and increase in movie screens will further improve rural penetration. As smartphones and mobile data become affordable, we expect the number of connected rural consumers to increase from about 120 million in 2015 to almost 315 million in 2020, leapfrogging over 30 percent year-on-year. However, distribution solutions and right monetization models are necessary to drive media penetration at faster rates, thereby unlocking rural demand and catalyzing rural growth signicantly.

Rural per capita consumption also lags behind urban levels by ~30 percent currently and this consumption gap is observed to exist across all forms of traditional and digital media. For all consumers, however, the number of hours spent on digital media increases with experience and maturity, and rural consumers are not expected to be exceptions to the rule. As income levels and literacy increase, rural consumers show enhanced awareness and willingness to pay for the latest technologies and experiences.

India's rural growth story, driven by digital media, is expected to replicate China's growth in rural consumption as observed in the past. As penetration and content supply for digital media increased in China, smartphones replaced TVs as the preferred viewing screen. Today, China's rural consumers spend more time consuming digital media when compared to other media forms. Electricity shortages have partly been responsible for low media consumption in some pockets of rural India, historically. However, Internet connectivity, especially on mobile phones, can overcome this challenge to help catapult rural consumption to urban levels and beyond.

As players think about tapping this opportunity space, it is imperative to innovate and pivot the thinking on business models. Players must now think of how they can tap into and monetize the rural consumer and doing so would necessitate re-imagination not re-engineering. Nukkad – a chain of small-sized digital cinema halls offering affordable access to good quality movie experience – is being received well in rural areas. Such rural-focused models need to be imagined to monetize this large untapped market.

Segmented Supply Begets Demand

While digital media penetration and the tapping of rural viewership represent aspirational media consumption levels for the Indian M&E industry, a tectonic shift across the board is needed to drive up current levels to match global benchmarks. However, not all of India consumes signicantly lower volumes of media than our global counterparts. Over the years, some Indian states have typically been high-consumption pockets, while others have proven to be characteristically low. Although disparities in electricity supply can account for some of the difference in content consumption, the difference is far larger, spanning more factors.

The disparate levels of consumption prove that there are in fact, two distinct media consumption markets – one made up of high consumption states such as Andhra Pradesh, Telangana, Karnataka, Maharashtra, West Bengal, and Tamil Nadu that consume as much television content as Brazil and 90 percent that of the US. Media consumption in the rest of India is almost 40 percent lower. This is especially characteristic of urban centers and not limited to a rural phenomenon.

Consumers across high- and low-consumption centers were interviewed and we found no signicant difference in their behavioral patterns. However, the content markets and content supply varied signicantly. Each regional pocket with high levels of consumption is characterized by a large supply of niche, targeted content – be it local language entertainment, movies, music, infotainment, or youth-specic content. This is not limited only to television content consumption but includes print content in specic vernacular languages to display high growth.

This disparate pattern of media consumption leads us to ask whether the creation of micro-clusters to target content could unlock growth. Two markets that have attempted to do that in television in the recent past have seen success, i.e., West Bengal and Maharashtra. The creation of a large number of local language channels across genres like general entertainment, movies, news, kids, youth, etc., have driven the per capita consumption higher than the rest of the Hindi-speaking market. Would further bifurcation of the so-called Hindi belt' into smaller communities with targeted content create more value and drive consumption? And will advertisement revenue be suffcient to fund the creation of specic niche content?

It is the need of the hour for traditional media providers to look at better targeting of communities with niche content and monetization models to sustain growth and revenue.

Way Forward

The growth journey of the Indian M&E industry has been a long and illustrious one. From the rst movie, Raja Harishchandra, over a century ago to the rst broadcast of terrestrial TV in 1959, to today's digital-rst platforms, the industry has reinvented itself with changing consumer preferences.

The vision of growing to be a 6700-crore (USD 100 billion) industry in a decade is a bold one, but the vectors for the next wave of growth make it an aspirational one.

Ecosystem interventions to affect these changes are key to executing this vision successfully. The passage of the GST bill is likely to bring cheer to various quarters in the industry. Further, as the industry matures into the digital age, improved monetization and measurement will help in the industry gaining a fair value for the vast platform it provides, and enable it to invest in new content and talent.

To conclude, the journey has just begun, and we should brace ourselves for exciting times ahead!


 

axon

carl-zeiss

BroadcastAsia 2017

Digital version