India Digital Media Landscape: a first-cut

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We have been witness to the huge explosion in mobile and broadband data consumption in India. There are different entities participating in this digital media ecosystem - from Content Creators, Content Aggregators, Multi Channel Networks (MCN), Over-the-Top (OTT) and Video Platforms, Media buyers & planners, Advertisers, and more.

Apart from Shemaroo, Balaji Telefilms there aren’t too many listed opportunities that benefit from this space. Recently Silly Monks listed on NSE emerge. DRHP. The opportunity being huge, there should be more value creation opportunities down the line. At the same time, I felt we do not understand this space well enough to do justice to even the listed opportunities - motivation for this exercise.

Leaving aside the well known Bollywood/Movies Content Creators and Aggregators, here’s a starting list of new players in the digital eco-system. We will cover each category in separate sections (if needed) later in this Industry mapping exercise.

A. Content Creators - (primarily videos/web series) - Alt Balaji, TVF, AIB, Scoop Whoop, Arre - apart from Alt Balaji which started a OTT subscription service, most others came into prominence through YouTube/Monetisation

B. Multi Channel Networks (MCN) - (primarily Aggregators on YouTube) - Culture Machine, Nirvana Digital, Ping, Qyuki, Fame, One Digital, Whacked Out Media, Silly Monks. The first 4 have 80-100 Mn views per month and have taken the PE funding route between ~$10-20 Mn. Silly Monks recently listed on NSE Emerge. (Disney had acquired MCN Maker Studios in 2014 for $675 Mn (380 Mn subs, $5.5 Bn monthly views) that has seen troubled times

C. Subscription driven Video OTT Platforms (SVOD) - Amazon Prime, Netflix, Hooq, Sun Nxt, Alt Balaji

D. Fremium/Advertising driven Video OTT Platforms (AVOD) - Voot, OZee, YouTube, HotStar, Sony Liv, Viu, Ditto TV, Silly Monks

To understand value creation opportunities in the industry, think we need to understand how these players make money. A quick glance would tell us that although a few (with deep pockets) have chosen subscription driven models, most owe their existence and survive on advertisement driven models. While we all know digital consumption has forged ahead by leaps and bounds in 2017, digital advertising though growing at a fast pace, has not kept pace with this consumption explosion.

Some answers we are looking for, to get an initial grip on the Digital Advertising Industry:

  1. Total Advertising Market Size in India?
  2. Advertising Spends on different Media - TV, Print, Digital, Radio?
  3. Which Sectors are the bigger spenders on Digital Media?
  4. What kind of Advertising strategies are being used by them? Push vs Pull?
  5. For digital advertising to grow rapidly, 3rd party measurement metrics will be essential. What kind of Measurement Metrics are initiated for Digital Advertising? Is BARC Ekam going to be the standard?
  6. In this era of rapid technological changes, how is the Advertising Industry likely to grow? If Digital Media share has to grow, it has take away some share from both TV and Print? How big or small is that change?
  7. Digital Media spend in different formats - Search, Social, Video, Display?
  8. Since most of search and social media spends are NOT shared with content publishers/owners, what is the Addressable Digital Media spend, really?
  9. What are the growth trends for Digital Media spends in future - Search, Social, Video, Display? Is display spend going to drastically go down like in Global trends? Will Video spend grow very fast?
  10. What is the share of Digital spend between Mobiles and Desktops today? Since India data growth is being propelled hugely by Mobiles, how much of a share is Mobile likely to take away in future?
  11. How stable is YouTube Monetisation rates? Are there other issues? YouTube Monetisation (55% to content publisher) rates have fallen from $150 for 1 Lakh views (in India) to $100, to $22 after some major brands pulled out of YouTube (on brand ads getting served alongside objectionable content) and also demonetisation effect. Another major brand pullout in Nov 2017 It has since recovered to $33. YouTube undertook major content clean-up exercise and recently introduced changes to Monetisation Eligibility criteria
  12. Now that Facebook Watch (launched in US) is being beta-tested in India (reportedly offering similar 55% share like YouTube to subscribed Content Publishers), how does that change the dynamics? Does it expand the market or more likely take away share from YouTube? How does it affect existing publishers dependent heavily on YouTube monetisation? How does it affect OTT players?
  13. Regional Content prominence versus Hindi Content?
  14. Direct Channels versus Programmatic Advertising share - buying on real-time bidding basis which allows brands to buy and sell inventory on per impression basis in real-time, target more effectively and improve RoI? What’s the Programmatic Advertising uptake in India?
  15. Digital ad Networks and Ad Exchanges becoming the norm in 5 years?
  16. Flipkart like Commerce Advertising? Reportedly 500 Advertisers have created at least 1 campaign in 2016 on Flipkart. Flipkart Advertisements how they fared in 2016

It makes sense therefore to start with a look at the digital advertising landscape first, before moving on to identifying the issues, challenges and opportunities facing the industry players. With help from VP Community media specialists (please put your hands up) – we aim to refine this progressively, and get a better grip on the myriad moving parts. (Please help correct mistakes).

References:

While there are several reports referenced above which provide more or less similar data points, I found the Dentsu Aegis network -Exchange4Media report most useful. Please bear with me for presenting next the visual charts to draw attention to the most relevant data-points for our exercise. Felt this is the quickest way to bring everyone on the same page (instead of writing voluminous text :slight_smile: )

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India Digital Advertising Market - in 10 Slides :slight_smile:
(Please bear with me - brings everyone on same page quickly, and helps prompt more questions)

1. India Advertising Market

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2. Advertising Spend on different media
If Digital advertising share is 12%, how far behind is it behind traditional TV and Print?

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3. Advertising Industry Verticals and Media Share
Who are the bigger spenders on Digital Media?

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That was todays picture. What are the projections for the future, in a rapidly changing environment? If Digital Media share has to grow, it has take away some share from both TV and Print? How big a change is that?

4. Advertising Industry India - Forecast

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5. Advertising Spend on Different Media - Forecast

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  1. Digital Advertising spend share - Search, Social, Display, Video

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  1. Digital Advertising spend share - Industry Vertical

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  2. Digital Advertising Industry Vertical spend share - Display, Search, Social, Video

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  1. Growth Trends for Digital Advertising - Search, Social, Display, Video

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  1. Digital Advertising Share Mobile/Desktop - Forecast

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MCNs play a critical role in helping content creators monetise.
Here’s a decent overview about Top MCNs in India

Here’s another that provides a 360 degree perspective on MCNs in India - how they operate, issues, controversies, viewpoints from different stakeholders.

Some trivia on regional MCNs. Only 2 out of top 10 MCNs in India focus on Regional Content. Most are focusing on Hindi/English. Silly Monks and Whacked out Media focus on Telegu/Tamil/Malyalam/Kannada content. Telegu content forms the bulk

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Excellent stuff Donald, as usual. What I find most interesting is Chart 9, which depict share of various sub-segment in Digital advertisement. I could not understand how with share of video in toal advertisement going up form 18% in 2016 to 20% in 2020, but still having lower share what is visual in area.
Even ignoring that, what factor would drive demand in digital advertisement and also why?
Second point which although not directly linked, nevertheless most influential on Digital advertisement growth is development in technology and speed of broadband. In late 1990s, digital advertisement started with search engine, moving to video, social media (not sure where bulk SMS /email be part of)
I am enclosing one report on Cisco about likely net/boradband consumption growth. Probably that would improve our undstanding on the subject.

I also came across another report on Digital advertisement. I compare the figure of Total advertisement and digital advertisement share in toal advertisement, just to understand range. I find range between both report within 5-10% range which give comfort to apply undetstanding from IMRB report with Dentsu report. What i find most interesting is growth of past 4 years in various subsegment of digitial advertisement which show highest growth in Video and Mobile subsegment in Ditial Advertisement

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Find enclosed link for IMRB Report
http://www.mxmindia.com/wp-content/uploads/2017/08/Digital-Advertising-Report-2016-Final.pdf

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Hi Sirs, should we include optic fibre cable manufacturers in the study of beneficiaries of data consumption boom or would that be a separate discussion?

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Found very useful link with regard to Video service-Netflix.

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Thanks @Donald for starting this thread. Building media industry landscape is a challenging task because of so many components to it & kudos to your effort in trying to build it & take us along. I will take more time to come to your level of understanding.

Following are some of my notes, in no particular order -

MEDIA INDUSTRY

  • Terms: MSO (Multiple System Operator), LCO (Local Cable Operator), ARPU (Average Revenue Per User), MVAS (Mobile Video Added Services), General Entertainment Channel (GEC)
  • Media industry can be divided into four parts - TV, Films, Digital/New Media, Music

CONTENT - CONTENT CREATORS - CONTENT AGGREGATORS

  • For TV industry, the revenue contribution is as follows - Hindi GEC (30%), Hindi Movies (12%), Regional GEC (20%). So it may be possible that GEC contributes more than movies & regional movies are also contribute pretty significant amount. So it is important to keep this mind when looking at content aggregators. e.g. Shemaroo does not have a lot of GEC content. It would be interesting to map out GEC content.

  • There might still be room for content aggregators as indemnification remains an important parameter in content acquisition. Big players do not want to deal with several small players with 1-2-3 movies/series & prefer to go through aggregators. Audio aggregation is more thriving industry than the rest.

  • The budget per episode provided by channels is more for Hindi channels vs. regional entertainment channel (or channels in north vs. regional channels) - difference of 7-8x. The rates for 1-2 flagship products are much higher than above average rates. Some channels follow commission based model & other channels follow buying & selling of airtime model. There is a feedback loop from channel to content creators that is used in development of characters & story-line.

  • There is still room for nostalgia based play in content as producing/acquiring new content has become more and more expensive & there is still demand for older content.

  • Ease of access defines whether the content will be paid for or pirated. If one has to do multi-level search for torrents, links etc., the probability that one might be willing to pay for that content goes up.

  • Generation Gap Gems: Disney does a very good job of content re-purposing. For any new content, Disney generally does not do follow on content for few years after first release. When the next generation (of kids) comes along (after ~7 years), they come out with re-purposed content.

  • Why a lof of Hindi movie channels are showing dubbed south Indian movies? - It is primarily because of cost. A dubbed south Indian movie costs ~2Cr vs. ~10Cr. for Hindi movie.

NETFLIX - AMAZON - JIO - YOUTUBE

  • The global content acquisition budget of Netflix stands at 8bn$ and than of Amazon stands at 6bn$. Amazon has budget of 2000Cr for content in Indian market.
  • Currently, Amazon seems to be more aggressive in gathering content whereas Netflix is more selective.
  • For any “Netflix Original” series, IP gets transferred to Netflix.
  • For most of the content creators, small/big alike - there is very little bargaining power with these two players. Both of these players are learning how to arrive at budget/cost for various content.
  • YouTube might add support for ads in regional language in future. Would that lead to value unlocking/appreciation of local language content?

MISCELLANEOUS

  • Merchandising market is in nascent stages in India. For merchandising to work, there has to be series format for content & constant connection with audience (like Marvel etc.). Baahubali seems potential candidate for merchandising if they can come up with more content about lives of Sivagami/Prabhas/Avantika/Devasena/Bhallaldev etc.

  • BARC seems to better metric than TRP as BARC brought the rural eyeballs into the play.

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A nanocap to watch out for Silly Monks.Scuttlebutt invited from VP members

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@rupeshtatiya Excellent work.

Just couple of points, Media would also involve, Print/Outdoor (Hoardings)/Cinema and Radio as sub-category in addition to what you have suggested.
Secondly, on repeat telecast of dubbed movie, I believe that once content is purchased for telecast, it can be retelecasted infinite run without any additional cost. So original cost of 5X for Hindi movie might be real issue, but after acquisition, there is no additional cost to repeat telecast that movie. What I have observed that increasingly Hindi audience is finding novelty value in south based movies due to which on many weekend prime-time also we find south dubbed movie broadcasted on Hindi movie channel.

@Donald On Digital adverisement some more thoughts:
One major chellange is to figure out the next trend in digital advertisement. In late ninties, it was search advertisement which was led by Yahoo, replaced in search(display) Google, subsequently, same player moved it to Video content (with emergerence of 3G in Developed world in early 2000), now chellanged by Social media. We do not know with emergence of 5G/6G what who would be new winner. Youtube dominence in Digital media is already facing resistance from large players (in pretext of inappropriate content being shown and many brands withdrawing from YouTube). Whether same is going to assist Facebook/Twitters? I have very limited understanding and technical expertise to answer same.

Further, there is another unknown unknown named Chinese technical leaders named Alibaba/Baidu/Tangent. Like Google destroyed Yahoo, they may emerge as major threat to US dominance in global technical landscap. I am streching thread too long but that may be real issue.


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This is THE point to try and get a better handle on.

  1. YouTube monetisation rates currently are reportedly 1/3rd of what it was 1.5 to 2 years back. That has queered the pitch. So when we see ~30-40% growth in digital media revenue across industry, it should be seen in the backdrop of viewership doubling (tripling?) over last 1 years - a blessing in disguise? Our original premise of New Media growth was right, but I was clueless about the risk on monetisation rates. That’s a good learning :slight_smile:

  2. Facebook Video Monetisation (beta-tested in 2017, probable launch in 2018) is probably going to take away some share of the available digital advertising budget away from YouTube, isn’t it?

  3. The mitigating factor would be that digital advertising revenues are growing at 40% rates - better targeting, better cost-efficiency. This has been in the absence of any reliable 3rd party metrics being available. So, I would venture to say share of digital advertising in a brands overall ad budget is set to increase faster, as reliable Metrics become available from BARC Ekam?

  4. As far as Tencent, Alibaba dominance, I am not so sure. Advertising is local market driven - depending on the reach/effectiveness. Google and Facebook dominate in India. As the reports indicate, Social will probably become the dominant share ~30% in India (which is facebook, and primarily non-shared revenue with content publishers), while Search share as we are seeing is probably going down. Despite Video monetisation adshare being projected at 20% in 3-4 years, I have a feeling that is slated to be much higher if Facebook Watch (and its shared video monetisation) takes off in India.

We need to meet media buyers/planners advertisers to understand monetisation better and how fast monetisation may catch up (or not) with viewership growth.

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Thanks Roopesh for your Notes. It rounds up a few things missed giving attention to e.g Content Creators. There is huge activity happening on the ground here as Amazon and Netflix have gone around selecting partners for original content creation. Many are getting big budgets too $5m- $10 Mn. Enormous value-creation opportunities exist here - for those who make a success of it.

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Regional Content has rapidly gained ground.

The video platform claims the growth of regional viewership has tripled over the past two years, helping to make content creation in languages ranging from Haryanvi to Tamil and Telugu a profitable business.

“Apart from Hindi, Telugu, Tamil, Kannada and Malayalam are seeing massive growth in watch time, with other languages including Haryanvi, Marathi, Bengali and others following closely behind,“ Satya Raghavan, head of entertainment at YouTube India, told ET.

Interestingly it seems only 2 out of top 10 MCNs in India focus on Regional Content. Silly Monks and Whacked out Media focus on Telegu/Tamil/Malyalam/Kannada content. Telegu content forms the bulk

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https://twitter.com/SanjayReddySR

A beautiful attempt to understand Indian Digital Media Landscape. @SillyMonks @Shobu_ @ssk1122

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Sanjay Reddy MD of Silly Monks appreciates and tweets this thread of VP.

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Thanks for pointing this out. Yes these are beneficiaries too. However, they are not part of the digital media value chain - they are not a moving part here that directly affects other parts. Hence not included.

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@Donald sir, what are your views on Silly Monks Entertainment Limited as they are in all verticals of digital media.

From AY 2016-17@silly monks

Silly Monks Entertainment Limited (Formerly Known as Silly Monks Entertainment Private Limited) FY
2016-17 is Limited Company engaged in digital marketing solutions to businesses, agencies and online
publishers. The Company connects Advertisers with their Audience across any form of Digital Media,
using its massive local presence to deliver appropriate messages to the right audience, through the
most relevant Digital channels

I. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY (All the business activities contributing 10 % or more of the total turnover of the company shall be stated):

  1. Motion picture, video and television programme company
    production, sound recording and music publishing
    activities (Publishing, Digital & Social Media)

Page no. 16 of AR 2016-17

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Noted Sir @Donald. Do let me know if I can be of any assistance in analysis of opportunities like Aksh. The Bharat Net allocation under the budget coupled with rural consumption should augur well.

One elementary doubt - since most digital media companies would have to pay hefty tax to the gate keeper (Youtube) does it diminish the possibility of anyone player making super normal profits ?

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I feel the content in Yupptv originals, Sheryas media, Wirally (competitors) is better quality wise and is more followed than silly monks esp., yupptv. But this also can be an opportunity for ‘silly shots’ if they can find good content.

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In an interview, one of the popular Telugu youtube channel owner who is also affiliated with an MCN called “Mango videos” said that Youtube revenue per view has been reduced drastically recently.