Digital to overtake traditional media by 2021-22: EY

Consulting firm believes by that time 50% of Indian population will be owing smart phones

Digital media is likely to surpass traditional by 2021-22, when smart phone and broadband penetration increases in the country, according to EY India.

"When does digital overtake physical? When smart phone penetration becomes 50 per cent of the population, which in our case will happen in 2019-2020.

Second factor is when broadband is equal to one-third of the smart phone penetration, which in our case will happen only by 2021-22, according to our estimate. The third factor is parity between cost of the two services," EY India media and entertainment advisory leader Ashish Pherwani said.

According to market research firm e-Marketer, Indians spend about two-and-a-half hours per day on traditional media including television, radio, newspapers, and magazines, compared to the one hour they spend on digital media on average.

He pointed out that the cost of a cable pack in US is USD 80-90 a month and that of broadband is $25-30, while in India, it is the other way round, with cable costing Rs 250 and broadband at Rs 500-1000.

"That equation will change by 2020-2021. Therefore you will see a big uptick in digital and a downfall of traditional in may be 2021-22. In traditional, English (print) will get hit first because that shift is already pretty strong," he said.

With the rising vernacular print circulation, Pherwani said regional has scope to grow.

"With the penetration of digital, the upper SECs may move to digital and actually give up on print and the biggest hit will be on English (print) and the more pricey magazines but regional will still take time for that impact to happen," he said.

The country's digital sector market is projected to cross Rs 20,000 crore in the next three years from Rs 8,490 crore at present.

The industry, which was pegged at Rs 8,490 crore in 2016, includes the four key areas of digital revenues - OTT and digital advertising, video OTT subscription, music OTT subscription and gaming (in app and paid).

According to EY estimates, smart phone penetration is expected to be up to 59 per cent by 2020 from 31 per cent in 2015 and digital ad-spend is slated to be Rs 18,500 crore by 2020, constituting a larger pie of the overall media spends.

"The real uptick, where the Rs 20,000 crore becomes Rs 30,000 crore might happen between 2020 and 2022," Pherwani said.