Weak economy, lower consumption to dent ad spends in media: KPMG

In what can be seen as a marker of difficult days for the media and entertainment sector, a consultancy firm on Monday said weak economy and lower consumption will dent advertising spends even after the Covid-19 crisis is over.

A change in consumption habits to consume more of digital media is the silver-lining, but others like theatres and events-based segments are set to have a longer period of struggle, according to a note on the sector by KPMG.

The country is presently under a three-week lockdown due to the pandemic, which is most likely to continue longer.

Much ahead of the lockdown, a lot of key states like Maharashtra had completely stopped theatres, and fears of more waves of infection are likely to dent the sector longer even after the crisis is over.

The consultancy firm said the media and entertainment sector has grown at 11.5 per cent per year over the last five years to Rs 1.63 lakh crore as of end of FY19.

"Ad-spend pressures will linger on the back of weak economy and lower domestic consumption," the consultancy firm said in a special report on the sector, which comes amid widespread concerns on the impact of the crisis.

It added that monetisation is predominantly reliant on advertising, which has seen a major contraction and the poor performance of key advertisers in FMCG, e-commerce, automotive, financial services, real estate sectors will also have an impact.

On a segmental basis, the firm said while TV viewership has grown, it has not been accompanied by a surge in ad revenues, and also faces the increased competition from the over the top (OTT) segment from a long-term perspective.

For print media, which is the most reliant on advertising, the firm advised publishers to build strong digital products, while for film distribution, it termed it as a disaster at the box office".

OTT, along with online gaming, are emerging out to be winners in the crisis, it said.