The COVID-19 outbreak has affected India's media and entertainment sector to varying degrees. While traditional outdoor entertainment formats have been affected, digital advertising, OTT and gaming have fared better. Digital advertising spends are likely to overtake TV advertising in FY21, according to a report by KPMG.

The media and entertainment sector is expected to recover to its current levels and post a 33 per cent growth in FY22. The industry is likely to see a contraction of 20 percent in FY21. In absolute terms, the sector is expected to reach Rs 1.86 lakh crore by FY22, according to the KPMG report titled ‘A year off script: Time for resilience.’

The growth in overall revenues was driven by digital and OTT video, which registered a growth of 26 percent in FY20, albeit lower than our earlier estimates. Gaming was the fastest-growing segment with a rapid increase in consumption translating partially into monetisation, although from a lower revenue base, said the report.

“There will be a deeper integration of digital technology across the M&E value chain – from content production to distribution. Technology adoption could however face some challenges in terms of skill development and the shift to a digital-first mindset but will result in operational cost savings and potentially lower lead times over the longer term, “said Girish Menon, Partner and Head, Media and Entertainment, KPMG in India.

With the upcoming festive season, advertisement spends appear to be recovering in Q3FY21. The overall reduction in advertising expenditure therefore may turn out to be lower than the contraction in economic activity. Bharat could lead in defining digital behaviour. Rural demand has shown unexpected resilience within weeks of the lifting COVID-19 lockdown alongside an already deepening engagement with the internet for the rural digital consumer.