Media & Entertainment sector takes solace from digitisation push in Budget

While the Union Budget came as a slight disappointment to the media and entertainment sector since there was no mention of benefits for Direct-To-Home (DTH) or film exhibition sector, the digital players can hope for better days given the government’s thrust on digital economy. 

The finance minister announced Rs 10,000 Crores for the ‘Bharat Net’ project to provide high speed broadband connection in 1.5 Lakh gram panchayats by the end of 2017-2018, with optical fibres already being laid across 1.55 Lakh kilometres till now. 

Siddhartha Roy, chief executive officer (CEO), said, “Focus on digital infrastructure in the current budget is extremely encouraging. Greater reach of broadband and data services into urban and rural India will lead to an inclusive digital economy, encouraging more people to embrace digital media, driving consumption and transactions across the medium. Better quality of data is also set to give an impetus to the digital entertainment industry lead by video, which is certainly poised for massive growth.”

Since digital content consumption has been on the rise, media and entertainment companies are keenly investing time and resources on digital content development and distribution. Independent players and media networks have both launched over-the-top (OTT) portals with varying degrees of success. 

Deepak Lamba, CEO, Worldwide Media says, “The budget reinforced India's huge shift towards digitisation especially with the proposed deployment of high optic cables to increase internet penetration in rural India. This is a big positive for content creators like us, as it will boost the digital content consumption across online and mobile platforms. Further impetus on digital payments and transactions will eventually help the subscription model. Also, the government's move to abolish FIPB (Foreign Investment Promotion Board) to make the inflow of FDI (foreign direct investment) smoother and to consider liberalisation of the FDI policy will have a positive impact for players across sectors in the long run.”

Sudhanshu Vats, Group CEO of Viacom18 & Chairman of Media and Entertainment Committee, Confederation of Indian Industry, says, "I am particularly enthused by the strong reforms push for digitisation and look forward to digital transactions increasing in the country. This also augurs well for digital consumption of video content. The move to cap political donations in cash at Rs 2,000 and all cash transactions at 300,000 are also much-needed, bold steps that are in line with the government’s commitment to uprooting corruption. With Swachh Bharat being close to our hearts, the budget has built further on this theme in a welcome move. I’ve said this before and will say it again: as the M&E sector we have a lot to gain from buoyance in the economy at the aggregate level and I believe this Budget has delivered on that front.”

Mobile content consumption has been leading the growth of online content consumption and with the proliferation of smartphones continuing in India, OTT companies hope to make hay while the sun shines. With increased thrust on broadband access to rural India, the content creators can now hope to reach markets which were till now comparatively media dark. While it may not make a big different in terms of subscription revenues, advertising revenues will definitely look up once rural markets start getting access to and adopting digital consumption route for content as well.

Abhesh Verma, chief operating officer, nexGTv adds, “I appreciate the clear commitment shown by the government towards fuelling the growth of digital adaptation by focusing on underlying infrastructure. This is reflected in the availability of more spectrums and 10k crore worth of budget allocation for fibre optic laying beyond the already laid 1,55,000 km. The availability of bandwidth will help Indians adapt to the digital lifestyle and thus, will help in the growth of the entire ecosystem. Additionally, the rebate in tax for people, especially the ones at the bottom of the pyramid will increase their in-hand disposable income a part which will also be spent on mobility, data, and entertainment, further working for the benefit of the OTT players."

Vats adds, “Much had been speculated about the economic slowdown post demonetization. With this budget, the government has taken important steps to boost the economy in a structured manner, building on the promise of transparent growth. Steps to liberalise the FDI regime further coupled with the abolishment of FIPB and tax reforms for MSME’s (Micro, Small and Medium Enterprises) are bound to have impact in the foreseeable future. This budget has seen some positive solutions to tackle poverty in our country including one of the highest allocation of funds to MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) and rationalisation of rate for the lower personal tax slabs.”

The industry also agreed that the roll-out of GST (goods and services tax) would be a welcome reform. Currently, sectors like cinema exhibition and DTH have to bear multiple taxing at state and central level. The roll-out of an inclusive tax will mean uniformity and some amount of relief to these sectors. 

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