Cinemas are set to finally reopen on October 15 at 50 per cent capacity, but the film exhibition sector, among the worst hit by the pandemic, is still looking at a tough 2021, as per the latest KPMG report on the media and entertainment (M&E) sector, examining its performance during the lockdown. Titled ‘A year off script: Time for resilience’, the report states that the industry will be cutting down its production costs. Many actors are said to already have taken pay cuts to ensure that projects are not stalled. As production houses opt for direct-to-digital releases, cinemas will prefer to accommodate mid-to big-budget films, well aware that they are more likely to be seat fillers as opposed to small budget fare which are more likely to get more eyeballs and recover costs on a streaming platform.

Apart from films, events and traditional media (which includes print and radio) were the worst affected. Television, though, is on the road to recovery after nearly four months of stagnation. The IPL has ensured a spike in viewership, ad revenues picked up in July and August and are now back to pre-Covid levels. With Bigg Boss, which began airing on October 3, viewership is likely to increase, albeit the small screen industry, too, has seen its budgets slashed by channels.

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With people stuck indoors, the biggest gainers have been OTT (26 per cent) and gaming (45 per cent and the fastest growing) as more people across India embraced the internet, resulting in what is noted as “habit formation”. Girish Menon, partner and head, media and entertainment, KPMG, says that the reach of streaming video content will go beyond metros and tier II cities to tier III and below, reaching rural India. It explains why digital advertising spends has seen a rise (24 per cent), with KPMG estimating that, for the first time, the segment’s ad revenues will overtake those of TV by 2021. One of the key developments this year was a revision in a KPMG projection—India will have a billion internet users by 2028 instead of 2030. It ensures that digital will continue its dominance and challenge out-of-home entertainment option even more so.

The coming year, though, for the M&E sector, will be another year of red with contraction to the effect of 20 per cent, predicts KPMG. But Menon still believes that OTT and cinema will continue to coexist even though the former has gained momentum. If the pandemic were to slow down or a vaccine or a swift, effective treatment were to emerge, it will be a rosier scene for the sector with a projected growth of 33.1 per cent to reach the Rs 1.86 trillion mark. The question though is, how many cinemas, studio and production houses will survive the disruption caused by Covid to make it to 2022?

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