Digital ecosystem offers revenue earning options

Digital ecosystem offers revenue earning options

By Rajiv Kapoor | 10 September, 2017

The expansion of the Indian digital ecosystem has opened up new avenues of consumption and revenue earning options for the media and entertainment industry. The progress of the industry is based on strong economic fundamentals and a steady growth in domestic consumption, with the rural markets contributing significantly across key segments. Important contributors for the growth of the media and entertainment industry are improved advertising revenues, increased digitisation and internet usage and an informed younger population. Though India’s English print industry has been facing competition from the rise in consumption of digital content, it continues to grow on the back of demographic and socio-economic factors, rising literacy levels and improved penetration of news. On the other hand, regional and Hindi newspapers are better positioned with a share of nearly 65% of the overall ad spend and two times’ growth rate over English newspapers. About two-third of the print income comprises advertising revenue, as advertisers increasingly prefer local newspapers, as these provide better opportunities to directly connect with the readers in smaller cities. Change in demography and increase in penetration India have gone through a major demographic change, with a significant growth in the literacy level across the country. India’s literacy rate stands at 74%, with rural literacy rate at 68.9% and urban literacy rate at 84.9%. This has significantly contributed to the growth in readership of newspapers. The fact that Indian newspapers are cheaper vis-à-vis newspapers anywhere in the developed world also facilitates growth in penetration. India’s education sector is critical to the country’s billion plus population as the value of the education market is worth $100 billion and the digital or e-learning market is estimated at $2 billion. Digital education is estimated to reach $5.7 billion by 2020, as the number of internet users is estimated to reach 550 million by 2020 with an approximately 40% penetration. A digital revolution is sweeping the country as smartphones are becoming commonplace across urban and rural sectors of India and the digital medium is anticipated to bridge divide across classes and categories. Besides, the government is giving further impetus to digital consumption and payments through initiatives like Digital India and Skill India. 

HT Media is one of India’s leading media companies with prominence across print, radio and digital platforms. The company is engaged in printing and publishing of Hindustan Times, Hindustan and Mint. It operates FM radio stations under the brands Fever and Radio Nasha. The Entertainment & Digital Innovation businesses of the group include multiple web portals (hindustantimes.com, livehindustan.com, livemint.com, desimartini.com), digital entertainment and the strategic multimedia content business. Apart from various digital media platforms, the company is into other domains like education and jobs. While the company uses Studymate to impart supplementary education to Classes VIII to XII, it offers management education through Bridge School of Management. In addition, the group possesses a job portal (Shine.com), and a mobile marketing and solution provider (Digital Quotient). HT Media stock currently trades at Rs 95 on the Indian bourses with the P/E ratio of 11.75 for FY 18 earnings and EPS is seen at 8.25 for FY18 potential earnings growth respectively. With the financials of the company expected to grow rapidly over the next few years, HT Media stock can appreciate by 25% in the next one year.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

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