Amidst gloomy analyst and industry reports forecasting limited growth for the Indian IT services industry in FY 2016-2017, a ray of sunshine in the form of a multi-billion dollar opportunity in the global Media & Entertainment industry has emerged for Indian IT services providers to tap.
Market sizeAccording to management consulting firm Zinnov, the $1.4-trillion Media & Entertainment (M&E) industry, expected to touch $1.9 trillion by 2020, offers a total addressable market opportunity of $60 billion across eight segments, including New Media, Education, Entertainment, Gaming, Marketing & Advertising, Broadcasting, Information Services, and Publishing.
Of the $60-billion opportunity, global and Indian IT service providers are addressing $6.5 billion worth of outsourced PES (product engineering services) and IT services work, with North American companies accounting for over 60 per cent of the outsourcing market.
Indian IT firms such as HCL, Wipro and TCS currently service 42 per cent of the $6.5 billion outsourced spend in PES and IT by M&E companies; 47 per cent is serviced by global IT service providers such as IBM, Accenture and ATOS, and the rest by niche regional providers such as MPS and SPi Global.
Highlighting the opportunity for Indian IT services firms, Sidhant Rastogi, Partner & Practice Head, Zinnov said, “The current addressed market of $6.5 billion is expected to grow at a CAGR of 14-16 per cent for the next four years, by when outsourcing from the M&E industry will cross $10 billion.
“This growth is faster than the overall M&E industry, which will grow at a CAGR of 8.7 per cent to touch $92 billion by 2020; with growth led by New Media and Broadcasting segments. These include key players like Facebook, Twitter, Linkedin, Yahoo, Baidu, and Huffington Post in New Media; and Comcast, Disney Networks, Turner, BBC, Sky, and Fox Networks in Broadcasting.”
Stating that Global media companies are looking at APAC and emerging markets to drive future growth, and are working with service providers to market their products faster, Rastogi pointed out that Service Providers are building end-to-end capabilities across the media value chain by acquiring niche digital companies or partnering with start-ups.
Recently, Wipro partnered with Finland-based multi-screen solution provider Maxicaster to offer OTT video services to broadcasting and media companies; IBM acquired US-based Ustream to propel cloud-based video services across industries, and Cognizant acquired US-based digital video solutions firm Itaas to enter the cable industry.
Significance of apps“Technology and market disruption is driving robust spend on product engineering/development, IT and support services by the global M&E industry, which is good news for Indian IT service providers,” said Rastogi.
Rapid proliferation of smartphones and the Internet is changing the way users consume content. Mobile apps are seeing faster growth than web-based apps, urging M&E firms to invest in mobile-based interactive content, in Virtual Reality to deliver premium experiences to users, and also in personalised content as well as advertising.