YOJANA May 2025

Industry Size and Growth Projections

• Projected to grow at 10% CAGR, reaching Rs. 3.08 trillion by 2026 (from Rs. 2.55 trillion in 2024).
• Traditional media (TV, print, radio, etc.) contributed 57% of 2023 revenues; print media expected to grow 8–10% in FY25 (ICRA).
• Video market (TV + digital): Forecasted to grow from US$ 13 billion (2023) to US$ 17 billion by 2028 (Media Partners Asia).

Key Segments and Digital Surge

• Advertising: Projected at Rs. 330 billion in 2024, with TV and digital ads each contributing 38%. India ranks 8th globally in ad spend and is the fastest-growing among the top 10 markets.
• OTT & Video Streaming: Growing at a CAGR of 14.1%, the segment is expected to reach Rs. 21,032 crore by 2026. India had 481.1 million users in 2023, including 138.2 million paid subscribers and 130.2 million SVOD accounts (2022). Revenues from international users on Indian OTT platforms surged by 194% over two years.

• AVGC Sector (Animation, VFX, Gaming, Comics): Expected to grow at ~9% CAGR, reaching Rs. 3 lakh crore by 2024. Animation and VFX alone are projected to grow from US$ 1.3 billion (2023) to US$ 2.2 billion (2026) (CII GT report), increasing their share in the M&E industry from 5% to 6%.
• Online Gaming: The 4th largest M&E segment, India’s online gaming market is projected to reach US$ 7 billion by 2025. The country had 455 million gamers in 2023, expected to rise to 491 million in 2024, with 90 million paying users. Revenue stood at US$ 3.8 billion in FY24, marking a 23% YoY growth. Mobile gaming time increased by 20% in Q1 FY24.

Other Notable Segments

• Digital Media: Projected to generate US$ 10.07 billion in revenue in 2024.
• Smart TVs & Short-form Videos: India is expected to have 40–50 million connected smart TVs by 2025. Around 600–650 million users are consuming short videos with an average daily viewing time of 55–60 minutes.
• Music Streaming: Set to grow from US$ 180 million (2019) to US$ 445 million (2026). India had 185 million listeners in 2023, but only 7.5 million were paid subscribers. Major platforms include Gaana (30%), Spotify (26%), JioSaavn (24%), and Wynk (15%).
• DTH Services: Estimated to grow from US$ 6.48 billion (2023) to US$ 7.59 billion (2029), at a CAGR of 2.8%.

Investments & Developments

• FDI Inflows: Totalled Rs. 99,096 crore in the Information & Broadcasting sector from April 2000 to September 2024.
• Private Equity/Venture Capital Investments: Declined by 84% YoY to US$ 575 million in 2023. Q3 CY23 recorded 8 deals worth US$ 269 million.

Government Initiatives

The Government of India has taken several regulatory and institutional steps to support the structured and ethical growth of the Media & Entertainment (M&E) industry:

• FM and Radio Expansion: Prime Minister commissioned 100W FM transmitters at 91 locations (April 2023). AIR’s reach extended to 615 transmitters, covering 73.5% of the population.
• International Promotion: India showcased its AVGC capabilities at the Annecy International Animation Festival in France (June 2023).
• Regulatory Reforms:
• TRAI is seeking to fast-track its recommendations to the Ministry of Information and Broadcasting (MIB) to catalyze broadcasting sector reforms.
• The Cable Television Network (Amendment) Rules, 2021 introduced a three-tier grievance redressal mechanism for citizens concerning TV content.
• The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, notified on February 25, 2021, established a progressive regulatory structure for digital media, covering news publishers and OTT platforms through a three-layer grievance redressal system.
• Institutional Developments:
• The government is working to establish a National Centre of Excellence for Animation, Visual Effects, Gaming, and Comics (AVGC) in Mumbai. This announcement was reiterated in November 2021.
• The Indian Broadcasting Foundation (IBF) expanded its mandate in May 2021 to include digital and OTT platforms, renaming itself as the Indian Broadcasting and Digital Foundation (IBDF). IBDF is also tasked with setting up a Self-Regulatory Body (SRB) under the 2021 IT Rules.
• International Cooperation:
• India and Canada signed an audio-visual co-production agreement, allowing producers in both nations to collaborate on creative content and cultural exchange.
• Prasar Bharati and PSM Maldives signed a cooperation agreement in February 2021 for capacity building in broadcasting.
• Support for OTT and Digital Platforms:
• OTT platforms such as Netflix, Amazon Prime Video, Disney+ Hotstar, ZEE5, and Voot have endorsed a self-regulation code finalized in February 2021 by the Digital Entertainment Committee of IAMAI, laying the foundation for responsible content creation.
• Content Oversight Expansion:
• In November 2020, OTT platforms, films, web series, news, and current affairs on digital platforms were brought under the purview of the Ministry of Information and Broadcasting.
• Ease of Filming:
• The Film Facilitation Office (FFO) under NFDC, in partnership with the Ministry of Railways, launched a single-window clearance system to simplify permission procedures for filming at railway locations.

Road Ahead

India’s M&E sector is on a trajectory of high growth—expected to outpace the global average, driven by key structural and technological shifts:

• Digital Adoption: The roll-out of 5G and upcoming 6G planning, especially in rural regions, is poised to revolutionize content consumption, opening new markets for advertisers and content creators.
• Retail and E-Commerce Advertising: The entry of new players in food & beverage, increased e-commerce usage, and exploratory campaigns by domestic firms are likely to fuel growth in retail advertisements.
• Rural Expansion: As urban markets saturate, rural India is emerging as the next frontier for M&E growth, supported by rising incomes, internet penetration, and digital literacy.

Creative Economy (Orange Economy)

The creative economy is a knowledge-intensive sector encompassing industries that involve the creation, production, and distribution of creative goods and services. These include:

• Advertising, architecture, design, and fashion
• Performing arts, visual arts, and literature
• Film, music, publishing, and photography
• Software, R&D, and digital content

India’s Media and Entertainment Sector

• India has the 5th largest M&E industry globally (after the US).
• Projected to grow to USD 44.2 billion by 2028
• A key pillar of India’s soft power and digital economy, contributing significantly to employment, exports, and innovation.

Sector Overview and Growth Potential

• India currently houses over 4,000 AVGC studios, mainly concentrated in Mumbai, Bengaluru, Pune, Hyderabad, and Chennai, while smaller towns are also witnessing increased studio activity.
• With a foundation rooted in India’s rich cultural heritage, diverse art forms, and skilled artists, the sector is increasingly being recognized for its potential in value creation and employment generation.
• The industry, growing at an annual pace of 25–35% in some segments, currently employs 2.6 lakh professionals and is expected to create 23 lakh direct jobs by 2032.
• Revenue is projected to grow from the current USD 3 billion to over USD 26 billion by 2030. Although India’s current contribution to the global AVGC-XR market is just 0.5%, government estimates suggest that it can capture up to 5% (USD 40 billion) by 2025, creating 1,60,000 new jobs annually.
• Key job roles likely to emerge include content developers, animators, pre- and post-production artists, pre-visualization artists, compositors, and more.

Challenges in the AVGC-XR Sector

• Lack of Authentic Data: The absence of reliable data on employment numbers, industry size, and educational institutions makes policy planning and investment decisions difficult.
• Skill Gap in Education and Employment: The sector demands a highly specialized workforce (animators, developers, designers, product managers, localization experts), but the current academic curriculum lacks alignment with industry requirements, leading to a shortage of skilled professionals.
• Infrastructure Constraints: Inadequate training infrastructure results in poor-quality instruction and substandard workforce output, negatively impacting the industry’s productivity and growth.
• Limited Focus on R&D: There’s a deficiency in dedicated research narratives, resulting in low innovation and a lack of academic inquiry into future trends in AVGC-XR technologies.
• No Apex Academic Institution: Unlike sectors such as engineering or design that have IITs and NIDs, AVGC lacks a national-level institution to guide academic excellence, innovation, and skill standardization.
• Funding Limitations: With no dedicated fund for promoting AVGC-XR, startups and innovators struggle with access to capital, slowing domestic production and technological innovation.
• Weak Indigenous IP Creation: Most of India’s AVGC output is outsourced foreign work; there’s a lack of globally recognized Indian intellectual property (IP). To compete globally, local content creation must be incentivized through tax benefits and other concessions.

Government Interventions

• Educational Integration under NEP 2020: The National Education Policy (NEP) 2020 integrates creative arts and design into curricula from Class 6 onwards, promoting early exposure to AVGC-XR skills. Already, around 5,000 schools (CBSE + state boards) have introduced AVGC-XR learning, with national rollout underway to make animation a family-friendly, mainstream medium.
• Policy Framework and Task Force: The 2022–23 Union Budget announced an AVGC Promotion Task Force to recommend measures for strengthening domestic capacity and global positioning. Several states—Karnataka, Maharashtra, and Telangana—have implemented proactive state-specific policies, often in collaboration with industry bodies like FICCI, ABAI, and SAIK to drive tailored growth.

Way Forward

• Skilling and Education Reform: Continued emphasis on skill development programs, both formal (schools and colleges) and informal (vocational training), is essential. Courses must be tailored to actual industry requirements, preparing a job-ready workforce.
• Academic-Industry Collaboration: Stronger partnerships between educational institutions and industry players are crucial to align the curriculum with real-world needs. Initiatives such as guest lectures, internships, and industry-backed projects can bridge this gap.
• Promotion of Local IPs: India must incentivize domestic content production and support creation of globally relevant Indian stories to strengthen the country’s soft power.
• Establishment of a National AVGC Institute: A dedicated national institute akin to IITs or NIDs should be established to promote research, innovation, training, and incubation of startups in the AVGC-XR domain.
• Dedicated AVGC Funding Mechanism: Government and private sector must collaborate to launch a dedicated AVGC fund that supports startups, R&D, IP development, and infrastructure enhancement through low-interest loans and grants.

Conclusion

India’s AVGC-XR sector represents a confluence of digital innovation, cultural expression, and economic opportunity. By addressing foundational challenges through policy reforms, education overhaul, funding, and IP support, India can emerge as a global leader in AVGC content creation, generating employment, exports, and cultural capital in the digital economy.

Market Dynamics and Growth Drivers

India’s M&E sector benefits from extensive digital penetration — with 971 million internet users and 690 million smartphone users — leading to widespread content creation and consumption. Entertainment has become the fifth-largest category in monthly per capita consumption, especially among the 377 million Gen-Z, who contribute 48% of India’s Out-of-Home (OOH) entertainment spending. India is:

• The second-largest mobile gaming market (by downloads).
• Host to the second-largest anime fanbase.
• The third-largest video market globally.

In 2024, new media and OOH entertainment contributed 41% and 14%, respectively, to industry revenues — underscoring their pivotal role.

FDI Landscape and Investment Scope

FDI limits range between 26% and 100%, depending on content/activity:

• 100% FDI is allowed in segments like films, gaming, animation, VFX, and advertising.
• Since 2000, the sector has attracted USD 11.5 billion in cumulative FDI, primarily in film, print, and radio.
• The new media segment alone generated Rs 876 billion in M&A deal value in 2024.

Gaming and Esports Boom

India’s gaming market:

• Valued at USD 2–3 billion in 2024, expected to reach USD 9.2 billion by FY29 at a 20% CAGR.
• 23 million new gamers were added in FY24, bringing the total base to 590 million.
• Average Revenue Per Paying User (ARPPU) rose from USD 8 in FY20 to $22 in FY24, projected to reach USD 4.3 billion from IAPs by FY29.

VC/PE Investment Trends:

• $1 billion infused in 2024, a 25% YoY increase.
• Around 50 VC funds, including Sequoia, Accel, and Tiger Global, have invested in Indian gaming startups.
• Mobile gaming accounted for 60% of investments; esports & real-money gaming: 30%, gaming tech: 10%.

Global Partnerships:

• Major players like Sony (India Hero Project) and Krafton (India Gaming Incubator) have launched programmes to support Indian developers.
• Imports of gaming consoles/machines doubled to USD 75.15 million in FY24 from USD 37.64 million in FY23.
• Gaming arcades now account for 48% of all indoor amusement centers (IACs) in India.

Esports Investment Potential

India’s esports market:

• Expected to grow from USD 40 million in 2023 to $100 million by 2025.
• Hosts 1.8 million players and 20 professional teams participating in global events like the Commonwealth Esports Championship and Hangzhou Asian Games.

Infrastructure Opportunities:

• High scope for investments in athlete training, LAN gaming centers, esports cafés, and arenas.
• State governments (e.g., MP, TN, Kerala, UP, Bihar, Nagaland, Meghalaya) are investing in soft and hard infrastructure to develop local esports ecosystems.
• Firms like Krafton and Nodwin are organizing grassroots tournaments, nurturing talent.

Animation & VFX: Emerging Creative Powerhouse

The Animation & VFX sector stood at USD 1.2 billion in 2024. Two major trends:

• Rise in anime consumption in India — the 2nd largest anime fanbase globally after China.
• Entry of global players like Crunchyroll.
• New opportunities in IP-related content, merchandising, and immersive experiences
• Rising domestic demand for VFX in Indian cinema and advertising:
• 30% of big-budget Indian film budgets now allocated to VFX.
• Mid-budget films spend ~15% on VFX.
• Studios like DNEG, Prime Focus, and Prana Studios are working on global projects, including Hollywood.

Infrastructure and AVGC Policy Push

The sector demands world-class infrastructure to attract global players, similar to:

• Dubai Media City
• Dutch Games Garden (Netherlands)
• SEF Arena for Esports (Riyadh)

Several Indian states (MP, Karnataka, Kerala, Rajasthan, Maharashtra) are planning AVGC parks/media cities under their state AVGC policies — creating opportunities for media firms, architectural firms, and PPP investments.

Government Initiatives & Policy Support

Since 2022, the Government of India has launched key schemes to incentivize the sector:

• Central incentive scheme (up to USD 3.5 million) for foreign companies producing/shooting content in India.
• 16 films incentivized so far.
• Formation of the Inter-ministerial AVGC Task Force (Budget 2022-23):
• Aims to capture 5% of the global AVGC market (USD 40 billion) and create 2 million jobs by 2030.
• In September 2024, the Union Cabinet approved the National Centre of Excellence for AVGC in Mumbai, recommended by the Task Force.

Conclusion

India’s M&E sector is no longer confined to traditional entertainment. From mobile gaming and esports to animation, VFX, and out-of-home entertainment, the industry offers unprecedented investment opportunities. Robust digital infrastructure, proactive policy support, and a focus on IP creation are laying the foundation for India’s emergence as a global creative hub. For global investors, the time is ripe to ride the wave of India’s creative revolution.