Are Indians spending more on entertainment or less? The short answer – entertainment spending in rural India continues to rise (slightly), while that in urban India has declined.
This is the somewhat disappointing picture given by the Household Consumption Expenditure Survey 2022-23, released earlier this year by the Department of Statistics and Program Delivery. Tracks food and non-food consumption.
Click here to follow our WhatsApp channel
The share of entertainment in monthly per capita consumer expenditure (MPCE) in rural India has grown steadily, rising from 0.42 percent in 1999-2000 to 0.99 percent in 2011-12. Over the next decade it rose to 1.09 percent in 2022-23. That’s a growth of only about 10 percent in as many years.
The share of entertainment in urban MPCE rose from 1.16 per cent in 1999-2000 to 1.61 per cent in 2011-12. It has since fallen to 1.58 per cent in 2022-23. The study stated that rural India spends an average of Rs 234 per month on various goods, including entertainment: Urban India spends Rs 424 per month.
What does it all mean?
A few explanatory notes here. The survey, conducted in 261,746 homes by the National Sample Survey Office, does not clearly state what is included in “entertainment.” Most entertainment businesses such as movies, TV or streaming have two streams of revenue. Advertising is earned by selling audience time to advertisers: Payment or subscription revenue is earned by charging audiences directly. The figures in the survey apparently do not take into account the consumption of free-to-air or free-to-view entertainment that is supported by advertisements. Advertising revenue brought in 49 percent of the 2.3 trillion rupees that India’s media and entertainment (M&E) businesses made last year. Then the study is probably limited to pay-out and, within that, possibly TV, movies and streaming.
Television is the largest media in India. It reaches around 900 million people and made (advertising plus pay) revenues of Rs 69,600 crore in 2023. This decade (and the previous one too) was marked by strict control of TV prices by the Telecom Regulatory Authority of India (Trai). This control means that even normal inflation cannot affect cable or DTH (direct to home) prices and this is reflected in the consumption data. Most broadcasters boost salary income by negotiating a better share of revenue from DTH and cable operators. Over the past three years, pay TV homes are estimated to have fallen from 165 million to 90 million. This naturally reduces wage income growth. The FICCI-EY (Federation of Indian Chambers of Commerce and Industry-Ernst & Young) report’s claim that TV revenue shrank by 1.8 percent in 2023 from 2022 is fully in line with the MPCE data .
For context, see cinema. Ability of multiplexes to change prices by day, time, film, etc. means average ticket prices have risen with inflation, unlike TV.
Why has industry-stifling TV price regulation not affected rural India? This is because the penetration of pay TV (via cable or DTH) is terrible in most parts of rural India – especially in the densely populated North. Kerala, Andhra Pradesh and Tamil Nadu have some of the highest rural and urban cable penetration rates. This is already included in the data for 1999-2000 and subsequent years.
What has risen in reach and consumption is free video. Both the biggest platforms that offer it – DD Freedish and YouTube – have seen phenomenal growth.
Over the past decade, the state-run free-to-air DTH service, DD Freedish, has emerged as the biggest force in linear television. It now reaches approximately 50 million homes (240 million people) in the poorer Hindi-speaking states. DD Freedish kits involve a one-time cost of Rs 1000-1200 and there are no recurring charges. This money probably appears in rural entertainment expenditure.
According to Comscore data, the majority of the 510 million unique Internet visitors in 2023 were users of YouTube, a (largely) free streaming service. Since this is an ad-supported service, the only money spent is for data, and it won’t show up in the entertainment queue.
The weak growth rates and the fact that much of poor urban and rural India is switching to free-to-air TV are indicative of something. If device penetration was to be used as a measure of reach, then much of India’s poor, small-town and rural areas were in deep trouble for more than two years in early 2020. This is when internet penetration stagnated and dropped, as this article previously reported.
This is because during and after the pandemic, the prices of smartphones – the primary way to access the internet for a large portion of Indians – continued to rise amid chip shortages. The average feature phone is under Rs 1,200. The cheapest smartphone costs Rs 5,500 and above. The difference of Rs 4,000 was too much for many parts of India. That’s why organic growth (from feature phones to smartphones) has slowed for almost three years. Although Apple’s iPhone continued to perform well, brands such as Realme and Xiaomi, which offer phones in the mid-range and lower end of the market, saw a decline in sales.
According to IDC data, in a country of 1.4 billion people, roughly 650 million, or just over half, have a smartphone — think of that as Internet access. In the latter half of 2023, the action in the used smartphone market revived it somewhat. According to Trai’s latest available numbers for September 2023, broadband subscribers have increased at a healthier pace.
