Digital sector to cross Rs 20,000 crore mark by 2020: Report

The Indian digital sector is expected to cross the Rs 20,000-crore mark by 2020 from Rs 8,490 crore at present, largely led by OTT and digital advertising, according to a report.

"The Indian digital sector is on the cusp of a strong phase of growth. With mobile penetration in excess of 100 percent and traditional internet and TV subscription services below world average, the Indian digital media market provides a unique opportunity.

"The sector is poised to witness the entrance of newly acquired internet users with internet using population expected to reach approximately 746 million by 2020 and a large number of consumers expected to get introduced to using digital platforms," the EY-vdonxt report on digital opportunity said.

The industry, which was pegged at Rs 8,490 crore in 2016, includes the four key areas of digital revenues OTT and digital advertising, video OTT subscription, music OTT subscription and gaming (in app and paid).

According to EY estimates, smartphone penetration is expected to be up to 59 percent by 2020 from 31 percent in 2015 and digital ad spend is slated to be Rs 185 billion by 2020, constituting a larger pie of the overall media spends.

Currently, digital media contributes to approximately 14 percent of the total ad spend in the country, however, by 2019, it is expected to be aprroximately a quarter of the ad expenditure.

The report noted the increasing acceptance of digital video, with the online video audience in India expected to reach 450 million users, and replacing US as the second largest market behind China.

"This growth will be driven primarily by the youth, with 80 percent of the users between the 15-34 age group." With the rural internet user base set to surpass the urban user base by 2020, it pointed out that regional content would be a key area of focus.

"An evolving, young user base and a higher per capita income presents very viable avenues for digital advertisers and service providers to reach their target audiences," EY India Head Digital, Media and Entertainment Raghav Anand said.