T he Indian media and entertainment industry is projected to grow at 13.9 per cent compound annual growth rate (CAGR) over 2016-21 to reach Rs 2.41 lakh crore by 2021, said a study released here on Wednesday.

The report prepared by the Federation of Indian Chambers of Commerce and Industry (Ficci) and management consultants Klynveld Peat Marwick Goerdeler (KPMG) says t he Indian media and entertainment industry in 2016 was a "mixed bag", where films had a "disappointing year with a near flat performance".

Girish Menon, director, Media and Entertainment, KPMG in India, said: "2016 was a mixed bag for the industry with digital media making its way to the centre stage rapidly from being just an additional medium. It is compelling existing players to rethink their business models.

"To accelerate growth, M&E organisations must rebuild their strategies to fit and thrive in the changing, digitally-oriented landscape. Nimbleness and flexibility will be at the core of sustainable businesses." 

The overall media and entertainment industry was able to sustain a healthy growth on the back of strong economic fundamentals and steady growth in domestic consumption coupled with growing contribution of rural markets across key segments. 

These factors aided the industry to grow at 9.1 per cent on the back of advertising growth of 11.2 per cent, despite demonetisation shaving off 150 to 250 basis points in terms of growth across all sub-segments at the end of the year, said a statement.

"The industry has gulped down the bitter pill of demonetisation trusting its long-term benefits and yet is set to bounce back to a steady growth, thanks to strong fundamentals," Uday Shankar, Chairman, Ficci Media & Entertainment Committee, said as the report was launched at the Ficci-Frames conclave on media and entertainment here.

"Building solid infrastructure and continued government support will help the industry reach the tremendous potential it holds for employment and creating socio-economic value for the country," he said, while adding that quick transition to digitisation will ensure growth for all stakeholders.

According to the report, the television industry clocked a slower growth in 2016 at 8.5 per cent, attributed to tepid growth of 7 per cent in subscription revenues and a lower than estimated 11 per cent growth in advertising revenues. 

Even the revenue growth rates of print continued to witness a slowdown at 7 per cent in 2016, while films grew at a crawling pace of 3 per cent in 2016, the joint report stated.

"The film segment was impacted by decline in core revenue streams of domestic theatricals and satellite rights, augmented by poor box office performance of Bollywood and Tamil films," the report said.

Segments that registered growth were radio, digital advertising as well as animation and visual Effects (VFX).

Digital advertising had a 28 per cent growth in 2016, and captured 15 per cent share in the overall advertising revenues, with a minor hiccup due to demonetisation. Meanwhile, the animation industry grew at 16.4 per cent, driven majorly by a 31 per cent growth in VFX due to increase in outsourcing work, growing use of VFX in domestic film productions and increase in demand for domestic animated content on television.

Even radio recorded a 14.6 per cent growth led by volume enhancements in smaller cities, partial roll out of Batch 1 stations and a marginal increase in effective advertising rates.

For the overall media and entertainment industry, the year 2017 is likely to witness a marginally slower rate of 13.1 per cent as the economy recovers from the lingering effects of demonetisation and initial uncertainties arising from GST implementation.