Anupama Arora , Vice President , ICRA
The Indian television broadcasting industry, catering to over 180 million TV owning households, continues to remain the preferred media for the masses. However, rapid technological advancements, growing smartphone penetration, declining data tariffs, entry of international digital platforms as well as changing consumer behavior have necessitated the industry to continue to invest in content acquisition/creation as well as digital (video streaming) platforms.
Evolving customer preferences for superior quality and differentiated content with on-demand availability have resulted in increasing investments by the broadcasters in creating (or acquiring) wide range of content offerings. On the other hand, digitization of the traditional delivery infrastructure (i.e., from analog to digital TV) to ensure better customer experience supported by investments in digital streaming platforms provide an opportunity to monetize content across media platforms. Some of the trends that have a bearing on the performance of television broadcasters are as follows:
- Increasing investments in content creation/ acquisition. Even though the entry of newer players in the broadcasting space (as well as OTT players) has aided in expanding the overall market, it has become critical for broadcasters to invest heavily in content development and acquisition so that they can differentiate themselves from their peers and gain viewership (as the viewership reach has a bearing on advertisement revenues). Consequently, the industry is witnessing the launch of specialty or niche channels and continued focus onto regionalization and content creation for tier II and tier III towns. Further, the trend of television premieres of recently-released movies, reflects the search of broadcasters for fresh content and is forcing them to allocate higher budgets for satellite rights acquisition. However, revenue potential of such broadcasting remains a challenge for the broadcasters despite the relatively high gross rating points (GRPs) of the programs
- Competition and opportunity from OTT platforms. Increasing penetration and rapid advancement in smart phone technology, high speed mobile internet, as well as declining data costs have brought about a change in the viewing habits of consumers, who are increasingly on the lookout for more personalized and engaging multi-channel experiences (e.g., watching only specific genre of content, advertisement free content, or ease to record programs to watch at convenience). Current trends already indicate that presence in these alternative segments allows broadcasters to consolidate their presence and stimulate new revenue streams. Nonetheless, it should be noted that not only do these platforms necessitate continued investments in fresh content but have also opened up the industry to competition from independent content developers and telecom operators and consequently, returns from incremental investments may be realized after considerable time lag
- Susceptibility to government policies/regulations. The broadcasting industry continues to be highly sensitive to the government policies and the new tariff order by TRAI (which inter alia would regulate their right to price their channels) if implemented, may have an impact on subscription revenues and with price cap in place viewership changes for many channels as the consumers, faced with a-la-carte pricing for channels, may opt for channels of their interest only
- Benefits from cable TV digitization yet to fully flow in. In view of the lower bandwidth availability on the analog distribution network, the television broadcasters incurred large carriage fees. These were expected to reduce with increased channel carrying capacity on the back of digitization. However, with digitization in phase III and IV yet to be completed, there has been a delay in benefits to both broadcasters and distributors. While some benefits have started flowing in in the past two years, carriage fee may decline further over the medium term.
The Indian broadcasting industry is highly fragmented with presence of more than 800 television channels across genres. Over the medium to long term, further consolidation remains a high possibility with most large networks focusing on expanding their broadcasting bouquet to offer national GECs, regional GECs, news as well as identified niche genres to attract viewers even as they continue to face challenges in balancing their investments toward content creation/ acquisition as well as in digital (OTT) platforms.