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New TRAI Order Is Unlocking Value In TV Sector

Have your cable TV bills increased after TRAI’s New Tariff Order (NTO) came into effect earlier in 2019? Or, is it a lack of information that is causing confusion amid the television audience?

According to Prathyusha Agarwal, Chief Marketing Officer – ZEEL, it will take a behavioural shift to understand the new cable TV pricing regime as the consumer is moving from a low involvement bulk purchase to a high involvement unit purchase.

This means that people earlier subscribed to television channels in bulk and had no idea how much each channel costs.

Now, the NTO regime which was initiated by India’s broadcasting regulator Telecom Regulatory Authority of India (TRAI) is giving people the power to purchase channels they want to see which is why every channel is priced individually.

It is this clarity in pricing which makes Agarwal say that this is the only way for TV to grow.

“Have you ever known any category where you are not aware of the pricing. NTO has brought transparency, then uniform pricing and this is a good move to unlock value in the TV sector,” she said.

But, there are many consumers who have shown dissatisfaction with the new cable TV pricing regime.

To this, Agarwal says, “When you have pricing available in a category for the first time it will take some time for market stabilization. And, it has not been easy to execute it as seamlessly because everyone has a learning curve in the value chain. However, the biggest measure of understanding whether consumers are happy or not is them saying if they want to re-evaluate their pack. And majority are saying that they don’t want to re-evaluate their packs.”

She added that ZEEL was running consumer track since the time NTO came into effect and they had found that 74 percent people made conscious choice of selecting channels they want to see.

Will OTTs take over TV?

Since the time NTO came into force, there have been debates that on-demand video platforms will supersede TV.

But, Agarwal says that over the top platforms (OTT) are no threat but will help the TV ecosystem to grow.

“There is huge amount of AVOD consumption happening and that is additive consumption which is good news for us,” she said.

According to her, television in India is mammoth. “There are 836 million people on TV. People are growing and the time spent is growing which is like 227 minutes a day.”

Talking about why TV is such a big thing in India she said, “It is because of the price economics for TV. Price for the TV subscription is for the entire household which could range in Rs 300 to Rs 400. In US, the TV and OTT is comparable. Here, if you look at access to subscription-based video you need to have broadband connection, then OTT subscriptions and then to watch content on TV there is another expense of buying a firestick.”

She added that TV had also perfected the art of producing daily content at a certain efficient cost and it is a proven sustainable model. Hence, TV will sustain.

That TV is here to stay can also be validated from the fact that advertisers’ interest for TV channels has not gone down after NTO came into effect.

“For an advertiser the reach of pay channels has increased. It has increased by 5 percent all India and 10 percent in HSM (Hindi speaking markets) and for an advertiser that is a good delivery on a pay channel,” said Agarwal.

Even broadcasters have benefited from the new cable pricing regime. Take the example of Zee that saw an uptick in subscription revenue. “Our subscription revenue for Q1 grew by 46 percent,” said Agarwal

And, Zee is not alone. Sun TV Network saw a 28 percent jump in subscription revenues in the quarter ended June 30.

Agarwal also believes that the new pricing regime has resulted in quality consumption.

“If a household was consuming 50 channels in December last year it has come down to 40 channels but those 40 channels have been consciously chosen channel. Hence, the quality of consumption is going up,” she said.―Money Control

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