As the date for the implementation of new TV channel pricing nears, broadcasters expect a 10-15% increase in distribution revenues, with announcements of new channel bouquet and a-la-carte pricing in line with amendments to the tariff order, known as NTO 3.0.
However, distribution platform operators are yet to finalize agreements, and many in the industry say that the 1 February deadline will be missed. Industry experts said that NTO 3.0 might effectively be implemented only by April, as direct-to-home (DTH) and cable operators are hesitant to pass on the price hike to the end consumer amid churn.
Many said these rates might seem nominal to affluent, urban audiences but will pinch many consumers in small towns.
A few said that implementation of the new rates might result in a marginal growth of subscription revenues, but it could well get offset by the subscriber churn because many consumers are either looking to do away with second television sets or moving entirely to video streaming or consume free content on DD Free Dish or YouTube. Times will be particularly challenging for markets where both Hindi and regional content are viewed because channels in one of these will be done away with.
“The sentiment in the broadcast industry currently is one of fear and caution. A lot of churn had already taken place with NTO 1, and genres like English entertainment had been absorbed into the fold of OTT. Even though subscription revenue could grow marginally at 8-10% because of these price hikes, overall subscriptions will come down, nullifying the impact,” said a senior executive at a broadcast network declining to be named. In addition, local cable operators, who are the first point of assistance in small towns, are very reluctant to implement the new rates, the person said.
Chandrashekhar Mantha, a partner at Deloitte India, said the NTO 3.0, to some extent, is on the same lines as NTO 1.0, as the price cap for a-la-carte channels is back to ₹19. “It will give leverage to broadcasters to price their very popular channels higher than the earlier cap of ₹12,” Mantha said, adding that subscription revenues may grow at a minimum, in the range of 7–10% for leading broadcast houses while ad revenues may go through some stress test with the looming slowdown.
One way of looking at it is that price hikes are in line with inflationary changes, said a media analyst declining to be named. “Genres like English have already been hit. The real question is whether Hindi GEC will be able to sustain it, given that many people are now watching catch-up content for free on OTT, if not DD Free Dish. Many regional channels, on the other hand, aren’t yet available on Free Dish, so those could have an advantage,” the person said.
While the pay-TV universe in India has already shrunk to 108-110 million from 120 million four years back, the investments in content, especially sporting rights, have gone up tremendously.
Media industry experts say multi-system operators may face some challenges as consumption preferences skew either to digital or free programming on YouTube or DTH packs that are increasingly bundling OTT and linear television channels. Live Mint