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NEW DELHI: While the TV industry is likely to maintain its
growth at the present 17 per cent, and gross revenue is expected
to reach nearly double of this year by 2010 (from Rs 208 bn
to Rs 405 bn), with advertisers and foreign investors showing
growing interest, not all the 350 odd channels would survive
the "broadcasting war", according to a major research.
The forecast is also that digital pay TV subscribers would
go up from the present 2.3 mn (March 2007) to 25 mn by December
2010, driven by mandatory Cas extension, growth in DTH subscriber
base and voluntary digitalisation by MSOs beyond Cas-notified
areas.
Crisil Research & Information Services Ltd, a wholly
owned subsidiary of Crisil Ltd, in its latest study on the
industry released this month has said it expects some 50 new
channels over the next two years, adding to the 300-odd already
existing, and spells out the factors pushing this growth.
Crisil says that most of the new coming channels (the highest
number of them - 12 from the INX Group) would be in the FTA
arena, which the report says is bound to be the ones to gain
the most, with their larger number of viewers.
Among them are string growth in advertising coming into the
TV kitty; increasing number of cable and satellite subscribers;
increasing fragmentation making it possible to benefit from
audience preference; attracting advertisers with a bouquet
of channels; and easy availability of funding, especially
from foreign investors who cannot invest in the second biggest
TV market in the world: China.
The paper, "Television sector in the midst of a metamorphosis,"
(June 2007) says that in the coming years, the market will
see many pay channels going FTA and, interestingly, vice versa,
surviving would be problematic as "the bargaining power
of advertisers would increase with growth in ad inventories
and even greater fragmentation of viewership".
"Therefore, hiking advertisement rates periodically
would be a tough proposition… if the channel is not among
the leading players in the genre…. Relying heavily on
subscription revenue is also fraught with danger, given that
the distribution market today is in a state of flux."
The Crisil report reflects what most advanced thinkers on
the industry have been saying: the audience of today want
the kind of content they want and when they want it, the platform
being irrespective, and in this context, warns about the threat
of IPTV and mobile TV.
"Their ability to 'acquire right content' and 'reach
the maximum possible relevant audience' would determine the
success of TV broadcasters," says the report.
The paper raises hope for the government also, saying that
if the entire metros of Bombay, Calcutta, Chennai and Delhi
go for Cas, from there alone the government would gain additional
Rs six bn, and hence CRIS has suggested the government to
focus on this and if required, subsidise STBs.
The report says that whether the government pushes digitalisation
or not, MSOs would be forced to digitise to face the competition
from the DTH sector, and says: "The pace at which they
invest in digitalisation will depend upon the quantum of incremental
revenues flowing through to them post-digitalisation."
Crisil Research estimates that the payback period for MSOs
investing in digitalisation and Cas in the four metros would
be three to four years, and a little longer in the smaller
towns.
India is the third largest C&S television market, after
the US and China and Crisil expects it to leap to some 109
mn subscribers (from today's 68 mn) "implying a penetration
of 80 per cent," out of a total number of 137 mn households
projected to own a TV set in the projected period (2007 -
2010).
The report says one of the growing features of the emerging
trend is fragmentation, and points out that the TVR among
the top ranking channels (among the 4-plus C&S audience)
was 4.9 in May this year, as against a TVR of 11.0 in 2004,
and also the average number of channels viewed by the 15-24
age group was 39 this year against 22 in 2000.
"These figures portend the future of television: very
few blockbusters and growing interest in a variety of niche
content," the report says.
The channel-boom in India will be a factor of high investor
interest and decreasing cost of technology, says Crisil.
"With Chine being viewed as increasingly inaccessible
to media and entertainment companies, global majors looking
to enter a fast growing market… are increasingly investing
in Indian companies," it says.
"Therefore, arranging the requisite funds for launching
and sustaining a TV channel during the initial loss-making
years is not an issue for TV broadcasters with the right pedigree,"
but the report also makes it clear that survival is a tough
nut to crack.
Crisil estimates that it costs Rs 600 mn to set up a news
channel and Rs 2,500 mn or more to set up a Hindi general
entertainment channel, there are several factors which could
account for a high mortality rate.
Among them are, despite growth in number of viewers, fragmentation
would continue; advertising revenue is expected to grow at
a much slower pace than growth in the advertising inventory;
skyrocketing marketing and distribution costs due to broadcasters
battling for space on choked cable networks, etc.
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