Television

Sudhanshu Vats on the TRAI tariff order, Viacom18's channel pricing and strategy

IndiaCast has bundled the networks’ 57 channels (42 SD and 15 HD) in three packs

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MUMBAI: At 50, with sharp features, and a spring in his step, Viacom18 group CEO and managing director Sudhanshu Vats can simultaneously pass off as an enthusiastic, backslapping college professor and an intimidating corporate power player. Watch him in action, even briefly, and you can’t help but be struck by adjectives like efficient and disciplined. Despite his unassuming manner, Vats, I am reminded is always firmly in control.

His six-year (and counting) stint as one of the most influential business executives in the country bears that impression out. A widely-respected thought leader and tactician, Vats has proved to be a highly effective occupant of the Viacom18 hot seat, corralling a cluster of brands and companies into an agile media and entertainment behemoth.

He rarely ducks a question, often either plunging into a dissection of it or using short and succinct sentences to answer it. Unfailingly, however, he punctuates every response with a smile.

Perhaps these qualities enable him to swing between an awkward but endearing dance at a kids' show awards and successfully present the intricacies of GST math on the entertainment media industry to the Prime Minister.

More on that some other time. For now, however, the subject of my chat with Vats, in his office at Viacom18’s headquarters, located just off the Western Express Highway in Mumbai’s Andheri, is the much-debated tariff regime for the broadcast sector. The fundamental tenets of TRAI’s diktat is rooted in order and process, words Vats is all too familiar with.

“The tariff order is a progressive document because it offers choice to the consumer, it attempts to bring in equity in the value chain and over a period of time brings in transparency and objectivity in the way we deal in the entire media and entertainment ecosystem,” he tells me.

As 28 December 2018 nears, broadcasters and DPOs are working both frantically and frenetically to ensure that none of their consumers are deprived of their favourite TV channels. Friction and chaos notwithstanding, the ecosystem is making a concerted effort for a seamless transition.

That, however, seems like a tall order for now considering the scale of the challenge. In fact, Vats puts his finger on two critical ones.

“Education of the consumer, which is critical, is a key challenge,” he highlights.

When talking about the second, Vats appears less a managing director of a giant corporation and more a statesman of India’s media and entertainment firmament and also its moral arbiter.

“Second is, in these times, the ability of the industry and all the constituents of the industry to come together and to be able to support one another. Because we have to start thinking of ourselves as the industry and seek solutions rather than focusing on our individual constituency or the company. My idea is that it has to be a win-win-win formula. So everybody should win in the long-term. But in the immediate analysis we if start looking at it from our narrow boundaries then that could make the transition more difficult,” he points out.

Viacom18 and TV18’s distribution arm IndiaCast has bundled the networks’ 57 channels (42 SD and 15 HD) in three packs - budget, value and family. The networks have also introduced 10 channel bundles, in SD and HD versions, mapped to its markets (Hindi, North East, Kerala, Karnataka, Gujarat, Bengal, Maharashtra, Orissa, Telugu and Tamil) to allow the consumer to choose from.

“Anuj [Gandhi] and his team have done everything possible to make sure we are equipped,” the Viacom18 topper says.

From a legal standpoint though, the matter is yet to be concluded. Earlier this month, TRAI filed a special leave petition (SLP) in the Supreme Court seeking clarifications on the 15 per cent cap on bouquet discounts. Currently, Viacom18 has not adhered to the cap. However, a favourable ruling for the regulator when the Supreme Court resumes after winter vacations next year  could lead to revision of channel pricing.

“This is a debatable point and I will wait because the matter is sub-judice. I wouldn’t like to give a point of view at this moment and we will see how we adapt ourselves to that,” says Vats when asked whether he’s in favour of a 15 per cent cap or not.

His network has launched a multi-media marketing campaign, titled ‘Ek Me Hai More Yahaan’, asking consumers to pick up the ‘Colors wala Pack’, designed for the Hindi speaking market (HSM) and priced at Rs 25 a month.

Given that the top court pronounced its judgement in the matter relating to jurisdiction of TRAI on 30 October 2018, could the broadcaster have kicked-off its publicity blitzkrieg earlier?

“As for the consumer campaign, the timing is broadly right. You can’t start telling the consumer in October and ask her to act in December. She has to act now and that’s why our campaign should be on now. That is why you’re seeing the timing the way it is,” says Vats adding that he’s committed to investing in such campaigns till it is required.

The early success of the new tariff regime’s implementation hinges on consumer awareness and adaptability. In such a scenario, every constituent of the value chain needs to play their part. However, if industry sources are to be believed, it’s the broadcasters and MSOs doing the heavy lifting currently with the LCOs not upping their game.

“If there is a gap in communication and things happen, there will be some loss in transition there is no doubt about it. But that has to be compensated with direct communication with the consumer. Supposing Colors wala pack or mention of some of our channels is missed out, then we keep it top of mind for consumers that there is a Colors wala pack which is very affordable. So our hypothesis is that we will have consumers being able to ask that question. And then we will be educating and training with the other part of the value chain to be able to fulfil this. So the demand should come from the consumer,” states the Indian Institute of Management – Ahmedabad alum, who has spent much of his stellar career at the mecca of marketing, Hindustan Unilever.

The broadcast cognoscenti is fussing over the financial remodelling of the value chain. The good old consumer will now not only flip channels but also make or break businesses. She’s suddenly become more popular, more powerful and immensely more significant. How will this impact the ARPU of the broadcaster in the medium to long-term?

Vats, as you’d expect, views this differently. He prefers restricting his focus to the systemic changes the order has induced rather than be lured by what its by-products, such as improved subscriptions numbers, have to offer.

“With the improvement in the objectivity and transparency in the entire value chain and with the equity I think it bodes well for everybody in the value chain. It bodes well for the broadcaster also,” he says.

Dealing with a radical change of this nature has several handicaps, the biggest being the unavailability of previous data. Therefore, predicting consumer behaviour can be a nightmare. Some believe that the tariff order will result in a shrinkage of broadcaster bouquets.

Interestingly, Viacom18 has two fresh offerings – Colors Gujarati Cinema and Colors Bangla Cinema (yet to be launched) – as the broadcast sector readies for a regime change. The show must go on, is something Vats believes in.

“My point view is that while the changes will happen, business has to go on. If there are people who would like to watch Gujarati films, they would like to watch Gujarati films, irrespective of what tariff order is there or what plans are there. So, I think it’s up to us to continue monitoring them as we go forward,” he argues.

Another point Vats stresses on is the fact that people aren’t going to stop watching television. It’s a simple but significant assertion. He intends to maintain the rhythm of his business despite the uncertainties the order’s implementation is likely to throw up.

“So some of the plans that we have are being rolled out. Whether it is channel launches or programs. The other thing you could also say as there is going to be some uncertainty, should we do programmes? But my point of view is that people are not stopping watching TV. And in the spirit of continuing the rhythm of our business we’ve go to the right level of new things whether it is new programs, new channels and new initiatives,” he adds.

According to the 2018 FICCI report, the advent of OTT players has whetted Indian viewers’ appetite for differentiated content. While Indian broadcasters produce over 100,000 hours of content annually, newer players are investing more money per episode (though for much smaller content pieces) and are snapping up high-profile talent. Broadcast sector luminaries suggest the overall content cost is likely to rise by two to three per cent of their top line.

Throw the tariff order into the mix, and networks could be forced to shell out a lot more than anticipated to line up engaging content on their ‘weaker’ channels. The other alternative, of course, would be yanking off the laggards.

“The investments are business decisions and any channel which exists has to have the requisite set of viewers. If you don’t have the right set of viewership in your segment, then there will always be pressure on that channel. That we need to maintain and that will be there without doubt,” concludes Vats.

The impending makeover of India’s broadcast sector has fuelled several questions, concerns and conspiracy theories. None of the protagonists of this play are certain of what to expect and how long it will take for dust to settle down. What’s clear, however, is the fact that this race of broadcaster reaching the consumer in her new avatar, isn’t a sprint. It’s going to be marathon, and few people know more about running long distances than Sudhanshu Vats.
 

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