Report on Shemaroo

Broadcasters split over rising production cost of GEC content

With OTT giving a tough clash, broadcasters need to up the ante

MUMBAI: The rise in over the top (OTT) platforms has also led broadcasters and production houses to drive up the investment into its TV shows. The same companies are now even producing for both TV and digital.

TV still has more headroom for growth, despite the OTT hype. India has 64 per cent TV home penetration and much room for growth. Data also shows that 86 per cent of Indian homes still watch TV on CRT sets and only 3 per cent are multi-TV homes. TV viewing in India has grown from 3 hr 14 min (2015) to 3 hr 36 min (2017) but it is still lower than the US, which boasts of an ATS of 3 hr 54 min. This gives a clear indication that there is immense scope for TV and it will further rise. According to FICCI 2018 report, TV viewership has grown by 21 per cent and it has grown across all age groups. On the other hand, even giants like Netflix and Amazon Prime Video are finding it tough to crack the OTT market here. The country’s online video market, valued at over $700 million, is expected to grow to $2.4 billion by 2023.

According to Zee TV business head Aparna Bhosle, production cost will not increase. Whereas, Sony Sab, Pal business head Neeraj Vyas believes it will definitely increase. Viacom18 youth music and English entertainment head Ferzad Palia said that the cost of production will not be affected massively but will see a win-win situation for broadcasters, production houses and consumers.

Viacom18 Hindi mass entertainment and kids TV network head Nina Elavia Jaipuria made her point by saying that a GEC needs fresh episodes every day, unlike OTT where the concept is of limited episodes and seasons with intervals. She added that there could be inflation and there could be little talent cost going up but there would not be that kind of inflation where the cost of production will go up.

Vyas said, “Content house is constantly growing and this is the time where good, differentiated and innovative content is really needed, and that’s not going to be cheap." Whereas, Bhosle said, “The cost of production will not increase. It largely depends on the kind of story, where you set it and how much you want to spend on it. So you can make a story in Rs 40 lakh or you can also make a story in Rs 5 lakh. It all depends on the quality.” She differentiates that OTT viewing is individual in nature while TV here is more family-oriented. So even if shows are being watched on OTT, it does not mean that it’s eating away from television.

Moreover, Palia said that there have been cases where the cost of production for digital is higher than what one would pay for television. He said that he has also heard about the instances where the bigger production houses had limited bandwidth and had chosen to do a digital show over a television show. According to him, it is a great opportunity for them because they can now monetise it across different screens and also for the production houses who could earlier make content for television to now broaden its base to mobile screens as well. “So I think it’s a win-win and I don’t think it will massively affect the cost of production. The consumers will also have a broader choice for the content that they want to watch and at a time and place where they want to watch,” he said.

Indian broadcasters produce over 100,000 hours of content annually across languages and formats while newer players are investing higher amounts per episode and are tying up with leading talent. The increase in cost is expected to impact cost of film acquisition more than costs of episodic content. The overall cost of content rose by almost 2-3 per cent of their top line. With OTT companies refusing to take their foot off the pedal, broadcasters have no choice but to pay up. However, if their bid for quality programming fails to generate higher viewership which can be monetised better, broadcasters may not pursue quality, and stick to current cost metrics, according to a report. 

Jaipuria said that TV needs to be supplied with 10 episodes a day and to meet such demands, the supply has to be at an affordable rate. While there is always inflation, I’m not sure there is going to be so much inflation in the cost of content per se when the demand is so high. "There has to be a demand and supply which will always even out. Even if there is an increase in cost, we are hoping that in the long term, we better our subscription revenue with the tariff order and that means we will invest more in content," she added. 

Production houses have a similar story to tell. For Peninsula Pictures, led by Nissar Parvej and Alind Srivastava, the cost of production will not observe a hike. On the contrary, Swastik Productions writer, director, and producer Siddharth Kumar Tewary felt the opposite.

Parvej said that the money is definitely more in the OTT space, but that doesn't make TV insecure.  “TV will be TV. I feel it will go down because I think the advertising money that they used to get before is not the same. The kind of cost we used to get five years is not seen anymore, it has come down and that is why the competition has become stiff. Reliance etc. are pumping in money but how much of it works, we will have to wait and see. There might be a cut-down or might take 4-5 years for OTT to settle,” he said.

Srivastava chipped in and said, “I don’t think cost of production will go up. It also depends on the storylines like mythological shows can be made in Rs 10-50 lakh per episode.” Since consumers are exposed to global content now, local players, as per Tewary, will have to work on the content quality.

Twisting it around, Carat India SVP Mayank Bhatnagar gave a different perspective to the mushrooming trend. He said that in 2019, the production quality has to be good but it will all depend on marketing. “People will only watch this content if there is enough awareness. Here, marketing spends will play a major role. If you look at the overall cost, it includes all the marketing expenses plus the production expenses then definitely the cost of production will go up because the kind of clutter that is there in the market, one needs to invest money behind promotion otherwise nobody will notice it,” he concluded.

According to the KPMG FICCI report 2017, on an average, 20–30 minutes of fictional digital content can cost anywhere between Rs 12–15 lakh, which is higher than content costs on television. Despite significant beliefs from the broadcasters, production houses and media planners, OTT content is equally or more expensive than producing TV shows.

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