SPLITSVILLE
If Indian TV broadcasting has to deliver on its promise, it has to do to TV what multiplThe wonder of it never ceases to amaze me. Just 12 years back, you and I were waiting for the Sunday evening film on Doordarshan. As slaves to the state-owned broadcaster, we waited with bated breath for anything it dished out, even the Films Division cartoons. Today, with over a 100 channels on offer, we crib about the lack of choice on TV. Are we simply spoilt, or do we really need more choice?
In the answer to that question lies the future of television broadcasting in India.
The fact is that we are no longer the same viewers. If 12 years back plain live telecast of cricket matches or a Buniyaad satisfied us, now we want to see more polo, hockey, history, wildlife, English films, or adventure. "India," as Rajesh Jain, executive director, KPMG, puts it, "is a lot of little Indias within." So, just like they met the need for entertainment programming then, TV broadcasters now have to meet the one for more variety. To do that they have to do to TV viewing what multiplexes have done to films – bring more variety in programming, in the pricing of TV signals, and in the way those signals reach our homes. They need to apply the principles of differential pricing and bundling to television broadcasting. The idea is not new. It has been used successfully in films, cable TV, and telecom, among other industries across the world.
It is an imperative that every indicator points to. The few software firms that have grown to respectable sizes, like Balaji Telefilms or UTV, are finding that variety is the key to scalability and growth. Both broadcasters and cable distribution companies will find growth only when they are able to price signals differentially. Now technology – CAS (conditional access systems), DTH (direct-to-home), two-way broadband – makes it possible (See ‘The Full Monty’). Broadcasters will be able to stem the rot of a stagnating ad market and declining yields per 10 seconds and up rates only when they deliver more focussed audiences to advertisers. That means far more slicing and dicing of audiences by genres, geographies, prices or delivery platforms. In the US, for example, the three large broadcast networks owned more than 90% of audience share about 15 years back. That is down to half, the rest going to specially targeted cable and satellite channels like HBO or Cartoon Network.
India is no different. Consider that language channels have shown the maximum promise in recent years, with Marathi and Bangla taking advertisers totally by surprise. News, a category that rarely makes money elsewhere in the world, has boomed from about Rs 100 crore two years ago to over Rs 300 crore this year. MTV is now the biggest ad grosser among its siblings in Asia and one of the Top 4 globally among 38 MTVs. Channels like Ten Sports that show golf, go-karting, hockey and horse-racing are working in a cricket-crazy country. The evidence is all across the TAM data, some of which this survey carries. You could argue that variety is the crux of broadcasting’s problem today. That there is too much clutter. That is not entirely correct. Considering the heterogeneity of India, there are very few speciality channels. Most fight with mass channels for the same ad pie (See ‘The Story So Far’). Till advertising was growing, it was alright. As it slows down there is a question mark on the growth of the industry.
"There is growth still left in the market," says Kunal Dasgupta, CEO, Sony Entertainment Television. Sure there is. But getting this growth will take some effort. Unlike 1992, 1995 and 2000, when fresh spurts of advertising or investments kept up the pace of growth, this time there is nothing. To reach the next level, TV needs another shot of adrenalin.
And that will come from pay TV. It can add at least $1.5 billion to industry revenues. Those numbers are possible when there is a set-top box (STB) in every TV home. Any company that seeds this market with free STBs can control it and kick-start growth. That is what BSkyB did in the UK.
Are we being unfair? Should we give broadcasters a commercial break? After all, when you and I were waiting for the Sunday evening film, TV broadcasting was a sub-Rs 500-crore market. Now, when we crib about lack of choice, it is a gargantuan Rs 12,000-odd crore! At over 80 million TV homes, more than 50% cable-enabled, we are the third-largest cable country in the world. In both value and numbers we are an attractive market. Maybe a little less so than China or Brazil, the markets that global investors compare India to (See ‘The Big Picture’).
That is exactly why pace is imperative. If India is to beat them conclusively and establish its rightful place as one of the most happening (and profitable) TV markets in the world, it has to keep growing, and fast. So far it has shown only hints of the potential. Like when the $17.5-billion News Corporation’s Star Group (Asia) turned in its first full year of profitability in 2002, thanks to India (and not China). Sony’s estimated Rs 800 crore in revenues in March 2003 has steeled its resolve to stick to broadcasting, a business it has little interest in otherwise.
So, while India has proved that it is a large, profit-making TV market, it is yet to achieve the sheen of a China or excite the interest that a Brazil does. One reason is size, it is still the smallest of the three comparable markets. Second is bureaucracy and regulation. Third is the fragmentation of revenues among the three main segments of the industry: software, distribution and broadcasting. Software alone has about 6,000 one-man outfits. In distribution over 35,000 operators control the 42 million cable homes. Broadcasting is yet to see a pan-Indian behemoth – imagine Star India plus Sun Group.
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The result: many global investors just don’t look at India. "The most promising area of growth in the world is South America," reckons Harold Vogel, a global authority on media and entertainment (See ‘The Future is TV’). This is not about pandering to a foreign point of view, it is about delivering on the promise that we have. Over a billion people, one of the largest youth populations, one of the fastest growing economies in the world, a pool of trained technical and creative people, and an entertainment-crazy country should add up to one hell of a TV market. It still doesn’t.
This survey will argue that to become the most attractive TV broadcasting market among emerging economies, the industry must tap the colour, chaos and variety that is India. It will further argue that pay TV is the way to do it and that every segment of the industry is now ready for it. If it pulls it off, the rewards will be happier viewers and advertisers, healthier bottomlines and arguably more investment. "This," as S. Sriniwasan, co-head (investment banking), Kotak Mahindra, puts it, "is not a market to take your eyes off."
exes did to films
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