Why is everyone in this room so dead? I looked around to confirm where I was. Yes, the sign on the podium said, “The India Digital Networks conference, October 1, New Delhi, brought to you by Media Partners Asia (MPA) and Indiantelevision. com.” The room was full of regulators, industry people and investors in the television business. The mood, however, was one of doom, almost every speaker made predictions of it. For one moment, it felt like a newspaper industry conference. Had I missed something?
Usually, TV guys are, arguably, the most fun, enthusiastic and “let’s do it” bunch of guys in corporate India. Nothing — tariff freezes, ad slowdowns — ever seems to depress them. The business keeps growing and remains the largest chunk of the $12 billion Indian media and entertainment business. India’s reputation as one of the largest and fastest-growing television markets in the world — 115 million TV homes, $5 billion in revenues (pay and advertising) and a CAGR of 22 per cent — ensures plenty of investor interest. In 2007, television got over one-third of the Rs 3,400-odd crore of the (publicly known) investments that came into media. Then there is the billion-odd dollars already sunk into digitisation — either through cable or direct-to-home (DTH). So why the gloom?
Rising content costs, the problem with pay revenues, a regulatory bottleneck of sorts on some key policies on FDI, is what the litany included. What was new? These have been around. Since digitisation is happening very fast, thanks to DTH, these will eventually go away. Almost everybody acknowledges that. If the fundamentals of the business — the rising time spent on television and an underpenetrated market — hold, then what’s the problem?
It took a few phone calls to get at the right answers. Shantonu Aditya had one part of it. Aditya is currently executive director, UTV Global Broadcasting. He has just kicked off UTV’s foray into the business — with Bindass, UTVi and World Movies, among other channels. He is far from depressed; in fact, he is scathing. “We are blinded by Hindi general entertainment channels (GECs). Because they are shrinking in viewership (their share has halved over five years) and because 2-3 GEC (dependent) players dominate the (ad) market, their gloom is affecting the industry. As for investors, most look at GECs as a barometer of the market,” he says.
The point is that because GEC-dependent players such as Star or Sony dominate the market, they dominate the mood. TAM’s analysis shows that speciality channels — from kids, to news and sports programming — are eating away into GECs share. So ad rates have actually fallen for GECs. On the other hand, speciality channels in business news or lifestyle, do manage to command a premium sometimes. As GECs’ overall share in viewership share goes up with new players such as Colors, the mood could equally swing the other way.
Paritosh Joshi, president, new ventures at Star India adds that broadcasters and distributors just don’t seem to be noticing opportunities. For instance, within DTH, a simple clustering of high and low value subscribers to sell differentiated services is staring everyone in the face. However, even after 2-3 million subscribers apiece, no operator has even begun looking at it as a way of increasing ARPUs (average revenues per user). “We have started thinking like commodity players,” he says. He points to telecom. Both Bharti and Vodafone sell a commodity product — voice. But clustering and segmentation has ensured ARPUs are 10-20 per cent better than the industry average. A point that Tata-Sky CEO Vikram Kaushik (the only chap full of good cheer) also made.
The second and more critical point Joshi makes is that analysts and investors tracking media in India come from an Asian perspective. For telecom, Asia offers an evolved perspective, but for media, it is the wrong reference point. “Asia is (largely) an FTA (free-to-air) continent, most of the (pay) markets (Malaysia and Indonesia) are too small,” he says. The two largest ones — China and India are not yet evolved. The reference point has to be Europe. This then becomes their limitation. Analysts and investors were incidentally the dourest of the lot at the conference.
Many, I suppose, are also feeling gloomy about the bank collapses in the US, the market they look up to. Maybe they could watch some TV to relax. As for GEC broadcasters, maybe they should stay off the tear-jerkers for a bit.
6 months ago