Dec 2, 2008

Business - DTH pay-per-view service opens new revenue streams for film industry

The emerging DTH sector is opening new revenue opportunities for film-makers. All DTH operators run a bouquet of pay-per-view channels offering a motley of films across various languages and genres. A DTH subscriber can access this content on a pay-per-view basis.

This is opening a new revenue opportunity for film makers to market their films to DTH operators directly. With a current subscriber base of over 12 million growing annually at 35 per cent growth rate, the DTH operators provide film-makers a captive audience to showcase their products.

Currently, film revenues are dominated by theatrical exhibition sales covering domestic and international markets. Over the last few years, the satellite rights have emerged as a key revenue generator. Going forward, new medias (mobile content, gaming etc…) and DTH pay-per-view will be key streams for film makers to generate revenues.

According to FICCI the size of Indian Filmed Entertainment industry is approximately Rs. 96 billion (Year 2007). It is estimated to touch Rs. 176 billion by 2012. The industry is expected to maintain a CAGR of approximately 13 per cent for the next 4 years.

Emergence of various revenue streams beyond traditional box office is changing the face of the Indian filmed entertainment industry such as television, mobile, internet, home video, merchandise, music, re-make rights and several branded entertainment opportunities.

Globally, the migration to digital formats is accelerating growth of the filmed entertainment industry. FICCI estimates that this trend is likely to catch-up in India too. Distribution of entertainment content over various platforms including video-on-demand is likely to rise significantly in the next five years.

Globally, pay-per-view has emerged from being an ancillary segment of film business to a full-fledged industry. Worldwide, pay-per-view revenues have grown steadily over the past decade, accelerating somewhat during the past five years with the addition of new pay-per-view subscriber services. According to global estimates, 45 per cent of all television households currently subscribe to basic services. Of these, many subscribers pay a premium for additional services.

The main staple for most per-per-view services is feature motion pictures which have been released theatrically. Pay-per-view is gaining market share rapidly and may eventually replace both subscription cable and home video by the turn of the century. Globally, the number of pay-per-view customers is over 20 million, up from 6 million in 1989. Combined pay-per-view sales total approximately 20 per cent of theatrical revenues.

India is still at a nascent stage as far as pay-per-view viewership is concerned providing great potential for future growth of this segment. India has a massive emerging middle-class, and TV viewing is a very strong habit. This clearly reflects its potential to be the driver of the pay-per-view market. Korea is currently the most advanced now, followed by China. But once it takes off, India will overtake China.

India can fuse its creative expertise with its technological know-how, coupled with the low-cost factor to provide cutting edge interactive formats and content to the world. In Hollywood, one would have to think really hard before experimenting, but India is in a position to attempt it since it's a highly flexible market with good technical skills.

India's pay-per-view segment is estimated to grow at 16 per cent annually to log revenues of $11.3 billion by 2012 and emerge as a key driver of this business in Asia, according to a study by Hong Kong-based Media Partners Asia.

The study estimates that India will remain a leading pay-per-view market in Asia with superior growth prospect indicating a huge upside for the future.

Much of Asia's digital growth will be driven by China and India, though India will have a more significant impact for pay-per-view distributors (DTH operators) and content suppliers.

The study by Media Partners Asia further states that the total pay-per-view revenues in India will grow further to top $18.5 billion by 2017, with subscription revenues of $12.3 billion and advertising amounting to $6.2 billion.

The study also projects that the overall pay-per-view subscriber base will expand to 137 million by 2012 and 163.8 million by 2017, with an annual growth of 10.9 percent for the first five years and 7.2 percent for the remaining five.

Some of the DTH operators are steadily building up their PPV potfolio. After an aggressive round of price wars, DTH operators are now changing gears to focus on their PPV channels to lure subscribers. The PPV channels currently offer a bouquet of films each DTH operator bundles as part of its channel bouquets. Operators offer the PPV movie bouquet in various languages including Hindi, English and regional. Each operator is currently indulging potential subscribers with a motley film bonanza through its PPV strategy.