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Rina Chandran

Mumbai , Oct. 10

THE response to the Conditional Access System (CAS), which was rolled out in Chennai on September 1, has been "very lukewarm," with only 8,000-10,000 homes out of an estimated 8 lakh cable & satellite households opting for a Set Top Box, according to a recent analysis by TAM Media Research.

So practically overnight, the market for pay TV channels has shrunk to just 1 per cent to 1.25 per cent of the size that existed before the rollout.

"This could mean an enormous loss in subscription revenue for the pay TV channels (assuming that the cable operators were declaring the right number of homes accessing pay channels before the rollout)," said Mr Atul Phadnis, Director, S-Group, TAM Media Research.

"Reality is slowly dawning on the industry that it is not going to be a cakewalk to induce consumers to purchase STB and pay the subscription fees for pay channels."

Certainly, it was understood that Chennai would be the most difficult market because over 70 per cent of viewership is for free-to-air (FTA) Tamil and other regional language channels. The viewership share of FTA channels in other metros is significantly lower.

Now, all Tamil and other regional language channels in Chennai continue to remain FTA and command high viewership, but viewership for Hindi and English pay channels has dropped to "negligible numbers," as viewers have shifted to FTA channels, according to TAM.

"Interestingly, since cable operators are no longer able to give viewers access to pay TV English movie channels in non STB homes, they have substituted some of these with other international channels like Hollywood and Arirang English movies," the TAM report said.

However, there have been other gains, too: while the slow pace of penetration has not come as a surprise, much of the consumer reticence can be blamed on the Government's failure to reassure consumers, or make progress in the other metros.

"People are waiting to see if more channels will go FTA once CAS is rolled out in the other metros," said a spokesperson for a large multi-system operator.

"Besides, the rollout cannot be called a failure, as it was aimed at consumer satisfaction, and that has been achieved with the reduction in their cable bills: consumers who only want FTA channels are very happy paying less than Rs 100."

The MSO believes that as consumers get more comfortable with the system, and with special programming for the festive season on pay channels, as also the holiday season when children want their cartoons and English channels, there will be a greater demand for STBs. Besides, the cricket tri-series may help the pick-up of STBs in cricket-crazy Chennai.

Also, after their initial reluctance, local cable operators are also pushing for CAS. "The cable operators have understood that they are still a part of the value chain, so they feel more secure now, and are encouraging consumers to get STBs," the MSO said.

The TAM report suggests that the learning from Chennai be used to make "strategic decisions for future rollout of CAS and the subscription drive for pay TV channels." The potential exists, but it will take hard work, the report said.

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