The Hindu Business Line : Of set-tops and setbacks

It doesn't take much to guess which will do better — free entertainment for the masses in their language or one which comes for a price and has hardly any takers?

A scene from serial on Tamil channel Star Vijay

EVERYONE is moaning about how the conditional access system (CAS) is a flop in Chennai. Personally, I think they are wrong: CAS is a hit! The huge mass of Chennaiites are now watching what they always used to watch, and are paying less. So CAS is working just fine — it has just proven what a lot of us knew all along: that the pay channels were carefully shooting themselves in the foot when their pricing games forced a CAS regime into place.

This is a classic case of a unilateral strategy — devised in boardrooms, not in the marketplace. Did anyone stop to conceptualise the consumer's reaction to CAS? Was proper market research conducted to understand consumer attitudes and expectations of home entertainment? Did anyone even work out the numbers that quite clearly indicated CAS would be a resounding flop for pay channels in Chennai?

I can quite see how the thinking would have gone: a quick count of the SEC A (socio-economic classification A) consumer base, a `no-brainer' assumption that high SECs are bound to watch English and Hindi, a reasoning that wealthy consumers would be only too willing to pay up for the set-top box, once they saw reason. No one in the CAS chain was prepared for the consumer response.

Consider some of these assumptions, and let's take a reality check.

Assumption: Enough Chennaiites watch Hindi/English channels to make this move a success.

A scene from serial on Star Plus

Reality check: The Tamil channel stranglehold on home entertainment in the city has been obvious for years. And if it wasn't, a rudimentary dipstick would have revealed it to be so. Before CAS was imposed, this was estimated to be over 70 per cent of viewership in Chennai — post facto, it should be clear that the number is even higher. Another reason to doubt the TAM figures, if you ask me!

Guess how many of Tamil Nadu residents speak Tamil as a primary language? 87 per cent

Guess how many of Tamil Nadu residents speak Hindi as a primary language? 0.3 per cent

Guess how many of Tamil Nadu residents speak English as a primary language? Negligible

So, here is the problem in a nutshell: On the one hand you have vibrant, dynamic entertainment tailored for the masses, in the language of their choice. And it is for free. On the other hand, you have the Hindi channels — Sony, Zee, Star or the English channels, which are viewed by a minuscule proportion of the public — and these want to be paid to be watched. Hmm ... now this seems a no-brainer, doesn't it? It shouldn't have taken a huge amount of analysis to conclude that pay channels would only get teeny-weeny revenues.

Assumption: Upmarket consumers can afford set-top boxes. Kids will provide the pester power to push the decision

Reality check: At an upmarket school, one mother voiced the collective relief of parents that perforce, children had been weaned away from the idiot-box. "No more Cartoon Network," she told me in relief. It wasn't that she didn't have the money to buy it: she just saw this as a great opportunity to put kids through a de-addiction treatment.

Assumption: It's just a question of time. Consumers will soon see reason.

Reality check: And therein lies another rub. Almost everyone expects that it will soon be a question of time before the cable chaps go bust and we are back to the good old days. Now that will never happen, but until the permanence of CAS is brought home, why would consumers commit themselves to the change? And as long as Chennai is the only experiment, how can the permanence of CAS be brought home? Even the ancient Roman emperors knew that it was dangerous to mess around with the entertainment of the masses. It would've been a short-lived emperor indeed who decided to charge for his gladiator shows.

Assumption: It will finally work out cheaper.

Reality check: Yes, it has — but if you are watching only the free channels! If, for instance, I want the same set of channels that I watched earlier, I would have to opt for a bouquet that will now cost me Rs 350 per month — as against the Rs 250 I paid earlier, plus I have to cough up over Rs 4,500 for the STB. Consumers are not fools — they can do the number work quite easily, thank you. MSOs have now realised selling set-top boxes is an uphill task and are offering them on a monthly rental.

All of which brings us back to the starting point — CAS has actually been a success for the large majority of the cable TV watching population, but for the pay channels, the less said the better.

I'd say this is a great opportunity for all marketers to observe exactly how their products are faring in Chennai without a regular dose of hype about the `reach' of the pay channels. Of course, for us at Paradigm, the CAS experience in Chennai only resoundingly reinforces one of our hobby-horses, that strategy in India is too Hindi-/English-centric. The market in India is hugely fragmented in the regional pockets, and pan-Indian strategies that do not acknowledge this reality are doomed. But that is another story.

(The writer is a Chennai-based management consultant. Karate-gy is a proprietary term for strategic exercises conducted by Paradigm Management Knowhow.)

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