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With the advent of Digital Addressable System (DAS) in 2012, analysts believe the broadcasting industry is expected to see further consolidation.
Jehil Thakkar, Head of media and entertainment, KPMG, who considers digitisation a game-changer, believes the industry can expectnew channels being launched in niche segments.
“With digitisation, new channels targeted at niche segments will continue to be launched. At the same time, consolidation will happen with larger players strengthening their bouquets by buying out smaller players,” he said.
The year has already seen a slew of channel launches such as Discovery Kids and Nick Jr in the children’s space and ZeeQ in the non-fiction space. This is despite Turner Broadcasting System shutting its general entertainment channel Imagine and BBC Worldwide pulling the plug on BBC Entertainment and Cbeebies.
Ajay Shah, Partner at Ernst & Young, said that the broadcasting industry is expected to see acquisitions and consolidations especially in the regional space as advertising budgets are growing at a fast pace in this segment.
Digitisation
While Delhi and Mumbai have achieved nearly full digitisation, Kolkata and Chennai are still to do so in the first phase. In the meantime, the Government as well as the Multi System Operators are gearing up for digitising 38 cities in the next phase (till March end).
Asked if the first phase of digitisation can be considered a success, Harit Nagpal, MD and CEO, Tata Sky, said, “The first phase of digitisation has been hugely successful. All stakeholders are convinced and confident that digitisation is the way forward. The cable operators are also clear that digitisation is inevitable.”
M.G Azhar, COO, DEN Networks, said, “The second phase is crucial as it will mean nearly half of the country going digital. Multi System Operators have already started getting demand from these cities.” He said that the biggest challenge for the second phase of digitisation will be executing and deploying a large number of set-top boxes across these cities.
FDI in Cable
According to Thakkar, opening up of Foreign Direct Investment (FDI) up to 74 per cent in cable is another key game-changer and the cable industry is expected to see investments coming in from foreign companies once the second phase of digitisation is completed. Added Azhar of DEN Networks, “In phase one, most MSOs used internal accruals to digitise their subscribers and will now be looking to raise funds for the second phase.”
According to estimates, nearly 15-17 million households need to go digital in the second phase and it would mean nearly twice the amount of investments required that was put in the first phase.
Talking about the new models that broadcasters will now test, Raj Nayak, CEO, Colors, said that DAS over a period will hopefully lessen the pressure on the advertising sales revenue. “Not only does digitisation open up significant avenues in terms of revenue for a broadcaster, but it also provides opportunity to the end consumer to experience better quality TV viewing. This also opens up more content experiments for the broadcaster, and as the current data has showed that niche content would get more exposure as more and more number of channels become available to the viewer.”
Already, HBO has collaborated with Eros International to announce the launch of advertising-free movie channels – HBO Defined and HBO Hits in India.
DTH Industry
The Direct-to-Home (DTH) industry has been reeling under losses due to high subscriber acquisition cost. But DTH players believe increase in average revenue per user as well as operational break even achieved by some of the players is a good sign. Nagpal said that the DTH industry has nearly six years experience of customer service, value-added service and is hugely being benefitted by the growing demand thanks to digitisation.
TAM and TRPs
The year also saw huge controversy around measurement of television rating system, and the industry talked about the need for overhauling the system. Analysts believe that even if broadcasters take time in getting Broadcast Audience Research Council (BARC) in place, the advertisers who need to put the money on television are likely to push the industry to ensure a measurement system that keeps pace with the fast changing broadcasting industry.
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