Peter Mukerjea
Chief Strategy Officer
INX Media
Apart from the huge untapped market, the use of new technology like HDTV and the potential of quadruple play mean there's still scope for new players
We have a TV household penetration of just over 50 per cent while it is more than 90 per cent in most other countries, so we have a long way to go in terms of penetration. Then multiply this by the number of languages that we have and you get a sense of where one section of growth will come from.
There is then the whole subject of TV on the mobile and interactive TV which hasn't even happened yet in India. What's stopping the introduction of most of these services is a little bandwidth which will allow a two-way path to support interactivity.
There's also a whole new generation of HDTV channels waiting in the wings to enter the consumers' home. The HDTV experience makes SD (the current day standard ) look quite basic. The consumer experience with quadruple play is yet another new opportunity. Imagine the growth and excitement when the same picture is available on the cell phone, the land line phone (which will have an inbuilt screen), the TV set and the PC.
What we have as TV channels today in India are very basic and soon you'll be able to go to the TV set and order your pizza or make a booking at the local multiplex for a movie and select your choice of seat using your remote control, and so on. None of this is my imagination -- it's available today in cities like Hong Kong on PCCW's Now TV platform, for example, at a relatively modest price. It won't be long before this will be available in parts of Indian cities. In other parts of the country which are evolving from no-TV to their first set, there will be equally extraordinary growth coming from the base level consumer too.
There will be a changed landscape where many of the rubbish channels will simply die or go out of business and will be replaced by higher quality services with additional features. So when one looks at the opportunities, I would add that there is room for more channels although the new ones will need to be more directed at specific target audiences. There is room for premium channels like a golfing channel, cooking channel, gardening, horse racing channel, motoring channel, 24-hour sports news channel and so on. In addition, there will be channels dedicated to men-and women, retired folk, children, education, health, interior decorating and other special interest content which viewers will be willing to pay a premium price for.
As the distribution system eases up, with the onset of more platforms like Reliance and Bharti, there will also be a greater opportunity for channels to be carried.
Rohit Gupta
President, Network Sales
Licensing And Telephony, SET
The top 3 channels get 80 per cent of ad revenues. So, while the costs of the other channels equal those of the top 3, it's difficult to see how they'll survive
The television space is indeed getting overcrowded. There are so many channels in each category whether it is news, entertainment, regional languages or sports. However, today you cannot club, say, all the Hindi general entertainment channels (GECs) together. In the entertainment space, there are the top three Hindi channels and then there are the rest. The top three command 80 per cent of the advertising revenue in the category and the rest play around with the remaining 20 per cent.
Clearly, if you want to make money you have to be among the top three channels in a genre, be it entertainment, news or others. You can command a premium on your ad rates only if you are among the top three. And that's what I mean when I say that the space is getting crowded. New channels are being added in the Hindi entertainment category. The going will not be easy for the new entrants.
This is not to say that advertising is not growing. Thankfully, advertising spends in India are growing by about 15 to 20 per cent. However, today while the new entrants are playing in the category that attracts 20 per cent advertising share of the total Hindi general entertainment category, their expenditure equals that of the top three players.
The top GECs in Hindi spend at least Rs 400 crore (Rs 4 billion) a year, or more, on programming, marketing and manpower. And some of the new players may be spending even more. The trouble is that while their costs are high, their income will match that of the second rung channels which earn between Rs 75 crore (Rs 750 million) to Rs 100 crore (Rs 1 billion) a year.
Clearly, the difficult part will be recovering that Rs 400 crore of investment. Do you know the amount of carriage fee some of the new entertainment and news channels must be paying? It would be close to Rs 50 crore (Rs 500 milllion) a year. Also, most news TV companies have added several new channels to their portfolios but their incomes have not moved up in the same proportion.
For instance, hypothetically speaking, if a news TV company earned Rs 125 crore from a single news channel, it is earning a total of Rs 150 crore (Rs 1.5 billion) from that and another three channels. Surely, the cost of the operating three new channels has been added but the income has not moved up at the same pace.
At least in the entertainment space, to make roughly Rs 400 crore from advertising, a channel's prime time weekly gross rating points (GRP) should be close to 100. The new players begin at 10-12 weekly prime time GRPs. Forget about entertainment, any new channel in any category eats into somebody else's advertising share. And there are scores of new channels waiting in the wings. The inference is that many television companies will bleed.
As told to Suchi Bansal
