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Are English movie channels differentiated enough to gain traction?

Are English movie channels differentiated enough to gain traction?

Author | Madhuwanti Saha | Wednesday, Jul 06,2016 9:06 AM

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Are English movie channels differentiated enough to gain traction?

English movie channel space is a ‘strong vehicle’ for advertisers to reach out to premium audiences, believes Saurabh Yagnik, Executive Vice-President and Business Head, English Cluster of Channels, Sony Pictures Networks India.

In unison, Vivek Srivastava, Senior Vice President and Head, English Entertainment Cluster, Times Network says that advertisers will spend more on this genre eventually and confident of its growth. He reasons, “There is dearth of platforms for advertisers to buy right now. If there are more channels advertisers will spend more.”

Where does this confidence come from despite no ‘dramatic’ rise in ad rates?

“Advertisers are getting their due in terms of audience they are catering to which is premium. So the money is not getting wasted as channels here are attending to focussed audience. Reach is not as important as the quality of audience,” says Anita Nayyar, CEO, Havas Media Group, India and South Asia. After Hindi GECs, regional and sports channels English as a category is gaining traction.

What also works is the ‘consistency in the English movie channel space than Hindi because of its premium audience’ according to Nayyar. “When a big movie is being premiered, premium audience makes a mental note of the date. So there’s appointment viewing more. There’s more consistent audience in this genre. Besides all English movie channels have a base of audience. Here content matter a lot.”

PM Balakrishna CEO, Allied Media Network finds this genre ‘safe’ for the fact that classics and popular movies always have takers. He explains, “Channels can manage with a combination of fresh and old and probably have one blockbuster a month. That model works. Traditionally, you have found people watching popular movies. It has this security about it unlike other genre. People would invest in movies they have already seen unless it’s a big star cast movie. Small dynamics that work as a pro for movie content which is why repeat telecast works.”

Is English movie cluster getting crowded?

2016 so far has seen the addition of two new premium HD movie channels with Movies Now 2 by Times Network in June followed by Sony Le Plex HD end of this month. That will result to 13 movie channels in this genre which is enough to raise questions on whether the English movie genre space is getting crowded. “Space is definitely getting crowded. The content is only movies,” says Nayyar.

Broadcasters clearly don’t agree, and in fact, bank on the increasing consumption of English as a language in India in everyday life. “Time spent on English is between 45 minutes and an hour as compared to any other regional content which is 2.5+ hours. According to me, time spent is low because of the paucity of content. That’s why the launch of every new channel adds to the viewership. In the next two years, English as a category will be exploding going by the recent social media consumption (which happens primarily in English), increasing Hollywood movies consumption, and the growing number of English medium schools in the past. But it will explode only if content is there to utilise the opportunity,” Srivastava.

Holding the same opinion, Yagnik emphasises more on the success of Hollywood movies in Indian territory. “Most of the Hollywood blockbusters have 70 per cent of revenues coming from international market. For them emerging markets like China and India are crucial. Hence, the future for Hollywood English movies is phenomenal in India which is the second largest English speaking country with 1.25 billion people.”

Yagnik brings out the timing factor as well. “The question is: are the channels differentiated enough? If you are able to create those opportunities for the same and have a critical mass of audience to cater to in each of the distinctive positioning (that you create) then the time is always right.”

 Balakrishna on the other hand thinks there is a definite demand for premium channels looking at higher target audience. “English channels are propagating because they are finding traction. Movie watchers want to watch different titles so they will be responding to channels.”

He even explains the trends that give fillip to the launch of new English channels. “First is overflow of inventory that they can leverage. Second is fresh movies with quality telecast especially with 4K coming and DTH players’ increased bandwidth. So the latter needs more content to showcase. Likewise broadcasters are now able to leverage platform and use additional advertising inventory. Subscription market is peaking up though it’s still not where it’s supposed to be. But there are enough subscribers who are willing to pay for a slew of services by DTH players like Tata.”

How can new channels get it right? He advises, “Channels have to ensure they get their penetration if they are taking the pay route. It will help if they are part of a larger network which ensures they are available to all the homes. Then they go pay and build the traction and ensure subscription and advertising revenue. Other route with the help of network they go free-to-air, build little loyalty and then go pay.”

Is the category under-monetised?

According to KPMG FICCI Report-2016, the English entertainment genre consisting of English movie channels and GECs has been growing 15-20% annually in terms of ad revenues.  The movie category is currently worth Rs 700 odd crores and obviously has room for improvement. Srivastava feels it should be around Rs 2500-3000 crores. “Despite the category having takers, I think we are little under monetised as far as platforms. The price tags on a 10-second spot can be much higher. But we are getting there.”

Even Yagnik agrees, “There is a scope for further monetisation because you are reaching out to premium audience and consumption of English movies is going up.”

However, both Balakrishna and Nayyar think otherwise. “It’s not under monetised in the current state. It hasn’t reached the positioning of a Hindi, regional or GEC who get far more traction. The genre is under leveraged,” explains Balakrishna.

Nayyar says “I think this space is at par with other genre because they are getting their yield in terms of the kind of audience they are catering to.”

HD is here to stay

Analysts put the HD subscriber base at 8-10 million. Despite the slow growth the industry definitely see a growth potential in this space. “A year or two back it was 2-3 million households. Now it’s 8-10 million. So obviously there’s growth potential in this space,” assures Nayyar.

 “It is going to go up. All content is going to be converted into HD. In DTH platform, HD penetration is around 25-30%. Sports, movies and GECs are increasingly watched in HD,” says Balakrishna. He adds, “4k and DTH are here to stay. OTT platforms are coming to play. They will all be used by the consumers. So consumers are growing, advertisers are increasing and spends are growing.”

Long term game

But the growth potential of English as a category can’t take away the category’s shortcomings. Last year, Turner shut down its premium subscription channel HBO Defined as they did not get enough traction.

Shekhar Banerjee, COO Madison points out another dismal picture, “We are not seeing much traction on English movie genre performance even after digitization. For roughly 1000-1050 airings per channel in a quarter we see roughly 400 odd titles per channel, against that such low double digit GRPs for the entire English movie genre is definitely not a game changer. The genre is not showing signs of growth with respect of viewership, in fact we have observed most channels have cut down the number of movie titles in the last quarter. This will only further fragment the audiences.”

Moreover, the increasing cost of content acquisition (which has gone up by 40-50% for the industry over the last three years) makes it impossible for broadcasters to make enough revenues to sustain high level of investment. Nayyar adds, “English movie library is quite expensive. Channels can’t break even on one big premiere.”

Yagnik explains, “We make revenues in Rupees and payment in dollars. While there is cost increases because of competitive force on the other side you are hit by exchange rate. Combination of this makes it extremely challenging for a businessman to sustain itself unless backed by a strong advertising revenue growth. Our belief is that since the audience we are talking to is premium there is targetted advertising.”

Balakrishna adds, “This business works on repeats. The broadcasters would have bought the HD rights or perpetual rights. Those movies are now getting leveraged over multiple platforms. Players have to stay in the market, acquire the rights, build the brand and get customers’ royalty. Then only work with pricing. It’s not an easy game to play. They need a lot of investment from content marketing. It works long term.”

Banerjee also cautions, “We need to also keep in mind the rapid migration of these top end audiences to OTT and other online video platforms and targeting them through digital comes at a fraction of cost of what an advertiser pays on TV.”

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