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Are new Hindi GECs making enough money?

Are new Hindi GECs making enough money?

Author | Collin Furtado | Friday, Sep 05,2014 8:20 AM

Are new Hindi GECs making enough money?

The Hindi GEC space has got busier with networks launching their second or third channels in the same space. In a recent article, exchange4media (New Hindi GECs: Effective brand magnets or segment crowders?) examined the trend, and asked if it made business sense for broadcasters to crowd the genre with multiple launches. We take the discussion ahead with a closer look at the costs incurred by a new GEC, and how long does it take for it to turn profitable. 

Paying the price

Whether it is Sony Pal or Zindagi, channels are splurging on acquiring new content for the channels. According to a senior source from the content acquisition team of a top broadcast network, the cost of acquiring a new daily soap ranges from Rs 7 to Rs 10 lakh per episode. The cost is significantly higher for reality shows at Rs 15 lakh to Rs 20 lakh per episode. “If it is a popular reality show like Jhalak Dikhhla Jaa, the costs shoot up to Rs 30 lakh per episode. The pricing depends on the popularity and format of these shows. And Jhalak Dikhla Jaa scores on both counts,” he said.

On the condition of anonymity, a senior source from a production house of top soap opera shows told us, that some daily soaps too command a premium. Diya Aur Baati Hum, which is the top rated show on Star Plus and among Hindi GECs with an average rating of nine million TVMs, costs the channel Rs 20 lakh per episode. 

Going by this estimate, a new Hindi GEC channel would end up spending anywhere between Rs 200 crore to Rs 250 crore during its first year, for acquiring new content. If the shows are from established production houses, the costs go higher.  

Amit Tiwari, Director, Country Head, Media, Philips India said that in the absence of any syndicated research on whether a channel is profitable or not, everybody paints a different picture altogether. But it is all a matter of a couple of top-rated shows in the channel's repertoire. “When Colors began (with a bunch of eye-catching shows), people started to switch to it and viewership automatically became very high. When Life OK was rebranded from Star One, because of two or three good shows, it attracted a healthy viewership. It is a direct correlation between good content, unique content and how you can attract viewers. And advertisers start investing in the progammes that enjoy a certain traction,” he added.

The slew of launches, as one of the experts observed, was also a move on the part of networks to work the 10+2 ad cap launch to their favour and increase the inventory space. 

Family matters

According to a source from a leading network, the time taken for a new GEC to turn profitable depends on two things - whether the channel is part of an established network with other popular channels in the space, and the marketing strategy.

Ajit Thakur, GM and Business Head, Life OK, in an interview a year ago had said that the channel has broken even one year after being rebranded and repositioned as Life OK from earlier Star One and started becoming profitable from its second year. The channel will complete three years on December 18 this year, and stands fifth in the TAM Hindi GEC rankings. It has even given older and top Hindi GECs such as Colors and Sony Entertainment Television (SET) tough competition throughout the year.

“This was possible because the channel is a part of the Star Network. When you go to a large network with a cluster of channels, such as Star India, it will crack a deal for all the channels in their bouquet, and not just for one. They sell it as a cluster. A standalone channel such as Food Food has not recovered any of its investments. It must have spent Rs 200 crore already, but must have not even recovered even Rs.20 crore from it,” shared a leading industry expert.

According to Mayank Shah, Deputy Marketing Manager, Parle Products, it takes time for GECs to make good the investments made on acquiring new content and promoting them. “And it could take at least a couple of years before viewers keep coming back to the channel,” he said.

Balakrishna PM, COO, Allied Media added to this, “The advantage of being a network with a cluster of channels is that the investments can be monetised over a larger set of offerings and cross promotions done effectively. This way, risks are reduced and the new channel gets all the attention as opposed to standalone GECs. In fact, a standalone channel will have to work that much harder to create for itself the environment that its peer would enjoy in a larger network right at its inception. This is something brands understand and take a punt on.”   
Brand backing from the beginning

Another reason for some of these channels to turn profitable sooner, is the brand support. Ruchir Tiwari, Deputy Business Head, Hindi Movie Cluster, ZEEL said, “With channels like &Pictures and Zindagi, we were very lucky in terms of support. We had the right kind of clients and brands who had faith in the channels.”

Explained Shah, “When you have a new GEC coming in, they typically try and get some founding partners or founder advertisers kind of deal. They will offer you a relatively good rate, and depending on your estimate of whether the channel would work or not, you take a call and you invest in it.”  

“At the end of the day, one waits for the weekly numbers and if the initial numbers are promising enough then brands do take a punt and invest in the GEC in the long term. If the GEC shows promise and if it looks like it will gain momentum and traction, then obviously there is an investment strategy in that,” added Balakrishna. 

For a new GEC to break even and turn profitable is evidently a matter of its genetic pool. Being part of a larger, established family, obviously helps as does enjoying the support of brands that are willing to bet on the content. It is also a matter of creating a property or a show that stands out in the clutter, because at the end of the day, if the audiences are not coming back, neither are the advertisers. 

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