While Star bowled a googly by announcing a new subscription rate which was 25% lower than the previous one on the eve of CAS bill being passed in the Parliament, ZEE-Turner is first of the block with a new pricing strategy a couple of days after the bill has been passed. Though there were unofficial talks of the network raising the bouquet price to Rs 50, it waited till CAS bill was finally passed in the parliament.
What is interesting is that the distribution network has announced a three-layer dual pricing strategy. As is known, ZEE offers differential pricing to small cable operators.
It has decided not to increase the pricing of its offering for rural markets, where the operators pay on the basis of the number of channels they broadcast.
In the segments where ZEE has been offering a bouquet of four channels based on geography, region and demography segmentations, and for operators in smaller places subscribing to four channels from the Zee-Turner package, the company would now be offering an additional encrypted channel. For these operators, the new package of 5 encrypted and 3 free to air (FTA channels) would cost Rs 37 per subscription per month.
Meanwhile, the complete bouquet of 16 Channels would cost Rs 50 per subscriber per month. The package of 16 channels earlier was costing Rs 42 per subscription basis.
Zee-Turner is confident that the new revised offering is in line with the expectations of its viewers and distributors and would pave the way for smooth migration to CAS environment. The bouquet comprises of all channels of Zee Group, Cartoon Netwrok and CNN.
ZEE's strategy of not increasing the rates in the rural areas is in sync with the market thinking that in the upmarket segments people would be ready to pay a higher subscription fee to watch the channels of their choice. However, in rural areas, where the cable operators air only a small number of channels, subscription rates might be a major deciding factor as to what channels people will be watching.
Though on the surface there is a dissonance as the price hike in the middle level is the steepest, it still might work in the network's favour, if in CAS scenario individual households are able to pick eight channels of their choice from ZEE bouquet. While, with the other distribution networks the option of picking the channels of their choice would not be available to the subscribers.
Meanwhile, Alliance One, at the moment would stick to its pricing of Rs 55 for the bouquet. It recently announced the hike its rates from Rs 40 to Rs 55. Says Shantanu Aditya, President, SET Discovery, "I see no reason to reduce the subscription rates. As I have mentioned earlier, we have had a reasonable price hike. We have just raised it Rs 55, and it includes a premium channel like HBO, and also a property like World Cup. This moderate hike has been welcomed by the cable operators."
But would the subscription rate not adversely affect the distribution network once CAS come into force? Says Aditya, "As CAS would be a reality at the earliest in 6 to 8 months. We don't really know how the market would be at that point in time. It is too premature to talk about it."