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Digitisation key expectation of TV broadcasters in 2015

Digitisation key expectation of TV broadcasters in 2015

Author | Collin Furtado | Wednesday, Jan 14,2015 7:54 AM

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Digitisation key expectation of TV broadcasters in 2015

Television broadcasters are optimistic that the sector will witness some major developments in the new year. One such thing is digitisation, which they feel will improve issues of addressability, bring down carriage fee and  increase subscription revenue.

Digitisation: Need of the hour

According to broadcasters, delay in the implementation of digitisation was the biggest impediment that the industry faced last year. Phase 3 and 4 of digitisation was postponed by a year to the end of 2015 and 2016, respectively. Besides, the implementation of Phase 1 and 2 witnessed a lot of roadblocks. However, broadcasters hope that there would be no further delay in the completion of Phase 3 and 4 of the project.

“A number of things needs to be done. One such thing is that digitisation gets established in the market in its true form, so that its benefits can be realised by the entire value chain. Phase 1 and 2 have been implemented on paper, but things on ground have not changed much. Phase 3 and 4 have been postponed. We have to ensure that digitisation gets implemented, so that the entire value chain becomes transparent,” NP Singh, Chief Executive Officer of Multi Screen Media (MSM) had said earlier.

Others in the industry echoed similar views. "Digitisation is something that we started and it needs to be completed at the earliest. The project should not miss any more deadlines,” said Keertan Adyanthaya, Managing Director, NGC Network India and Fox International Channels.

Saurabh Yagnik, EVP and Business Head at Sony PIX and AXN, said, “I hope for a stronger policy and directives on digitisation. The project should help improve the viewing experience and ensure that business benefits are realised in 2015."

Pradeep Hejmadi, Business Head of Zee TV, lauded the government for being communicative in terms of regulation and policies. “The government has done a good thing by saying that the industry is mature enough and understands what it should do. As long as that conversation continues, it will be perfect for us moving forward,” he said.

Addressability to improve

Despite the completion of Phase 1 and 2, broadcasters faced several problems until last year. However, with digitisation, they expect higher subscription revenue, reduction in carriage fee and better addressability.

“The television sector will witness a robust growth in 2015 as well. The full impact of digitisation in terms of higher subscription revenue, reduction in carriage fee and better addressability is expected soon,” said Ravish Kumar, EVP, Viacom18 and Project Head Regional Channels – ETV Kannada/ Bangla and Odiya.

“We need transparency. Besides, declaration of revenue by Local Cable Operators (LCOs) and Multi System Operators (MSOs) is needed. Transparency will ensure a better dispersion of funds across the value chain, which will help everybody. If the value chain gets broken, it doesn’t grow after that,” said Neeraj Vyas, Senior Vice-President and Business Head, Sony Max, Max 2 and Mix.

Similarly, “The most important thing for the industry will be to get addressability work smoothly with digitisation. It will be the biggest thing for the industry from both the business and consumer points of view, like it is in most developed markets. It will also help increase cable and satellite Average revenue per user (ARPUs), which are very low compared with other areas in the Asia-Pacific region. It will also help broadcasters meet viewers' expectations. With funds getting better, the quality of content too will improve. Digitisation can help that money go into content itself,” said Krishna Desai, Network Head, Kids Entertainment, Turner International.

On the carriage fee front, Nina Jaipuria, EVP and business head of Viacom 18 - kids channels, says, “From a PNL perspective, I would like to see the carriage fee reduced. If the subscription is growing and carriage fee reducing, the margins will certainly look up. At present, the carriage fee is reducing by 10-11 per cent.” 

Micro-segmentation here to stay

Broadcasters expect more market segmentation in 2015. More channels are likely to be launched. In 2014, several broadcasters had launched two-three channels in a particular genre. The trend is likely to continue in 2015.

“Micro-segmentation is here to stay. Segmentation is good as it caters to the needs of the audience. Once digitisation comes to play, segmentation is going to be the way forward in terms of trying to meet the needs of the target audience, however big or small,” said Jaipuria.

Desai shared similar views. “The trend is likely to continue worldwide. Broadcasters try to segment the market and viewers so as to meet the increasing demand and business goals,” he said.

Digital penetration

With the advent of digital platforms and video-on-demand service, service providers are eating into the share of revenues in the US. With the increasing number of smartphones and launch of 4G, broadcasters expect that the digital consumption to grow exponentially.  

“You have to evolve on the digital front at some point of time because a large audience will switch from TV to iPads, tablets, smartphones, etc. If you want to stay ahead, you got to be future ready. Future ready is about having a platform based on internet. Besides, with 4G coming next year, the entire plan is likely to change. You got to be future ready in terms of taking that engagement and entertainment beyond television to every screen possible,” said Jaipuria.

Sangeetha Aiyer of History TV18 says, “Every study shows that the consumption of content is shifting beyond television. Broadcasters should look at the growth of the online video industry to reach out to a broader audience. It is a threat, if channels refuse to adapt to this trend and create content that viewers would like to watch on demand. However, I don’t think that the online video industry should be viewed as a threat. Ultimately, one has to create a system that unites online and on-air elements.”

Ad revenue to shoot up

TV broadcasters also expect advertising revenues to shoot up in 2015. Factors such as a stable government and revival of investor sentiment have benefitted broadcasters. Advertising revenue growth for TV in 2014 was around 12 per cent. It is expected to increase further in 2015. 

“As far as television is concerned, 2015 looks good as a lot of new categories are coming up. No other medium offers the kind of reach like that of television. Also, we are adding 8 to 10 million homes every year on cable and satellite. So, 40-50 million new viewers are coming in every year. These factors will keep fuelling the growth of television. There are categories such as e-commerce, auto, telecom, handsets, FMCG, etc. that have been strong. We had a good run in 2014 and all these categories seem to perform well in the new year as well and contribute to TV's growth. Even consumer durables are back, which over the last two-three years had dropped spends,” said Rohit Gupta, President, MSM.

“I expect the advertising expenditure (adex) to grow. Most projections are above 12-15 per cent, which is healthy. New categories will continue getting added,” said Yagnik.

Earlier, Exchange4media News Service had taken a look at some of the issues that affected the industry last year (Flashback 2014: A roller-coaster ride for the TV industry). The industry had witnessed some significant developments last year. But the implementation of digitisation faced a major roadblock. In 2015, broadcasters are keeping their fingers crossed and hope that the project is completed without any further delay or hindrance.

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