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English GEC space preps to grow into Rs 400 crore market

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English GEC space preps to grow into Rs 400 crore market

The English GEC space has seen a lot of activity in the recent past with the emergence of new channels, the latest to join the pack is Colors Infinity.

The genre is riddled with content acquisition costs which have increased by more than three times in the last few years according to the FICCI-Frames 2015 report. We had earlier reported content acquisition costs per hour per show ranged between $5,000 - $8,500 (approx. Rs.3 – 5.5 lakhs). Today it is between $7,000 and $10,000 (approx. Rs.4.5 – 6 lakh) per show per hour depending on the popularity of the show, said an industry source. The cost of some new shows which are aired either 24 hours after being aired in the US or simulcast can even reach up costs of $13,000-14,000 (approx. Rs.8 – 8.8 lakh) per show per hour. It would put acquisition costs for 10 shows for a channel to more than Rs.10-15 crore.

Monetising the genre

The question is what is the market size of this genre and is it making enough revenues to sustain the high level of investments? A major portion of the revenues in the space comes from ad revenues and subscription revenues. According to the FICCI-Frames 2015 report the adex share of the English entertainment genre (which consists of English GECs and movies) was 4.6 per cent in 2014. This would peg it at around Rs.713 crore. Industry sources we spoke to pegged the ad revenues in the English entertainment space at Rs.600 – 750 crore. The English GEC genre accounts for ad revenues of Rs.350 – 400 crore. Growing at 15% YoY, it is expected to rise to Rs.400-450 crore by the end of the financial year.

Subscription revenues of TV channels depend on digitization and though phase I and II of digitization are complete a majority of broadcasters say that subscription revenues are yet to grow to significant levels with distribution still stuck in the analog phase. “The ratio is still significantly skewed in favour of advertising review. However we have seen a consistent incremental increase in subscription revenues and we are sure that once digitization is complete we will see further growth in subscription revenues,” says Ferzad Palia, EVP & Head, English Entertainment, Viacom18. This increase in subscription revenues according to the FICCI-Frames 2015 report is due to the increasing penetration of premium ad free channels (such as Star World Premier) and has resulted boosting subscription revenues in the English entertainment genre. Premium HD channels recorded about 10x topline growth, with DTH accounting for over 95% of the premium channel subscriber base said the report.

Ratings game…

Some of the channels in this space include AXN, Star World, FX, Fox Crime, Zee Cafe, Comedy Central and now Colors Infinity and there is also the pure play subscription channel Star World Premier. According to the latest BARC data ratings (Week 28, July 11 – 17, 2015, 6 Mega Cities : NCCS AB : Week 28 : Individuals : C&S 1Lac+) Zee Cafe dominates the ratings and has the maximum share with ratings of 208,000 followed by Star World with ratings of 92,000 and AXN at 89,000. However, TAM ratings during the same period week 29 (July 12 – 18, 2015, All India without LC1 markets CS4+) show FX on top with 2 GRPs, followed by AXN and Zee Cafe with 1 GRP each. BARC data currently is only from 6 major cities, while TAM is All India. As from the ratings the viewership share of this genre is small currently and had reduced to 0.9% in 2014 from 1.1% in 2013. Currently according to TAM Telepedia data it is still at a low 0.1% market viewership share in week 29. It is even lower than the lifestyle channel genre which is at 0.2% market viewership share.

What makes English GECs click…

However, what works for this genre is that it doesn’t go by ratings or CPRP (cost per rating point). English GECs have a certain premium-ness attached to them as they cater to a high earning audience which is SEC AB and hence attracts premium categories and revenues. “It attracts all premium categories right from lifestyle brands to telecom brands to financial BFSI. As a genre English GEC is treated slightly more up market catering to a premium audience. They (target audience) have a far more propensity to spend and affinity to buy new fashion trends. From that perspective brands look to target that genre. Unfortunately the reach and ratings is not so high that is why the spends are lesser. But if they showcase a higher share in terms of the audience viewership then brands will definitely want to leverage them,” says P.M. Balakrishna, CEO, Allied Media. 

Another senior media planner pointed out that the English GECs not only attract premium brands but many of these brands then to spend a lot in acquiring a lot of inventory on the channel. While spot rates are at Rs.2,000 – Rs.4,000 for a 10 second spot, many brands on the channel do not tend to spend on spot buys but instead on acquiring larger inventory such as acquiring presenting sponsorship or powered by sponsorship of the shows. The weekend packages of shows which are marathons which run for five or six hours can go for a price of Rs.30,000 to 40,000 according to media reports. English GEC channels also can charge Rs.5,000-6,000 for a 10 second spot for new seasons of a show. The Hindi GEC ad rates go from Rs.80,000 to even Rs.1 lakh for a 10 second spot.  

The road ahead…      

One way ahead for English GECs to be profitable is to expand viewership. One way to do this is to tap into even the HSM markets which have a lot of youth who have grown up with English education. This is exactly what new English GEC Colors Infinity and many other channels in the genre are looking to do by expanding their target audience beyond the metros. Colors Infinity also roped in Bollywood celebrities Alia Bhatt and Karan Johar to appeal to the mass audience to sample the content.

“With India being the second largest English speaking population in the world, the opportunity for the genre is huge. Not confined to the elite, English viewership now extends well beyond metros. The category is fast widening its appeal across viewers who think and speak in English, but haven't experienced the latest international entertainment yet. We are sure that with increased exposure, and accessibility we will have more and more viewers looking at consuming English entertainment,” said Palia.

Vivek Srivastava, SVP & Head English Entertainment Cluster, Times Network said, “English language consumption has been surging ahead across media. We are the second largest English speaking population in the world. English is the second largest medium of instruction in the Indian schools. The English movies theatrical revenues are growing continuously across years, we have already had two 100cr+ Hollywood hits in first six months of 2015. On social media most of this consumption is in English despite language options being available. The English story is bullish and television will be at the forefront of this growth both in eyeballs and ad pie.”

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