High Definition (HD) channels have recently seen a spurt with many channels launched off late. According to the recent Pitch-Madison Advertising Outlook 2015, the television industry is expected to grow by 9.5 per cent in the adex on the back of some key factors including HD channels, ICC World Cup and Assembly elections.
The adex share for the HD market was 4.6 per cent of the broadcast industry ad revenue in 2014, which is approximately Rs 7.13 billion. This could go up by 20 per cent in 2015, say media planners.
As ad revenue of the broadcast industry are expected to go to Rs 175 billion according to the FICCI-KPMG report, we can expect this figure to go up by Rs 35 billion.
According to the FICCI-Frames 2015 report, there are currently four million HD subscribers that account for approximately 10 per cent of all DTH subscribers in India. It also stated that 15-20 per cent of the incremental subscribers in 2014 were HD subscribers.
The DTH players have grown their top line tenfold thanks to premium HD channels and are said to account for 95 per cent of the premium channel subscriber base. This shows that there is a big revenue base that is waiting to be tapped for broadcasters as well as DTH players. The Average Revenue Per User (ARPU) from HD subscribers is the largest for broadcasters and DTH players.
While for DTH players, the ARPUs from HD subscribers are at approximately 1.5-2x the ARPUs of non-HD subscribers, for broadcasters, the ARPUs from HD channel subscribers is 3x more than standard definition (SD) subscribers.
Harit Nagpal, MD & CEO, Tata Sky, said that currently, 25 per cent of their new subscribers are HD subscribers and that their base for HD is currently 25 per cent.
“Whatever it is, they are interested in watching anything if it is available in HD. So our pricing is also configured in such a manner that whatever you ask for, you pay Rs 125, which is in HD. It started with ‘knowledge’ channels and then went to sports, then to English movies, Hindi movies and moved further to Hindi entertainment. I think the next stop is going to be regional entertainment,” he said.
“There are over 320 channels being delivered at Rs 250 for SD and for Rs 150, there are 50 HD channels being delivered. So that makes it Rs 3 per user (for HD channels) as compared to Rs 1 per user for SD channels. So, the simple math is that it gives us more ARPUs,” said Pradeep Hejmadi, Business Head, Zee TV.
He further said that there is huge potential in terms of advertisers for HD feeds. The brands that they get on Zee TV HD are premium than the mass market brands.
The premium tag comes with HD channels as they currently are subscribed by only a marginal portion of the television audience who are considered to be the premium audience. However, this premium tag does not translate into ad rates on HD channels as they are currently one third of the SD rates. There are also lesser number of ads currently on HD. A reason for this is that the base of HD subscribers is currently still low compared to TV households in India, said Rajendra Khare, Chairman & MD, Surewaves.
“The ad rates are low because the advertiser is paying for the viewership and usually the viewership of HD is lower as compared to SD. But they do get a premium because the engagement level is far better. So it is a function of both these parameters,” he said, adding, “With time, HD adoption will keep on increasing as compared to SD and the advertising load will shift to HD as more and more people are willing to adopt it. So I think we are going through a transition phase.”
Ruchir Tiwari, Deputy Business Head, Zee Hindi Movie Cluster (&pictures HD and Zee Cinema HD) expects close to 10 per cent growth in revenues of HD channels in a short period.
“I think the tipping point is soon where we are going to see a good jump in revenues. The consumer and advertising feedback, which we are getting, looks like there is something big on the anvil very soon in terms of growth. What I see is that there is enough positive interest and liking by advertisers of late,” he said.
The market, however, is very big for HD channels, especially when it comes to advertising.
Dinesh Vyas, GM, OMD said that he sees the HD channel advertiser market growing by 20 per cent in a short period, and also the potential for it to grow by even 100 per cent over the next few years.
Brands with premium products are increasingly looking at only HD channels, he said, adding that there is currently a certain skew for sports channels in HD by advertisers. Media planners too are recommending brands to go for HD channels. However, he said, there is a problem of data regarding HD channels as viewership is not accounted for by TAM. The only information available is from broadcasters. As a result, media planners have to go with their gut feeling instead of relying on the data. If more data on HD channels come out from industry bodies such as BARC, it would be helpful for media planners, he added.
“For marketers, for whom the top six to eight cities constitute a decent share like in financial services, HD becomes more attractive than like an FMCG brand whose target is the top 100-200 towns and cities. HD penetration is getting deeper in eight-10 metros, and so it has become attractive for brands such as financial services. Also, it depends on the pricing. For instance, during the World Cup, the pricing of HD was good compared to SD pricing. So, in that case, it worked out more effectively for us,” said Naveen Kukreja, Group CMO & MD Non-Insurance, Policybazaar.com.
He further said that HD will grower faster than SD and will take a bigger portion of the share going forward. But the only question is how fast this will happen, he added.
As adoption of HD picks up pace, we can expect HD channels contribution to the revenues of broadcasters to increase not only through subscription but also advertising.