Media experts see HBO’s move to go ad-free as a ‘calculated risk’

Media experts see HBO’s move to go ad-free as a ‘calculated risk’

Author | Swapna Rahul Shah | Monday, Sep 08,2008 8:10 AM

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Media experts see HBO’s move to go ad-free as a ‘calculated risk’

The Indian media industry has been evolving steadily, and the recent developments on the distribution front, where digital homes hold a 7 per cent share of the overall television households, have perked up the broadcasting industry to some extent. English movie channel HBO’s move to follow in the footsteps of its global model and go commercial free in India very soon has raised some interest in the media industry.

The company is reportedly in talks with various distribution platforms already in this regard. It is also understood that HBO is seeing substantial subscription revenues that has fuelled this decision further. However, can HBO sustain this move, given the present market dynamics in India? Media experts state that even as the decision is in the positive direction, it is a risk nonetheless.

Imran Karim, Media Director, TME, said, “Worldwide, HBO is a commercial-free entity, except for India and Brazil. When HBO was launched in India, it had followed the ad-free model, but a few months down the line, they took the commercial route. In today’s scenario, it is very difficult for any channel to make any revenues on the basis of just subscription revenues. They won’t be able to get the returns only through distribution platforms because in India the cable route is powerful. This kind of move may work after 2-3 years when DTH takes over completely and CAS is implicated.”

Kunal Jamuar, GM, Madison, added here, “The success of this move completely depends on how well they monetise this. HBO has taken a calculated risk in the current scenario, assuming that everybody is on to the DTH bandwagon and the degree on convergence, at least in the metros, would be quite high. Therefore, they think they can make money out of it. It’s a very good move from the consumer point of view as they would get the opportunity to watch a commercial free channel, which would give them the feel of theatre-viewing.”

Speaking on the present distribution scenario and the strength of the cable platform, Jamuar added, “The cable market has become very fragmented. We have several cable operators, smaller sub-operators and so on. Getting a fair subscription for channels is not going to happen in the short-term because all cable operators have the habit of under-quoting. This is the reason why subscription models don’t work well in India. In order for them to monetise this properly, they are probably banking on the fact that DTH is catching on. On the DTH platform, there is no question of under-quoting figures for subscription.”

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