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Subscription, revenue sharing continue to haunt broadcast industry

Subscription, revenue sharing continue to haunt broadcast industry

Author | Abid Hasan | Thursday, Jun 26,2014 8:27 AM

Subscription, revenue sharing continue to haunt broadcast industry

The Indian broadcast sector is the third largest in the world in terms of number of TV households and has been the preferred advertising medium in India for several years now. The television industry in India, as in the rest of the world, consists of some basic internal stakeholders – content providers, distribution platforms, advertisers and consumers. All segments are undergoing a major transformation in terms of regulation, technology, business models and market dynamics.

The phase-wise implementation of digitisation is bringing about further changes in this industry.

Highlighting the benefits of the subscription-based model and ad free channels, Monica Tata, MD, HBO South Asia said, “It provides a huge opportunity when it comes to quality entertainment and there is an audience that is willing to pay and watch. Global travellers know for a fact that HBO is an ad-free channel around the world. Originally, HBO’s format is ad free and the objective is to give a premium experience to the consumer. However, in India and Pakistan, we carry ads.”

Speaking about the challenges for the broadcast sector, she said, “We are heavily dependent on ads. Besides, we are facing bandwidth constraints. Another challenge is to turn a consumer into a paying consumer.”

With the deadline for implementing the final phase of digitisation just six months away and the industry witnessing several landmark developments in the last one year, the Indian cable television is entering an exciting phase of both opportunities and challenges.

Tony D’Silva, Group CEO (Media), Hinduja Group and MD, IndusInd Media & Communications ,congratulated the cable operators for building such an ecosystem. He strongly appealed to the Government to finalise a date for the last phase of digitisation. He said, “Fundamentally, digitisation is not about installing set top boxes. It is about consumers getting the benefits.”

He added, “HITS is one of the best answers to this entire question as it provides all the background technology. The Government should announce the exact date so an investor can invest his money in this sector.”

D’Silva further said, “While we are progressive on the one hand, we are lacking in implementation. The success criteria for everybody in the value chain need to be defined.”

Commenting on the challenge of getting the required number of set top boxes in place for the digitisation process, Anil Khera, CEO, Videocon D2H shared some statistics and said, “In India, there are 240 million households, out of which, 160 million have got TV connections. There are 80 million cable connections and 40 million DTH connections, including 15 million DD Direct connections. As of now, we need 50 million to 60 million set top boxes.”

He raised the question as to whether it is necessary to import these STBs from other countries or manufacture them in indigenously.

Sharing his point of view on taxes for the broadcast industry, Khera pointed out that the DTH sector pays around 33 per cent tax to the Government.

However, the Government has now requested DTH players to reduced their subscription charges, Khera said, adding, “Though we have been asked to reduce the monthly subscription charges, there have been no reduction in the content cost or taxes. DTH operators together have invested around Rs 20,000 crore over the last 10 years, but none of them are making profits today. We are providing the cheapest service to the country.”

Supporting the self manufacturing model, Khera said that all Videocon STBs are made in India and added that these boxes can be easily manufactured in India, but who is going to finance it? He requested nationalised banks to help in the manufacturing process.

Meanwhile, Roop Shrama, President, COFI highlighted different issues that last mile operators are facing. The first question she raised was regarding the benefits of digitisation.

She said, “We were told that the purpose of digitisation is to give benefits to the customer, the LCOs will not go out of business, and there will be good quality boxes. However, none of these have come into existence yet.”

According to her, the most important aspect is percentage sharing pattern. She stressed, “The MSOs are taking all the decisions, broadcasters are not spending a single penny, but they want full revenue in the form of subscriptions and advertisements.”

Parmeswaran N, Principal Advisor, TRAI pointed out that the regulator too is facing some issues where “ten different MSOs are pulling in ten different directions”.

He asked,” Can’t the industry come together and work for the implementation of DAS? As far as the revenue pattern is concerned, revenue sharing was okay when analogue system was in place.”

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