The television industry has continued to grow at a healthy level despite the delay in digitization and the economics between multi-system operators (MSOs) and TV broadcasters still not fixed. The television industry in India is estimated to be at Rs.475 billion in 2014 says the FICCI-KPMG Indian Media and Entertainment Industry Report 2015. It expects Indian TV industry to grow to Rs.975 billion by 2019, growing at 15.5 percent CAGR. It also says that subscription revenue growth will also outpace the advertising revenue growth.
The report expects TV industry growth in 2015 to touch Rs.543 billion. Out of the Rs.475 billion in 2014, Rs.320 billion was accounted for subscription revenue and Rs.155 revenue was from advertisement revenue. Going forward in 2015 subscription will increase to Rs.369 billion while advertisement revenue will increase to Rs.175 billion. In 2016 the jump in growth of subscription revenue will be to the tune of Rs.433 billion, while advertising revenue will increase nominally to Rs.198 billion. By 2019 subscription revenues are expected to have grown to Rs.676 billion and advertising on the other hand will have grown to Rs.299 billion.
The report said that in 2014 subscription revenue growth from DTH continued to grow fast. However, the TRAI aggregator break-up order had not significantly impacted larger broadcasters but did in fact impact smaller broadcasters. Another reason for the increase in subscription revenues is the paid cable and satellite (C&S) TV households in India. The number of TV households in India increased to 168 million in 2014, implying a TV penetration of 61 percent said the report. At 168 million TV households India is the world’s second largest television market after China, however it remains highly unstructured. This is from 161 million TV households in 2013. Paid C&S penetration of TV household in India increased from 80% in 2013 to 82% in 2014. However, the report expects this to increase to 90% by 2019 where TV households will have grown to 196 million in India.
The problem still lies with the slow process of digitization, as without complete digitization packaging and channel tiering to increase ARPUs still remain at large. Currently analog subscribers still occupy the largest portion of the pie with 70 million subscribers in India, followed by 40 million DTH subscribers, 29 million digital cable subscribers and 10 million other digital subscribers. However, going forward the number of DTH and digital cable subscribers are expected to increase phenomenally. In 2015 DTH subscribers are expected to increase to 61 million and digital cable subscribers 45 million, while analog subscribers decrease to 55 million. This trend is said to go on and by 2019 the DTH subscribers will account for 76 million and digital cable 94 million, while analog will account for only 5 million according to the report.
Subscription growth for TV broadcasters
For the TV broadcast industry on the other hand has seen most of the revenues come from advertising and less from subscription. However, as things progress subscription revenues for TV broadcasters are expected to increase gradually as digitization progresses. The TV broadcast industry size according to the FICCI-KPMG report in 2014 was at Rs 230 billion and is expected to grow to Rs 265 billion this year. Advertising revenues in 2014 was at Rs.155 billion and grew by 14% since the previous year where it stood at Rs.136 billion, while subscription revenues too grew to Rs.75 billion in 2014 from Rs.69 billion 2013. In 2015 advertising revenues are expected to grow to Rs.175 billion, while subscription revenues are expected to grow to Rs 90 billion. Further on by 2019 while advertising revenues are expected to grow to Rs.299 billion, subscription revenues will have grown further to Rs.201 billion.
In 2014 one of the biggest contributors to the TV advertising revenues was the elections and are estimated to have contributed about Rs.4 billion says the report. Excluding this the TV advertising grew by 11 percent on a like-to-like basis. Further ecommerce companies too contributed this growth in 2014 and is expected to continue their spends on TV in 2015.
With some pain points of digitization and addressability getting cleared in the future we definitely can expect the TV industry to grow not only in advertising revenues but more importantly in subscription revenues.