Stakeholders in the TV distribution business have mixed expectations from the year 2014. Although all the stakeholders are optimistic regarding the future, the dimension of optimism of one side (broadcasters and content aggregators) is countering the dimension of the other (MSO, LCOs, DTH players) to a certain extent.
TRAI recently came up with number of guidelines for all the stakeholders in the business. This included protocols regarding Consumer Application Forms, directives to be followed by the MSOs and content aggregators before getting into interconnection agreements, more power to the consumer, and so om. The year 2013 saw a number of controversies and clashes in the distribution business. While broadcasters feel it is high time they start receiving more subscription fee and pay less carriage fee, LCOs, on the other hand, feel that it is not the right time to pass on the cost to the consumers. Will 2014 deliver some results in the television distribution business?
Rajesh Kaul, President, One-Alliance remarked, “We have high expectations from 2014. Grassroot issues need to be addressed and there needs to be clarity on billings. It is time MSOs put the systems in place. It is high time that the ARPUs increase this year from the distributors. Digitisation needs to deliver now.”
Broadcasters and content aggregators want to recover carriage fees now. However, commercial negotiations in such scenarios usually are backfiring. Sony’s dispute with Hathway Cable and Den is a prime example of this case, where the MSM Network got into disputes with both the MSOs, which resulted in the blockage of signals of the channel.
But as far as development on the ground is concerned, though 2014 might not turn around the distribution business completely, it is likely to add more dimensions in the change factor witnessed across the industry, especially at the grassroot level.
How will this happen?
Resolving the ARPU fluctuation
In digitised markets, MSOs have and in some cases are planning to pass on the cost to the consumer, thereby increasing the Average Revenue per User (ARPU). The present ARPU structure is not enough for RoI at various stages. There are certain cases where the consumers have not paid the monthly cable fee for more than three months, but are still receiving all the channels. DTH players, too, are planning to increase the ARPUs.
In a scenario with pressure from broadcasters and TRAI, the equations might change soon. “ARPU increase is inevitable and was a part of digitisation. This has to happen citing the present business model. We would want as a genuine business step to increase our ARPU, but we are not able to do much as the consumer has an option of switching to cable service, which provides the content at lower prices. Now, the MSOs and LCOs have begun to feel the pinch. ARPUs are likely to increase this year,” said Salil kapoor, COO, Dish TV.
Although stakeholders have suggested that the ARPU has increased post digitisation, MSOs feel that there is no level playing field in the business. “Even if ARPU is increased significantly, the benefits are yet to be received. For that to happen, one-sided approach would not suffice and MSOs and LCOs have to be treated at a level playing field with the Government, broadcasters and content aggregators. There should be accountability from every corner and not just from one. I firmly believe that 2014 would be a year of stabilisation of Phase I and Phase II of digitisation,” commented Shahji Mathews, CEO, GTPL Hathway.
Transparency would also imply service tax and other Government collections from the grassroot LCOs. As per MSOs, the Government mandate promises accountability, but does not pitch for the ARPU. “There is Government, MSO, LCO, Broadcaster, and content aggregator in the entire chain. Therefore the stakeholders are many and vested interests from various quarters are clogging the development. This can only be resolved if mutual interest is taken into consideration”, mentioned an LCO on condition of anonymity.
Clarity on Business protocol
With subsequent judgements from TDSAT or High Court there should be clarity on how protocols need to be followed in the distribution of TV channels in India. “TDSAT has delivered some judgements recently. Although they haven’t delivered anything out of the box, but judgements usually make stakeholders remind and in some cases aware of the business protocol. More judgements are likely to give some direction, especially to MSOs, LCOs and the DTH operators over what to do and what not to,” said Amit Patil, media analyst with Angel Broking.
Although the disputes according to players in the industry are likely to increase as stake are high but simultaneously judgements should start making things clear as well. Therefore a complete makeover might not happen, but business protocol in the coming year is likely to be clear from what it is now regarding carriage fee, channel placement, etc.
Gaurav Gandhi, Group COO, IndiaCast Media said, “I think economics of the business in phase 1 and phase 2 would fall in place this year. This involves full subscriber declaration, billing by MSO to the end consumer and packaging being implemented thus resulting in effective increase ARPU for all stakeholders. I see all members of the value chain working closely to see this through.”
Tapping un-digitized markets
Markets like Chennai, some western and some eastern markets like Kolkata are slow on digitisation and it is likely that some improvement might happen this year. TRAI recently expressed concern over the slow pace of digitization in Chennai and acknowledged that the progress is not up to the mark in the Southern state. However most broadcasters and analysts working in the Southern market expect things might not change drastically. A broadcaster operating in the Chennai market mentioned “Although I am not very optimistic but since change is happening across all the markets, Chennai cannot remain immune to it for long. It is high time that stakeholders should take initiative to improve conditions here and let the market decide its course. But the possibility is minimal, as vested interests from the Government quarters are high.
In some cases over distribution the loss of one stakeholder is the gain of another, but analysts say that this would be beneficial for the overall health of the industry. 2014 might deliver on their hopes, but is best to wait and watch.