Big four broadcasters mulling return to DD Free Dish?
Sources say the rationale behind exiting DD Free Dish earlier this year was to arrest the decline in pay DTH base, but the gamble doesn't seem to have paid off
The media industry is abuzz with talks of big broadcasters contemplating a return to DD Free Dish. Sources in the industry say that broadcasters like Disney Star, ZEEL, Culver Max Entertainment (Sony), and Viacom18 are planning to relaunch their Hindi GECs Star Utsav, Zee Anmol, Sony Pal, and Colors Rishtey on the free direct-to-home (DTH) platform.
The four broadcasters had decided to exit their Hindi GECs from DD Free Dish just four months back. However, they are facing a double whammy of loss of ad revenue due to a drop in GRPs of the Hindi GECs even as the subscription revenue remains under pressure due to the migration of customers to alternate platforms like DD Free Dish and over-the-top (OTT) video streaming. Star Utsav, Zee Anmol, Sony Pal, and Colors Rishtey air re-run content from their pay Hindi GEC siblings.
In March, the Big four broadcast networks had decided to pull out their Hindi GECs from DD Free Dish due to pressure from pay DTH platforms like Tata Play, Airtel XStream, and Dish TV. The pay DTH platforms have been losing subscribers to DD Free Dish, which has become a TV distribution behemoth with an estimated customer base of over 40 million.
The DTH players believe that the availability of premium content from leading broadcasters has aided the growth of DD Free Dish as a leading distribution platform. Since the broadcasters earn a large chunk of their subscription revenue from DTH, they yielded to the pressure from the DTH lobby.
Emails sent to Disney Star, ZEEL, Sony, and Viacom18 remained unanswered till the time of filing of this report.
Sources in the TV distribution industry say that the rationale behind exiting DD Free Dish earlier this year was to arrest the decline in pay DTH base as it is hurting the pay revenues of the broadcasters. They added that the big four broadcasters sacrificed ad revenues to protect their pay revenues. However, the gamble doesn't seem to have paid off as any gain in pay revenue is not commensurate with the likely loss in ad revenue. The four Hindi GECs collectively earn an estimated Rs 1200-1400 crore ad revenue every year.
"The big four broadcasters will definitely return to DD Free Dish later this year since the objective with which this decision (to exit DD Free Dish) was taken has not been met. There is no evidence that the pay revenues have seen much of an upside despite the move to remove Hindi GECs from DD Free Dish. On the other hand, the broadcasters have sacrificed a large amount of ad revenue to ensure that the decline in pay universe can be brought under control," an ad sales official from a broadcast network said on the condition of anonymity.
"Under the current macroeconomic backdrop television ad market has remained soft for broadcasters this year. The pull-out resulted in further loss of ad revenues without any win-backs in pay-TV subscriptions. The strategy seems to have backfired forcing leading networks to reconsider their decision," said Media Partners Asia VP Mihir Shah.
Concurring with this view, a senior ad sales executive from another network said that the decision to return to DD Free Dish should be a no-brainer as the loss in ad revenue is too significant to be overlooked. "The four GECs collectively earned around Rs 1200 crore in ad revenue. There hasn't been major growth in the pay revenues as was anticipated. Therefore, removing channels from DD Free Dish has proved to be a costly affair for big broadcasters," the executive said.
He added that the loss of big networks hasn't resulted in big gains for independent networks and channels as the BARC ratings show that the GRPs lost by the former haven't got redistributed among the other players. "For some reason, those GRPs have just disappeared as the smaller channels have not seen much of a gain from the exit of top networks. The viewership gains by smaller Hindi GECs and other genres are negligible," the executive said.
A source in the TV distribution industry said that the pay revenues of the broadcasters have not seen a full recovery after the twin setbacks of price freeze due to the New Tariff Order (NTO) 2.0 and the pandemic. He also conceded that the bet to reduce subscriber churn from pay DTH to DD Free Dish has not achieved the desired results.
"DD Free Dish continues to grow despite the exit of big four broadcasters. The decision of these broadcasters had, at best, slowed down the growth of DD Free Dish but there has not been any appreciable gain in the pay DTH base. In fact, the pay universe as a whole continues to shrink due to OTT and DD Free Dish taking away the top and bottom end of the consumers. Even the customers in the mid-segment are exercising their options thanks to AVOD platforms," the source said, adding that the cable TV companies are also seeing a decline in their subscriber base.
Endorsing this view, a top official from a leading DTH company said DD Free Dish will continue to grow no matter what the broadcasters do. He also stated that the growth in DD Free Dish base should be seen as a silver lining as these consumers continue to remain in the TV universe, unlike the cord-cutting that is prevalent in the urban markets. "DD Free Dish continues to expand despite the move by big four broadcasters. This is an irreversible trend and there is very little anyone can do about it. The good part is that those customers have continued to remain under the TV fold," the official said.
Ad revenue impact of DD Free Dish exit
Media planners say that the ad revenue loss due to exit from DD Free Dish ranges in the high double digits. As mentioned above, the total advertising revenue collected by the four channels stood at an estimated Rs 1200 crore.
"When the big broadcasters moved away from the FTA platform their viewership numbers fell drastically. These channels were always bought mainly on CPRP metric, so the moment their efficiencies dropped, the advertisers pulled out their ad spends. It was a double whammy as these channels lost the GRPs as well as ad revenues. These channels had pulled out from DD Free Dish in 2019 also and they came back in 2020, they had been through a similar situation with other external factors also in play. But this time around the loss has been larger, as advertising was in full swing in comparison to what it was in 2020," said Dentsu-owned Amplifi's Chief Investment Officer Sujata Dwibedy.
She added that they have to come back to DD Free Dish in order to recoup their ad revenue loss. "Without the DD Free Dish numbers, they cannot be compared even with the second-rung Hindi GECs. Also, the space left by the big broadcasters was getting filled by independent broadcasters. Overall in the Hindi Speaking Markets, we have seen around 15-20% of GRP drop. On top of it, with the shift from the Free Dish platform, these channels faced a much tougher situation," she added.
Dwibedy noted that some new entrants and existing smaller channels did gain at the expense of big broadcasters. However, the return of the big Hindi GEC brands will spoil the party for smaller channels, she averred.
"We also need to note that DD Free Dish allows the broadcasters to reach out to a huge audience, the masses, which becomes a critical platform for advertisers who are also targeting that same audience. For the period that these channels have not been on DD Free Dish, they would have easily lost 40-45% of their ad revenue, maybe slightly more in the last 3-4 months. If the big channels come back, the independent networks will definitely see an impact on their viewership shares," she contended.
The return of the big four-owned Hindi GECs to DD Free Dish spells good news for advertisers as well. "With the return on DD Free Dish, the channels are expected to get back their viewership and also regain the lost advertising revenue. For advertisers, this leads to cost-efficient options to reach out to the lower NCCS and tier-2, tier-3 towns India as well as rural India," Dwibedy stated.
Zenith SVP & National Head - Media Buying Ramsai Panchapakesan said that the collective ad revenue earned by the four channels would be Rs 1350 to 1400 crore. He added that the overall GRPs got completely disrupted because of the decision to stay out of DD Free Dish by the broadcasters.
"It's been a double whammy for the broadcasters as they were hoping that DD Free Dish customers would move to pay DTH platforms, however, the pullout didn't translate into acquiring viewership through paid distribution model. The subscription revenue for FTA has not helped much in revenue gains hence there is unsolicited stress. In terms of FTA ad revenue, almost 90% of the estimated Rs 1350 to 1400 crore got impacted because it has not gone to anyone else. It has also put pressure on the market as the demand for TV inventory in the FTA space has increased. When the demand increased, the broadcasters managed to maximise their revenue but that maximisation has not compensated for the loss in FTA ad revenue, due to overall GRPs dip across market except very few regional markets," he elaborated.
Panchapakesan stated that the return of the big four to DD Free Dish may be a turning point decision to attract audiences from Tier-2 and 3 markets. "This will help boost the GRPs to meet the demand situation in the market," he asserted.
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