DD FreeDish: A costly affair for smaller Hindi GECs?
Experts say though the platform gives an exceptional reach to broadcasters, it is quite an expensive ride for newer channels because of the high bidding prices and the subsequent content cost
With an estimated 40 million userbase, DD FreeDish, a direct-to-home (DTH) service from Prasar Bharati, has become a much sought-after platform to reach out to rural India for both broadcasters and advertisers.
Since last year, Prasar Bharti has added several Hindi general entertainment channels (GECs) on the platform, including Shemaroo TV, The Q, Azaad TV, and Ishara TV. 2020 was also when DD FreeDish witnessed the comeback of the big four- Zee Anmol, Star Utsav, Sony Pal, and Colors Rishtey- after winning MPEG-2 slot bidding last year. These channels had pulled out in February 2019.
According to the industry, the bidding price for the platform has gone up over the years. As per market estimates, the new channels paid approximately Rs 14-16 crore for a slot on DD FreeDish. Certainly, with the kind of reach it offers, the platform is lucrative for broadcasters, but is it worth the investment, especially for small players?
The Q India, a Hindi GEC targeting youth, landed a spot on DD FreeDish in April. CEO Simran Hoon shared that after coming on the platform, the channel peaked at 51 GRPs from 4GRPs in the Jan-Feb-March quarter. The channel has been on an average of 45 GRPs for the last four months. "It's has been a good story for the Q in particular. DD FreeDish has added a considerable value to our viewership and gives us big spurge in our GRPs,” said Hoon.
Being on DD FreeDish, the channel could target the audience in states like UP, Bihar, Uttrakhand, and Jharkhand. "It's the Hindi heartland where our viewership is coming from, and that's an essential market for everybody whether it's a viewer or a channel or an advertiser," added Hoon.
The additional reach of DD FreeDish helped the channel to grow its advertiser base as well. The channel had five advertisers on board in the first quarter (JFM), which has now grown up to 30, and is still growing, informed Hoon.
Hoon, however, agreed that the bidding cost for FreeDish has gone up and wished it could be more reasonable. "Channels would be able to spend more money on good content if the bidding price was affordable. It would have been better for the new players since older broadcasters have been there for a long and it's easier for them to pay that much fee." However, she feels that if the channel gets the content right and resonates with the market, it's worth the investment for any broadcaster,” Hoon mentioned.
Echoing similar thoughts, Sandeep Gupta, COO, Broadcasting Business, Shemaroo Entertainment, shared that the bidding prices have skyrocketed. “The bigger broadcasters are not affected too much because, for them, the content they air comes at zero cost. They have to give small pie to the distribution and they get a large audience base. But for the broadcasters like us, this cost is a big hit. As a small broadcaster, we have to incur a compulsory cost to be on this platform because no other platform can give this much reach. But this kind of an investment is a significant burden. I am not sure if it's worth the investment; maybe one can avoid it. It's worth it for the biggest broadcasters because their ROI is outstanding. But for the smaller ones, this is the only way to survive," he opined.
Gupta shared that the Shemaroo TV reach is 56.7 million and the channel has been able to garner this reach because of DD FreeDish. As much as 37.4 million out of the 56.7 million reach on the channel comes from DD FreeDish. "The platform helps the channel to serve a much higher audience base," said Gupta.
Similarly, Azaad TV, a new channel from Beginnen Media, was launched recently on DD FreeDish. The channel targets premium Hindi rural entertainment channel. “Availability on DD FreeDish is a stepping stone to maximize channel sampling and is enabling us to place the brand as one among the viewers, reflecting their dreams and aspirations," said Beginnen Media, Chief Marketing Officer, Rachin Khanijo.
Khanijo however added, "In the distribution strategy, bidding prices could depend on the larger business objectives and the expected ROI. DD FreeDish could look at a differential pricing plot, with a specific price band for established players and introductory pricing for new players, especially when the analogue environment does not guarantee equal base to all channels. The existing players build a solid base overtime and hence benefit from that reach vis-à-vis new players stand at a disadvantage, as the customer base is to be built ground-up and DDFreeDish set-top boxes, being open architecture, require manual tuning and are unaddressable. This delays the journey of the channel in reaching the audiences."
According to industry players, newer channels on DD FreeDish have to incur more costs apart from the bidding. Unlike bigger broadcasters, they don't have a vast content library and therefore have to acquire content from other broadcasters, which costs in the range of Rs 1 lakh per episode. For original content, the cost can go up to Rs 10-15 lakh per episode.
Deep Drona, former COO, Enterr10 Media, feels that bidding for DD FreeDish is worth the investment for big players, as by paying Rs 14-15 crore annually, the broadcasters get a frequency to air a general entertainment channel. However, the picture is not the same for smaller channels. A large channel has a lot of library content that can be repeated at zero cost. But when it comes to individual players, it is a great challenge.
"None of the established pay channels are willing to syndicate their old content to new channels because of competition. They instead put it up on their free-to-air channels. But they have exhausted that library in the last four years. It is now coming to a point where the channels will be in trouble if they do not infuse original programming. So some channels have started doing that. Now that's where the economics change because if you are going to make original programming, you have to get some good ratings otherwise, input and output equations will go wrong."
"If there is a billing of Rs 300-400 crore in ad sales, it's excellent because the channel paid only Rs 15 crore for broadcast. But it's a problem for new players. The only way to survive for channels that are not part of a larger group is investing in own fresh," he further added.
According to the FICCI- EY M&E report 2019, DD FreeDish revenue crashed when the leading broadcasters removed their channels from the platform. It was estimated that approximately Rs 1000 crore of advertising was affected. But when the channels returned to the platform in June last year, it also witnessed a revenue comeback. The report estimates that the channels would have generated Rs 300- Rs 400 crore of incremental advertising revenues in 2020, likely increasing to Rs 1000 crore in 2021.
Taking about the rush of GECs that the platform is witnessing, Ashish Pherwani, Partner and Media & Entertainment Leader, EY India, said, "The reason we are seeing more GEC launches on DD FreeDish is the reach that the platform offers. DD FreeDish caters to an estimated 40 million-plus homes, making it an attractive proposition for advertisers and the audience, who get good quality content for free. This audience was earlier called bottom of the pyramid, but now, because of India's economic growth, they too have certain spending power, and therefore, are important for advertisers. It is a very efficient way to capture a larger number of people who are not exactly affluent but still have a reasonable purchasing power. "
Pherwani further added, "The pricing for FreeDish slots shows how high the demand for it is. And it is definitely worth the investment. If the channels are airing good quality content, it will drive viewership followed by advertising money for that audience segment."
Adding to the point, Vishal Shah, Managing Partner, Mediacom, too shared that DD FreeDish has strong penetration in tier II and rural India, enabling more viewers on board. "Compared with urban, rural has a lot of potential and a long way to go, and that's where DD can play a very crucial role."
He further explained that advertisers would chase where the consumers and eyeballs are. "If channels get the numbers, advertisers will be keen on an experiment. Additionally, many parts in India are media-dark and anything in terms of getting more visibility, more ways of connecting with the consumer will be explored by advertisers."
Speaking on the investments, Shah said whether it is worth it depends on who is bidding for slots and their existing infrastructure and access to distribution. For instance, some broadcasters with strong distribution may not want to go over the top.
Sharing a different perspective, Karan Taurani Karan Taurani, Senior VP Research, Elara Capital, said, “It's not worth the investment. Some channels do it because they have some kind of niche content which they want to showcase and rather than investing in a commercial channel (pay channel) which has higher marketing expenses, DD FreeDish is available for free of cost. However, after the implementation of NTO, FreeDish has also become fragmented which is why all major broadcasters were shying away after NTO.1 and returned to the platform only last year.”
He further added, “With the large broadcasters coming back, it will be tough for new players to make a big mark on this platform because advertising yield are not appealing.”
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