Does NTO 2.0 jeopardise the future of niche channels?

Experts opine whether the NTO amendments meant to address market anomalies are actually jeopardizing the future of niche offerings by broadcasters

e4m by Tasmayee Laha Roy
Updated: Jan 20, 2020 9:39 AM

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TV Channels

The debate on whether NTO 2.0 is a boon or curse for the broadcasters is far from over. The new talking point is whether the amendments introduced to the NTO with the intention of addressing market anomalies are actually jeopardising the future of niche offerings by broadcasters.

Broadcasters with niche channels complained that NTO had no capping for the maximum number of channels in Free To Air (FTA) channels so niche channels could move towards FTA. However, capping has now made the segment highly competitive.

Niche channels are generally the non-driver channels which were bundled in a bouquet by broadcasters in the NTO regime. But has a capping of MRP of a channel at Rs 12 against the earlier Rs 19 actually helped in creating more opportunities for all channels as TRAI claims?

Explaining how NTO 2.0 impacts broadcasters and non-driver channels Naval Seth Deputy Head of Research at Emkay Global in analysis said “Although the price difference between a-la-carte and bouquets offering have narrowed vs. the earlier regime, it continues to remain high to discourage consumer to opt for channels. Furthermore, broadcasters have been pushing non-driver channels along with mainstream channels in bouquets. We believe that the reduction in channel pricing cap will impact broadcasters only if a large proportion of subscribers shift to a-la-carte model and subscribe to fewer channels. Large broadcasters (Zee, Star and Sun TV, etc.) that have driver channels (featuring in top 3) across the genres will have limited impact or risk of revenue loss due to the shift to a-la-carte. However, the impact could be in the form of lost advertisement and subscriber revenues due to the non-subscription of non-driver channels".

To narrow the discounting between bouquet and a-la-carte pricing, TRAI has set two conditions in NTO 2.0 -the sum of maximum retail prices per month of the a-la-carte pay channels forming part of a bouquet shall in no case exceed one-and-half times of the maximum retail price per month of such bouquet; and the maximum retail price per month of any a-la-carte pay channel, forming part of such a bouquet, shall in no case exceed three times the average maximum retail price per month of a pay channel of that bouquet. “We are not against bouquet but TRAI wants similarly priced channels to be placed in a bouquet to create a level playing field,” said SK Gupta, Secretary, TRAI.

“If we place our niche channels outside our bouquet to put similarly priced channels in one bouquet who will subscribe to them a-la-carte. The audience looks for convenience. They don’t want to scan through a-la-carte offerings for niche channels. The niche channels will, therefore, be ignored,” said a senior member of the broadcaster fraternity.

English, for instance, is one niche category that has been amidst bad times since the implementation of NTO and the newer version of the same seems to provide no relief to the category.

A KPMG report titled India’s Digital Future – Mass Of Niches mentions that the introduction of the new regulatory order in the last quarter of FY19 has added to the challenges with the uptake of English pay-TV channels taking a hit and channels expecting a drop of 25-30 per cent in their revenues post the NTO. Only the channels/broadcasters who have been able to place themselves i.e. the English cluster in a sufficient number of DPO packs are likely to find decent pick-up.

 So where does it leave the niche channels? Will they look for greener pastures in terms of newer platforms?

“We believe that India will remain a bouquet subscription market while increasing options of lower a-la-carte offering do pose risk for broadcasters amid rising acceptance of OTT platforms,” said the analysis by Emkay Global.

 TRAI, however, has an altogether different approach towards the issue. “Firstly we believe capping of the carriage fee will ensure the viability of news, regional and niche channels.

 “We had to ensure that every broadcaster who is providing his channel should get equal opportunity to compete in the market. After the implementation of NTO in December 2018 top 5 broadcasters have changed the FTA channels to pay channels and ensured that they are made part of the bouquet so that it can be pushed along with their driver channels to the consumers. Now, this has resulted in a non-level playing field to those who are actually niche broadcasters or are the regional broadcaster is a serious problem,” said Gupta.

Further explaining the point made Gupta said, “Many of the pay broadcasters which were reasonable or niche broadcasters had to convert a paid channel to free to air in order to exist in the market. There are 12 channels which were converted to FTA by such broadcasters. We had to stop that. So what has stopped with NTO 2.0 is just the misuse of bouquet.”

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