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Tag: Yearender

  • Media and entertainment industry: hindsight 2018, foresight 2019

    Media and entertainment industry: hindsight 2018, foresight 2019

    MUMBAI: The Indian media and entertainment industry continued to be robust in 2018, aided by the domestic consumption story remaining strong, as well as the impact of one-time events such as demonetisation and GST progressively fading away. The sharp increase in digital access and consumption, with continued investments by telecom operators on 4G and content, was a major growth driver in the sector. Digital video has seen an explosion in terms of consumption, with 250 million online video viewers out of 450 million broadband users in FY18, and platforms already looking at adding the next 250-300 million online video viewers in the next three to four years. However, despite the rapid growth of digital media, India remains one of the unique markets in the world where traditional media continues to grow.

    TMT Convergence – the rise of ecosystems

    The media and entertainment industry in India started witnessing a structural shift in FY18 with convergence across telecom, media and technology (TMT) companies beginning to take shape. While the telecom and technology companies are building competencies to offer content directly to consumers through acquisitions and partnerships, traditional broadcasters and media companies have started building platforms to reach the end consumers directly. One of the recent examples in this space includes the acquisition of two traditional cable companies by a major telecom player. 

    In addition the competition, the industry has also been witnessing collaboration within the TMT ecosystem. Effective bundling of content by telecom players has ensured that the distribution ceases to be a challenge, allowing standalone content players to focus heavily on original content. 

    The advent of 4G and the rise of TMT ecosystems has resulted in the surge in online video consumption with the number of video and entertainment app downloads witnessing a 5x increase from September 2016 to June 2018 and the data usage on these apps increasing by 25x during the same period.

    Despite the industry seeing rapid growth in the consumption of digital media, monetization has lagged behind till now, with AVOD models still dominant and SVOD not seeing significant traction. Introduction of third-party digital measurement, compelling content across languages and an effective micropayments infrastructure are factors which could help monetization in the near future.

    The growing emphasis on rural and regional markets

    With the viewership of regional language (non-Hindi and non-English) content on television close to 40-45 per cent of the overall consumption, the industry is increasingly looking at rural and regional language markets as the key to success. Additionally, while the rural internet penetration stands at less than 20 per cent (as of June 2018), it presents a considerable upside to organizations who have already started developing local language digital content. 

    Key focus areas for the regional and rural markets in the past year have included – continued digitization across phase 3 and 4, increased focus of broadcasters through the launch of language sports channels and adaption of popular reality shows into local languages, inclusion of rural into measurement metrics through BARC and a focus on digital regional content. 

    Data Analytics – moving from ‘good to have’ to ‘must have’

    Increasing digital consumption is resulting in the availability of large consumer data sets which the industry is trying to collect, integrate, analyze and derive value from. Organizations across the value chain are investing heavily in data analytics around areas such as content creation, customer acquisition, pricing, distribution, and content management.

    Implementation of the TRAI tariff order – a game changer

    With TRAI’s tariff order getting the green light from the Hon’ble Supreme Court (effective 29 December 2018), broadcasters have started to publish Reference Interconnect Offers (RIO) and MRPs of their individual channels. The tariff order is expected to bring in the much-needed transparency ensuring equitable distribution of revenue across the players in the value chain. 

    However, the pricing strategies are at an early stage with some leading broadcasters having priced their flagship channels closer to the cap of INR 19 while some of the niche channel broadcasters are seeing a reduction in MRPs and bouquet prices. Further, the outcome of the ongoing litigation over the 15 per cent discount condition on bouquets may also fundamentally impact the strategies of the stakeholders. With only a few days to go for the implementation deadline, consumer education is expected to be a major challenge for distributors. 

    Looking ahead, the media and entertainment sector is expected to continue seeing growth on the back of growing digital access and consumption, strong domestic (particularly rural) demand supported by GDP growth and growing penetration into non-urban and regional user base across media sectors.

    The author is partner and head (media and entertainment) for KPMG in India

  • Changing role of media agencies

    Changing role of media agencies

    2015 rang true with the anticipated digital growth and enthusiasm. 

    Mobile led and ‘download the app’ became an almost expected byline. Popular companies saw fit to do away with the very website that built their brand. And, the viewers that most marketers wanted to tap were multi-screen. Further, media measurement across the multi-screens and the rural customer became legitimate. Year-on-Year the only constant with media has been change, some more disruptive; but nonetheless – it’s change.

    With the changing role of today’s ‘Media Agency’ they can aptly be re-branded -‘Media Brand Smith.’

    Closely aligned to client, brand and their customer, the Brand Smith must blend brand ethos and objective in a compelling story using relevant prevailing media and technology. Drawing from ensuing trends, the Brand Smith must craft unique SMART business solutions – that resonate to the brand’s core, echoing it to its customer perception. A ‘meaningful’ solution will be all the better! The Brand Smith further needs to be unwaveringly consistent in this task. They need to be the brand, the agency, the expert and the customer all rolled into one for a full perspective.

    Media Agencies need to unlearn, learn, re-learn, adapt, collaborate and communicate in a way they have never done before within their own internal teams as well as external stakeholders to sprout ideas and talent, both latent and new. Integration is a tough word and matter does not integrate easily. Integration of people, tech, knowledge and skill on the foundation of an idea, takes time; so does the idea itself.

    The job is to be informed and inform, what to do and when, as well as what not to do. It is not about the razzle-dazzle of data, beacons, 3D printing, Augmented Reality, etc., or the immediate big ticket spend but a deeper articulation of the insights, the technology-devices details, its uses, the brand fit and campaign fit – for the long term.

    We live in exciting times with a flood of opportunities and technologies coming out like from a Pandora’s Box. Channelising this and helping clients navigate through a shifting-sands media-devices landscape to unleash its potential will not only win new customers, build engaging-entertaining content but more so create some memorable brand and client experiences!

    2016 is a year we wholeheartedly look forward to. Undoubtedly it will be interesting with some amazing work and of course a very challenging one.

    (These are purely personal views of Havas Media Group, India & South Asia CEO Anita Nayyar and Indiantelevision.com does not necessarily subscribe to these views.)

  • “The market is expanding faster than expected and more brands are going digital”

    “The market is expanding faster than expected and more brands are going digital”

    As 2014 comes to an end and as the media and entertainment industry bids adieu to the year, company executives are leaving no stone unturned when it comes to listing down the achievements it has attracted throughout the year. 

    On the same lines is Vdopia, a programmatic buying and selling platform for mobile and online video advertising. It tags itself as a pioneer in mobile and online video advertising, enabling major brands to engage their desired audiences in premium content environments around the world. 

    Vdopia SVP-APAC Preetesh Chouhan pens down the major digital happenings in the year 2014 for Vdopia and the entire industry and also the future of digital platforms in the coming year.

    Major digital happenings…

    Digital Video Revolution – 

    •             Video viewing on PCs has almost doubled in three years in India. (source – comScore)

    •             India now has over 59 million video viewers. (source – comScore)

    •             73 per cent online audience now watch digital video. (Source – eMarketer)

    •             The share of video in internet data traffic is expected to rise from 41 per cent in 2011-12 to 64 per cent in 2016-17. (Source – Assocham and Deloitte)

    Emergence of specialised apps –

    •             App downloads in India likely to cross nine billion by 2015 (Source – Assocham -Deloitte)

    •             Mobile TV registered a 400 per cent growth rate in viewership. 

    m-commerce revolution India –

    •             India has reached 50 million digital buyers. (eMarketer)

    •             1 out of 3 customers of Flipkart arrive via mobile.

    •             33 per cent of Flipkart revenue originates via mobile based transactions. (Flipkart)

    •             60 per cent of all orders received by Snapdeal originate on mobile phones. (Snapdeal)

    Micro-video multiplied –

    •             Micro-video ads can transcend the mobile, tablet, PC and even TV gap, could eventually result in micro-video becoming the most portable video format across screens.
    Television is going digital:

    •             Television content is no longer being consumed only within the four walls of the viewer’s living room.

    •             TV remains one of the primary modes of communication reaching out to 60 per cent of the population, online videos are witnessing a steady surge in consumption even as internet penetration in India currently stands at about 16 per cent.

    Coke Studio, for example. While the latest season of the show on MTV received lukewarm response on TV, it went on to garner more than 54 million views on YouTube and across social media platforms.

    •             By 2018-end, India’s internet user base is expected to touch 494 million as against 938 million TV viewers.

    Marketers in India are leveraging digital marketing –

    •    96 per cent of the Indian marketers have high confidence in the ability of digital marketing to drive competitive advantage. It is among the highest in Asia-Pacific APAC with only Australia leading with 97 per cent.

    •    Indian marketers believe that the key driver to adopting digital is a growing internet population (70 per cent in India against 59 per cent in APAC).

    The big achievements for Vdopia…

    •    Launched Chocolate, a global programmatic buying and selling platform exclusively for mobile video advertising. 

    •    After major metros and cities, Vdopia’s reach has expanded to tier 2 cities, tier 3 cities and small towns.

    Lessons learnt…

    •    The market is expanding faster than expected and more brands are going digital. The demand has grown for new category of content and rich media video ad formats for better engagement. Like, travel, auto, humour, lifestytle, how-to videos etc.

    •    With 70 per cent growth in Asia Pacific, programmatic is the future. 

    Future of digital platforms in 2015…

    Digital India program – The Indian government’s $17 billion ambitious Digital India programme has the potential to be a game changer for the country. (Source – Forrester)
    P.S. – Currently, nearly 74 per cent of the population has mobile phones, most of which though is in the hands of urban India. 

    Focus on mobile content – In 2014 out of 885million mobile users, 185 million are mobile internet users. (IDC and India Digital Review). It’s a changing world, and businesses absolutely need to focus on ways they can give their marketing efforts a mobile component.

    Focus on Content – Content has been an integral part of digital marketing strategies for a few years now, but with so much of it out there, your content needs to be better and smarter. Content that’s relevant and interesting isn’t just a good idea, it’s a requirement. 

    Programmatic advertising will be understood by the majority of marketers – More than two-thirds of marketers are now using programmatic in one form or other shows programmatic might have become mainstream over the course of 2014. It’s a safe bet that this trend will continue in 2015 as more marketers realise the benefits of programmatic in their paid media programmes (Media Week).

    Clients will dictate the future of programmatic – Fundamentally, we believe the future of programmatic market landscape will be driven by the clients’ diverse characteristics and needs. Clients are either transactional or not, large or small, international or local, e-merchants or brick and mortar, large media spenders or not.

    Spending on RTB display advertising will accelerate – Spending on real time-bidded display advertising will accelerate at a 59 per cent compound annual growth rate through 2016, making in the fastest growing segment of digital advertising over the next few years. (IDC)

     

    (These are purely personal views of Vdopia SVP-APAC Preetesh Chouhan and indiantelevision.com does not necessarily subscribe to these views.)

     

  • 2014: A year of improved subscriber numbers

    2014: A year of improved subscriber numbers

    The year 2014 has been better than the previous year, in terms of the share of numbers for all direct to home (DTH) players. Subscriber additions were higher and there was more stability in the overall industry. In terms of price discounting, people were more rational through the year. Overall, it has been a much better year than 2013.

    Increased subscriber numbers and ARPU

    Overall additions in subscribers, for all the DTH players, were higher in the magnitude of 25-30 per cent than the previous year.

    That apart, the churn came down substantially, not only for Dish TV, but for all the other DTH players as well.

    2014 also saw a rise in the Average Revenue Per User (ARPU). But there are still problems, since the whole cable TV system hasn’t stabilised and gross billing hasn’t been fully implemented. Though, we do see some encouraging signs, in terms of people getting down to doing that now.

    DTH has been able to take price increases through the year. There was a price increase which took place in April, at the magnitude of 8-9 per cent. But the big collection from the ground will happen only once cable TV gets its act together.

    Different people calculate ARPU differently. For example, Dish TV calculates it on subscriber revenue, whereas Airtel Digital TV, as per its published figures, looks at gross numbers, and so do others. So there is no common matrix being used across the industry for definition of ARPU. But having said that, at the consumer level, the consumer prices are in the average price range of Rs 250-275.

    Challenges in 2014

    One of the major challenges that we continue to present to both the state and central government is on the high level of taxation on DTH. Apart from the taxation element which we have been presenting, we are the only industry which is subject to service tax and entertainment tax. While we were hoping for some relief in the last budget, we didn’t get that, we hope we will get some relief in the coming year.

    Secondly, there is no clarity on the licence fee issue, even though the Telecom Regulatory Authority of India (TRAI) issued a recommendation, there has been no action on that front.

    So while we lived in continued uncertainty in 2014, we hope that the government will take some steps in 2015. People have invested more than Rs 25000 crore in the industry, so at least we have the right to know what the law of the land will be going forward.

    The new launch Zing

    It has been an extremely successful product in all the geographies we launched. The specific proposition that we had, which was regional first and targeting the entire product mix around consumption has clicked very well with the customers. So we are very pleased with the way things have come.

    Highs and lows of 2014

     For Dish TV, it has been a fairly stable year. We regained our share leadership for about last three to four quarters. We launched a significant and tactical product in Zing which has helped us capitalize on the phase III and IV areas. The high point has been that we have been able to, post the balance sheet adjustment that we did last year, been able to get back on the growth path, which is what we have always said and we achieved that in 2014.

    The low point is at two levels: At one level, the whole issue of taxation and licence fee kept dragging for the whole year. Secondly, we expected the cable TV and broadcaster system to stabilize the whole regime. The whole issue of getting proper addressability and customers to actually choose and compare products has still not happened.

    Delayed Digitisation

    First and foremost, the manner of digitisation needs to be addressed. What has happened in the first two phases is simply the change of pipe. This has not been supported by addressability and that is the reason there has been no or marginal change in the revenue flow.

     Until and unless these issues are addressed, a non-addressable digitisation is of no help to anybody, neither to the government nor the stakeholders. We hope that by the time they get down to it, we will have some better roadmap of how to achieve that.

     

    (These are purely personal views of Dish TV CEO R C Venkateish and indiantelevision.com does not necessarily subscribe to these views)

  • The year of improved sports marketing and production

    The year of improved sports marketing and production

    The year 2014 may have seen a few new leagues coming up but cricket very clearly rules the roost both from an on ground and on air perspective.  While gap between cricket and other sports have shortened, it’s still quite significant.  Indian Super League (ISL) has begun well with aggressive marketing and managed to garner eyeballs for Indian football. ISL has also garnered encouraging response from advertisers. For the first time a non-cricket sports has more than six central on ground sponsors.  Though lot of work need to be done in the grass root development of football, it’s been a great beginning considering its first season.

    Moving onto FIFA, the market in India for the sport is growing every four years as can be seen from the last three editions.  We have beaten the benchmarks of 2010 in 2014. It also generated lot of hype that helped garner newer audiences and fan base. Overall football, as a sport is growing and FIFA being the biggest football tournament has managed to score on all counts. The cumulative efforts over the last five to eight years, by  FIFA, European Soccer Leagues and the broadcast community backed by audience desire to see a more local flavor of football has helped in the formation of the ISL. 

    The surprise package of 2014 was the Pro Kabaddi League (PKL), a pleasant surprise I must say. It was a league which was very well marketed and packaged with fantastic production value. While everyone thought of Kabaddi as rural sports, it’s quite interesting to see viewership numbers ticking from metros.  Looking forward to season 2 of PKL with a hope that it continues to attract audience and build stickiness.

    Indian Badminton League (IBL) launched in 2013 with top international talent and lot of fan following, missed the show in 2014. Hope to see IBL back with bigger and better show in 2015. The Hockey India League (HIL) also showcased fabulous production quality and packaging. HIL has also managed to grab reasonable response from advertisers till now. Currently with the fabulous winning performance of team India, in 2015 we would like to see a better marketing of HIL to attract and hold audience attention.

    The Champions Tennis League (CTL) and the International Premier Tennis League (IPTL) both failed to generate buzz because of lack of marketing efforts. CTL has been a bit disappointing with respect to the production value, while IPTL’s production was world class. Expectations from IPTL were quite high considering the participation of big current stars and legends like Roger Federer, Novak Djokovic, Pete Sampras, Serena Williams etc…. Aspirational and emotional connect with IPTL was very high for the fans who have been following tennis for more than two decades. It was like a dream coming true to see the likes of Roger Federer, Novak Djokovic, Pete Sampras, Serena Williams or even Sania Mirza playing in India. There was high interest in fans to go and see their heroes play live and get to meet them or get a closer glimpse of them.  But would that translate into TV viewership is something we will have to wait and watch. Therefore while CTL’s structure is towards building affinity for tennis as a sport with a hope that more Indian start playing the game. IPTL is clearly going after the experience of getting up and close with the big international stars and ride on their popularity to garner eyeballs. However considering the structure of both leagues, the overall objective of both leagues is little unclear.

    Marketing and production values of these sports have been a key highlight this year.  Sport marketing in India has been ahead of the curve in terms of marketing and production value. Great production values along with a greater thrust on marketing has led to a stronger audience and advertising interaction.

    ICC Cricket World Cup 2015 is the biggest sporting event in 2015 and will continue to attract audience in large numbers. The advertising pie will grow and be bigger than 2011 as other sports are still catching up and are in the development phase.

     

    (These are purely personal views of GroupM ESP national director entertainment sports and live events Vinit Karnik and indiantelevision.com does not necessarily subscribe to these views)

  • 2014: The year that changed landscape of distribution

    2014: The year that changed landscape of distribution

    2014 has been the most exciting and an eventful year for us in the Media and Distribution Industry. The phrase “There is never a dull moment” is so apt to define the year of 2014 that changed the landscape of distribution so significantly and posed challenges like never before. The year started on a promising note for the Industry with the impact of digitisation settling down and the benefits of this shift starting to roll in. Reduction in carriage fees and an upswing in subscription revenues indicated change, yet the industry continued to grapple with implementation of packaging at the retail level.

    Value chain as a whole moved towards a more structured form, with constituents at each level moving from an adhoc/ flat fee commercial arrangement to CPS model. Subscription flow from LCO to MSO which was significantly low in analog era started growing. Wider choice at the subscriber end also helped growth in ARPUs.

    One of the biggest changes that shall significantly impact the distribution model is BARC becoming a reality. It is set to redefine the way all of us look at distribution. Expansion in LC1 markets and forthcoming BARC measurement is pushing every broadcaster expand visibility to the deepest, darkest corners of the country. Such is the scope of expansion that it will require any organisation 24-30 months to plan, execute and brace one of the biggest change in the history of distribution.

    DTH industry saw a major shift this year in their outlook towards the business. Almost all of them moved away from the customer acquisition mode to better profitability. While the story of subscriber acquisition was not exceptionally different over the previous year, DTH companies managed churn, HD and ARPU increasingly well.    

    No other year has seen a bigger storm than 2014 in the Regulatory environment. There were so many storming changes that touched every stakeholder in the distribution chain. TRAI came out with regulatory changes like Disaggregation, DAS phase III and IV, Commercial establishments and Ad-Cap. The new regulatory environment posed new challenges such as keeping partners together, protecting bottomline revenue and remaining relevant in the new regime. Postponement of digitisation in phase III & IV caused recalibration of business plans by all stakeholders. TRAI’s regulatory change for commercial establishments affected an entire revenue stream of broadcasters and the matter continues to be fiercely litigated.

    Going into 2015, we strongly believe the industry will undergo some paradigm shifts in the way we do business. Implementation of RIOs in cable will see packaging in cable become a reality. Digital platforms hence shall compete effectively. Carriage fee, a big cost for broadcasters will get reduced to miniscule or only exist for FTA channels. HD and broadband in cable will see a big swing to drive revenues significantly for the cable companies. More interesting deals like DEN-Snapdeal shall emerge. DTH players shall equally bring about next level of offers to bring more value to the subscribers such as OTT, 4K boxes, TV Everywhere, and Binge viewing being offered to the consumers.

    For us here at IndiaCast UTV, the year 2014 was equally exciting. In face of compelling challenges, we en-cashed on the opportunities to attain significant growth. There is ample evidence that we are moving forward and in the right direction. In light of disaggregation, IndiaCast UTV was successfully appointed as the authorised agent for TV 18, Disney UTV and ETPL and the broadcasters reposed full faith in the our team. Transcending these regulatory changes, we emerged stronger than ever.

    On the DTH front, we saw all our renewals happening during the year. We had to up our ante and attain a fair share for the unmatched content that the network stands for. It was tough convincing the platforms but eventually they saw sense in the value we bring to the table. We are proud to say that we were able to stitch our multi-year content deals with all the DTH platforms at a healthy growth rate. On the visibility front, we embarked upon the biggest challenge to put in place an entire LC1 team and collectively put in thousands of manpower hours to expand our reach across the length and breadth of the country. Our ratings in the past few months are a testimony to the efforts of the affiliate team who seeded our channels in a number of new networks across smaller markets.

    The year also saw us successfully launching and distributing the third Hindi GEC “EPIC” which expanded the GEC space by offering a season based formats based on Indian Mythology and folklore. Viacom18 gave a myriad of entertainment options with Colors being the frontrunner in Hindi GEC space, launch of new Hindi GEC “Rishtey”, MTV Indies creating a new space in Music genre and by launching “24” – India’s first international non-reality format show with international standard production quality. TV 18 maintained its leadership position and added a business news channel in Gujarati called CNBC Bajar to its portfolio. The regional offering was strengthened by launching four news channels under the ETV banner – Kannada, Bangla, Gujarati and Haryana.

    This year has seen IndiaCast UTV coming of age, adding stability and propelled us to achieve more. We are confident of setting new benchmarks for ourselves and for the industry and embark on a larger journey which will see us coming out stronger than ever before. We are looking forward to an exciting and eventful 2015.

     

     (These are purely personal views of IndiaCast UTV Media Distribution EVP Amit Arora and indiantelevision.com does not necessarily subscribe to these views)

  • 2014: Setting trends, changing paradigms

    2014: Setting trends, changing paradigms

    Cinema is at its best when it surprises, changes paradigms, pushes the envelope and sets new trends. The year that was, saw new trends being set, new vistas being explored and the journey of evolving new Bollywood had some interesting new pit-stops. Here are a few of them though our lens at VMP.

    Lady’s Finish First 

    Queen and Mary Kom, two strong scripts, viewed from the eyes of two equally gutsy woman characters, set the Box Office ablaze. Mary Kom packed a punch with its record breaking opening weekend collection, a feat most pundits would shy from predicting for a female centric film. Queen made a silent start and like all long distance runners, gained pace as it refused to budge from the cinema halls week after week – both films eventually crossing the 100 crore gross mark globally with rave reviews that brought in audiences from every part of the world.

    World Tours

    Post a historic Indian leg last year, Bhaag Milkhaa Bhaag continues its run around the world. The film is all set for a theatrical released in Japan in January 2015. Release in Latin America and France are in the works as we also take the remote Wasseypur to the United States of America with theatrical release of Gangs of Wasseypur 1 & 2 lined up in January 2015.

    Reversing the remake traffic

    Traditionally Bollywood has seen remakes of south or Hollywood blockbusters.  We flipped the trend to remake Hindi blockbusters in the south. After its successful run at the box office, Queen and Special 26 will now be seen in Tamil, Telugu, Kannada and Malayalam avatars. Kahaani will soon speak to audiences in Kerala in Malayalam.

    Beyond the Fan boys

    An iconic Hollywood franchise in India usually rakes in considerable attention from a niche audience. However, the beloved Transformers in its fourth avatar attracted not just ardent fans but also made new friends clocking a 30 crore weekend at Box Office.

    A Contest to Win

    Through Cineshorts, we established a new and unique platform that offers the exclusive opportunity to budding filmmakers. Contestants showcased their talent through a five-minute short film, of which top five are set to be premiered on MTV Indies besides receiving significant cash prizes. The top 50 films were showcased on the studio’s official YouTube Page. A new first step to presenting fresh talent with opportunity.

    The Global 70mm

    Well before its Indian release, ‘Margarita With A Straw’ started making its mark on international film festival circuit. Premiering as opening day film at the 39th Toronto International Film Festival and winning the prestigious NETPAC (Network for the Promotion of Asian Cinema) award for Best Asian Film. The film went on to receiving standing ovations at the 19th Busan International Film Festival (BIFF) and the 58th BFI London Film Festival. This Kalki Koechlin starrer also won her the Best Actress award at 17th Tallinn Black Nights Film Festival in Estonia.

    But mistake us not for elitists! We’re bringing a flurry of entertainment to cinemas in the new year. Slate of releases in 2015 features Gabbar, an action thriller with Akshay Kumar in a new look, while Dharam Sankat Mein with Paresh Rawal in the lead, along with veteran actors Anu Kapoor and Naseeruddin Shah. Sequel of Pyaar Ka Punchnama as the audience must look forward to watching it. Ramesh Sippy’s Shimla Mirchi marks his directorial comeback after a 15-year hiatus and the Hindi remake of Malayalam stunner  Drishyam. Our Hollywood platter includes two of the biggest crowd-puller franchises Terminator Geneysis and Mission Impossible 5.

    (These are purely personal views of Viacom18 Motion Pictures COO Ajit Andhare and indiantelevision.com does not necessarily subscribe to these views.)

  • 2014: A year of de-aggregation

    2014: A year of de-aggregation

    2014 was a year when the Telecom Regulatory Authority of India (TRAI) issued, as many said, the ‘death warrant’ for the powerful aggregators. The year started with the regulator throwing the ‘big bomb’ on the channel aggregators by introducing the ‘de-aggregation paper’. The paper clearly stated that the broadcaster appointed content aggregators could not mix and bundle channels from different networks before signing deals with the distribution platforms.

    With the regulation, the once content aggregators were given a new name, that of ‘agents’ who would carry out the deals ‘on behalf of’ the broadcaster. TRAI gave the aggregators six months to dismantle operations, or realign as agents. As part of the regulation, it was the broadcasters who could now sign deals with the distribution platforms either directly or through agents, who could only work on behalf of the broadcaster and not bundle channels from different networks. The regulation came as a shock as it curbed the power of aggregators Media Pro, IndiaCast UTV Media Distribution and TheOneAlliance.

    Soon after, aggregators started disintegrating. MediaPro, the JV between Star Den and Zee Turner was the first to announce its separation. Thereafter, both of them began distributing on their own. Zee Network created a separate distribution entity called Taj Television which would also act as agents for Turner channels. MediaPro CEO Gurjeev Singh Kapoor headed off to handle Star India’s international business while COO Arun Kapoor became CEO of Taj. Soon after this, MediaPro terminated its alliance with NDTV, MGM and MCCS.

    The next in line to break up was IndiaCast UTV, the JV between Network 18 (TV18) and UTV. The last to do so was TheOneAlliance (a JV between MSM and Discovery) which has already announced its decision to break away but will formally happen only on 1 January 2015. Meanwhile IndiaCast will act as an agent for UTV as well as Epic TV channel, while MSM and Discovery will be setting up their own operations.

    While on one hand broadcasters were figuring out how they could deal with the new clause from TRAI, on the other hand distribution issues were being fought in the Telecom Disputes Settlement Appellate Tribunal (TDSAT). The fiercest of them was between Hathway Cable & Datacom and Star India/Taj Television that lasted for nearly seven months.

    The first accusation was from Star when it stated that Hathway had removed its sports channels and placed them as a separate pack. Zee Network was nearing the end of its deal with Hathway and wanted to re-negotiate it with the MSO. Hathway failed to reply on time, leading to disconnection of signals from the broadcaster. Thereby, the MSO took Zee to court.

    After long hearings between the three parties, the two cases got combined and it was settled that till the time the case does not come to an end, Hathway would pay Star and Zee at the rate of Rs 23 and Rs 21.5 cost per subscriber (CPS) basis for their entertainment channels and Rs 4 CPS for Star’s sports channels. The last verdict of the hearing came as the TDSAT directed Hathway to enter into RIO agreements with Taj Television and Star India for the DAS markets.

    When everyone thought that the case would come to an end, Hathway went to TDSAT once again claiming that there would be partiality in providing RIO rates to various platform operators. The case came to an end with Star India coming forth and stating that it would only be executing RIO deals for DAS markets with all distribution platforms from 10 November. Though Taj Television had also been ordered to get into a RIO deal with Hathway, the broadcaster later on signed a CPS (carriage) deal.

    The year’s ending saw much discussion on Star’s incentives that were being provided on the basis of channel penetration, reach and channel placement. While most MSOs vehemently protested against the new RIO at first, in the end they took up the channels on incentive basis and created new packs. Most MSOs decided to put the popular channels on the base pack and give the remaining as separate packs, in higher packs or as a-la-carte.

    The year also saw a rise in the carriage fees, which according to many has risen by 20-25 per cent for niche and news channels.

  • 2014: Cable TV’s year of missed opportunities?

    2014: Cable TV’s year of missed opportunities?

    2014 many would say has been a year of more downs than ups, especially for the cable TV industry. But, if one peels off the superficial layers and looks deep, it would be fair to say that it was indeed a year of opportunity for all the stakeholders in the cable TV ecosystem, despite all the trappings that it had of a Bollywood film with all the drama and twists and turns.

    The year began with industry regulator the Telecom Regulatory Authority of India (TRAI) cracking the whip on errant multisystem operators (MSOs) and last mile owners (LMOs) who had not implemented simple hygiene requirements such as subscriber information and billing in Digital Addressable System (DAS) phase I and II areas. 2014 probably was the most litigious one in recent memory for those in the cable TV ecosystem with the various constituents spending more time in courts or in the portals of the Telecom Disputes Settlement Appellate Tribunal (TDSAT) than in upgrading their systems or moving ahead on business models. LMOs and MSOs snapped at broadcasters and aggregators, even as the latter took swipes at them with their heavy hands. No resolution seemed in sight and hence the anti-climactic postponing of phase III and phase IV DAS to 2016 by the Information and Broadcasting (I&B) Ministry almost came as a lifeline to the industry. Some carped about the postponement, some decided to take it upon themselves to voluntarily digitise, while other LMOs just got back to squabbling once again.

    Even as international strategic and financial investors got repelled by the chaos in Indian cable TV land, domestic lay investors and equity investors too gave the sector a thumbs down. One of the leading stocks, the Sameer Manchanda-run Den Networks, which was the investors’ darling in 2013, registered a 19 per cent erosion in its share price from Rs 161.65 in early January 2014 to Rs 131.30 on 24 December. Hathway Cable & Datacom rose 25 per cent from Rs 278.75 to Rs 347.50. Both underperformed the Bombay stock Exchange Sensex which rose 28.5 per cent from 21,000 on 2 January 2014 to 27,206 on 24 December 2014. However, an exception was the stellar performer  Essel group owned Siti Cable which appreciated 80 per cent from Rs 18.15 to Rs 32.75 on the same dates. 

    November 2014 saw Star India take a big punt and play pioneer by deciding to enter into only Reference Interconnect Offer (RIO) deals with MSOs in DAS areas.  The hope was that it would push cable operators to come up with better subscriber packages and hopefully improve realisations for themselves and Star too. With ARPUs sneaking up marginally, the big MSOs and cable TV cooperatives aggressively moved ahead with the more lucrative broadband offerings to subscribers.

    The year began with the MSOs meeting in different parts of the DAS areas to ensure gross billing could be started. While Delhi and Kolkata could, at least in a few parts start gross billing, Mumbai and other phase I and II cities, even as the year comes to an end, haven’t seen bills being rolled out. The reasons for this being no consensus: on the biller’s name (whether it should be of the LCO or MSO), revenue share between the two and the pending entertainment tax case in the Bombay High Court.

     The next big development in the year was when Hathway Cable and Datacom announced a cricket pack, wherein the MSO created a separate offering consisting of all the sports channels. When the announcement was made, little did people know that the issue would be dragged to the court and would keep the TDSAT occupied for almost the rest of the year. Hathway has been one player that has been in the news throughout, mostly for its progressive moves- from launching new local cable channels, to launching DOCSIS 3 broadband technology. It also wrestled with the major broadcasters such as Star and Zee through the year on terms and conditions.

     2014 was the year of opportunities, as it opened doors for the $100 million Hinduja’s Headend In The Sky (HITS) project and the Cable Virtual Network Operator (CVNO) model. As part of this LMOs can come together and join hands with the MSO to take its infrastructure, thus giving the former the power to own their consumers. The former Indusind Media CEO and promoter of Bhima Riddhi Digital Services Nagesh Chhabria too showed his intent of getting into the cable TV market with a national MSO. A much hyped $200 million announcement – in July about his agreement with Atlas Consolidated LLC (a joint venture between Greenwich Equity Partners and Jagran Infra-Projects led by Sanjiv Mohan Gupta) – to create a national MSO it has been followed by a strange silence since.

    It was a year of opportunity, as after a gap of long seven years, the TRAI decided to defreeze prices and allowed a price hike. The regulator in March, released a notification, offering a 27.5 per cent inflation-linked hike to stakeholders in the tariff ceiling. The hike was to be implemented in two phases: 15 per cent from April 2014 and the remaining 12.5 per cent from January 2015. The move gave some hope to stakeholders to increase their Average Revenue Per User (ARPU) which was at around Rs 180 – a 20-25 per cent increase. But the industry is clearly aiming at much higher ARPUs of Rs 300-350 in the short to medium term. 

    The most important month for the cable TV industry was August. Ask why? Well, this was the month, which shocked the whole value chain.  While the LCOs were relieved, the worried ones were the broadcasters and the MSOs. The newly appointed Information and Broadcasting Minister (now former)  Prakash Javadekar, looking at the condition of phase I and II cities, which had undergone seeding of set top boxes (STBs) decided to further push the digitisation dates for phase III to December 2015 and phase IV to December 2016, from the earlier deadline of December 2014. The reason given by the Minister was that he wanted to promote indigenous STB manufacturers, who had not benefitted much from the earlier two phases.

     The news brought in some cheer for the indigenous STB manufacturers who said that this would help the indigenous manufacturing industry give employment to about 50,000 people and would attract an investment of about Rs 500 crore. The move, according to many would also generate local support facility for repair of STBs and help in smooth implementation of digitisation in the country.

    While, everyone has their own take on the decision, one should take this as an opportunity to be able to complete phase III and IV cities, which includes the small towns and villages, in a much more organised manner. Currently in phase I and II, while boxes have been seeded, no proper rollout of package and billing has happened. The stakeholders have time to ensure that along with seeding of boxes in phase III and IV cities, they can ensure that Consumer Application Forms (CAFs) are filled, the information is added in the Subscriber Management System (SMS), packages are created, offering consumers the option to choose and proper bills are rolled out, bringing in complete addressability and transparency.

     According to many, with delayed digitisation, carriage fees are once again on the rise. According to a Media Partners Asia (MPA) report, carriage fee has gone up by 14 per cent, while broadcasters and MSOs peg this at around 20-25 per cent for niche and news channels. In fact, Colors CEO Raj Nayak at this year’s India panel in MIPCOM said that carriage fees which had come down by 20 per cent are again climbing and have gone back to pre-digitisation rates. Yes, all these can be counted as the drawback of delayed digitisation, but tackling the same is broadcaster Star India’s take on the deals with MSOs.

    The case which kept TDSAT busy this year was the Hathway vs Zee and Star case. It was during this, that Star India, in order to fight discrepancy in deals with MSOs, took a firm decision of entering into only RIO deals with MSOs. While this did hit the MSOs, since their cost of content went up, it did two things. One, it nipped carriage fees and two, opened the doors for the MSOs to increase their ARPUs. In fact broadcasters, who feel that the carriage fees are headed northwards, should consider entering into RIO deals, as was also said by MPA in one of its reports.

     With the extension of digitisation dates, a number of MSOs also decided to opt for voluntary digitisation, which was a welcome move, since it showed the intent of MSOs to see the country fully digitised.

    Keeping digitisation and broadband plans in mind, the year saw a few MSOs raising funds for themselves. Considering the money spent by the MSOs in acquiring content and taking digitisation forward did not match with the on-ground collections, MSOs were left with no choice but raise more funds to complete the task in hand. So while Hathway got board approval to raise Rs 300.80 crore through preferential allotment of shares, Essel Group’s subsidiary Siti Cable Network raised Rs 600 crore through the issuance of securities. Last mile owner Ortel Communications too made its move towards getting listed. The LMO, this year, filed its draft red herring prospectus (DRHP) for its proposed initial public offering (IPO) with the securities and exchange board of India (SEBI). The IPO may raise as much as Rs 360 crore.

    The year also saw the I&B cracking its whip on a few MSOs like Digicable and Kal Cable as their licences were cancelled following refusal of security clearance by the Home Ministry. But the duo got relief from their respective state High Courts and are still up and running. Even as Tamil Nadu former Chief Minister J Jayalalithaa owned Arasu Cable struggles to get its DAS licence, Karnataka state government Minister for Information, Public Relations and Infrastructure R Roshan Baig too showed some interest in entering the cable TV business, this year.

     The cable TV industry, like every year was brought together through one forum organised by indiantelevision.com and MPA, IDOS 2014, held in Goa. The three day event threw light on some important statistics:

    ·         Of the 262 million households in the country only 162 million houses have a TV. Of this, 27 million is taken up by the free to air service providers such as Freedish via satellite and 7 million by terrestrial DD, while the rest comes under cable and satellite.

    ·         Rs 32,000 crore has been invested in digitisation since 2005 with a bulk of the investment coming from the DTH operators followed by the MSOs and LCOs since 2011. Out of this, over Rs 11000 crore in the last 24 to 30 months has been invested by MSOs and LCOs.

    ·         While the cost of all the pay channels on a wholesale basis is Rs 922 to digital platforms, the highest pack price is Rs 550 which is an anomaly and needs correction. Retail pricing is the answer to correct this. And it is competition amongst six DTH, two HITS, five national MSOs and several regional ones and the local cable ops will keep retail rates in check.

     We at indiantelevision.com hope that broadcasters, LMOs, MSOs will take a progressive view towards digitisation of their operations and also becoming transparent with their partners in 2015. The fact is there is a lot of work to be done: more than $3-4 billion are needed to digitise India’s cable TV infrastructure; a large part of these will most likely come from international players.   Many of these who were pacing the sidelines watching the developments clearly got a stomach upset and decided to park their funds elsewhere. Now it is up to the industry to restore investor confidence; that cable TV is a sector where one can see adequate returns. Failing which newer distribution technologies like OTT, video streaming and 4G might end up being good options which video lovers could end up considering.

  • The DTH industry’s big developments in 2014

    The DTH industry’s big developments in 2014

    MUMBAI: 2014 was the year of mixed fortunes for the direct to home television industry in India. The seven players in the industry continued to burn cash as customer acquisition costs continued to stay at high levels, at least one of the players spent a large part of the year looking for a white knight, all the players pushed ahead with their HD offerings in phase I, and II digitisation areas, leading to attractive rises in average revenues per user. The total number of registered subscribers and active subscribers, for all the six DTH players, as per the Telecom Regulatory Authority of India (TRAI) report, as on 30 June 2014 was 67.57 million and 38.24 million respectively. Close to 43.41 per cent of DTH subscribers were inactive till June 2014.

    At least two of the players have started generating positive cash flows during the year, even as new spectacular announcements of preparing launches of Ultra HD or 4K services were made during the year. Fresh debt and equity infusions, efforts to introduce new subscriber packages, and an announcement of new policy directions for licensing DTH by TRAI were the hallmark of the year.

    The DTH industry in the country saw some big innovative changes being made over the year 2014. These helped the industry in adding more subscribers while marginally increasing the average revenue per user (ARPU).

    The year began with three DTH operators, Tata Sky, Sun Direct and Reliance Digital TV being issued notices by the Information and Broadcasting Ministry (I&B) for not showing the mandatory 24 Doordarshan channels. Later on the Ministry also pulled the entire DTH industry for not paying licence fee worth Rs 2066 crore.

    The DTH ops resisted the amount stating that they had been paying the fees on the gross revenue (GR) basis while the government was extracting it on the adjusted gross revenue (AGR). A court case on the same had been pending from nearly four years and is still ongoing. However, Tata Sky and Reliance decided to challenge the same in the Telecom Disputes Settlement Appellate Tribunal (TDSAT) while Sun Direct made an application on its 2009 petition regarding AGR.

    The licence fee case was put in the backburner by the TDSAT stating that since it is relative to the telecom case on licence fee issue, it would hear that case first and then come to the DTH case. By the end of the year, however, the TDSAT agreed to hear the DTH ops separately rather than wait in line, the case is still on. Tata Sky in the meanwhile has already paid a sum of Rs 383 crore to the I&B Ministry, while Dish TV awaits court orders.

    The budget 2014 got some relief to the set top box (STB) manufacturers by reducing the excise duty from 12 per cent to 10 per cent from February to June 2014. However, they continued to fight the entertainment and service tax that was being levied on them since several years while cable operators go without paying it. Dish TV raised the issue with the finance minister Arun Jaitley and then I&B Minister Prakash Javadekar to discuss the multi layered taxes, which however didn’t lead to any conclusive solution on the same. DTH ops are subjected to licence fee, 12. 3 per cent service tax and also entertainment tax at the state level.

    The DTH Operators Association also saw a change of head with Dish TV CEO RC Venkateish replacing Tata Sky MD and CEO Harit Nagpal. Doordarshan ADG Ranjan Thakur who also headed Freedish moved out due to the expiry of his term.

    Freedish has been working on adding several Indian as well as international channels through its auctions while also setting up MPEG-4 boxes alongside MPEG-2 for the interior parts of the country.

    Several new innovations came across last year. Tata Sky introduced a new feature of Karaoke on TV while Videocon d2h came out with a headphone attached to the remote for watching TV without disturbing others. Both of them also were the first ones to introduce 4K HD TV set top boxes in the country. However, the official commercial rollout for both has yet to happen. Tata Sky even did a live telecast of one of the FIFA world cup matches on its 4K TV as a demo.

    Dish TV on the other hand, chose to go local, by introducing customised packs for regional India. A sub-brand ‘Zing’ was launched that would give localised packages in the states of West Bengal, Odisha, Tripura, Seemandhra, Telangana and Maharashtra. The oldest DTH operator also heaved a sigh of relief when after months, it received the nod from the Sri Lanka government to commence operations for its DTH project in the neighbouring country.

    With markets being more receptive, Videocon d2h, which has been planning on launching its IPO since long, went ahead with its filing to SEBI for Rs 700 crore with seven banks managing the share sale. Much of what it can raise will go towards acquiring STBs and outdoor units. Dish TV is also contemplating on starting its own manufacturing unit, though it hasn’t laid any concrete plans on it yet.

    TRAI played a big role when it came out with its DTH licencing recommendation paper which is now pending before the I&B Ministry. The paper restricted broadcasters from owning more than one DPO which is likely to affect Dish TV/Siti Cable under Zee and Sumangli Cable/Sun Direct under Sun Network.

    The paper however extended the 10 year licence period to 20 years while the one time entry has been retained at Rs 10 crore. DTH operators whose licence term expires after 10 years will be allowed to apply for a 10 year extension. The licence fee has been reduced from 10 per cent of GR to 8 per cent of AGR.

    The earlier norm of providing a bank guarantee (BG) of Rs 40 crore was change to the amount payable as a licence fee for two quarters and will have to be renewed year on year till the end of the licence period. New entrants will however have to provide a BG of Rs 5 crore for two quarters and then progress as above.

    The year ended with the Comptroller and Auditor General (CAG) of India coming out with a scathing report on the management of satellite capacity for DTH service by the Department of Space (DoS). In it, it stated that over the years the DoS has been lagging in its satellite launches that were required by DTH operators, leading to them migrating to foreign operators and loss of revenue to the government. The DoS had also goofed up on charging Sun Direct and Prasar Bharati leading to a loss. On the other hand, its commitment to Tata Sky for first right of refusal for using its Ku band transponders, led to its transponder space remaining idle for years.