Indian Railways plans foray into radio to boost non-fare revenue
The Financial Express , Oct 08, 2016
The Railway Ministry plans to foray into radio broadcast to provide free onboard and customised entertainment across all trains in order to boost its advertising revenue.
The Non-Fare Revenue (NFR) Directorate of Railway Ministry pegs the revenue from advertisements through onboard radio at over Rs 100 crore per year. Last year’s total advertising earnings were Rs 263 crore.
According to a senior official, the capital expenditure in setting up speakers and amplifiers for the purpose is expected to be around Rs 40 crore while the operating expenditure per year is estimated at nearly 3 crore.
Neither of the two expenditures will be borne by Railways. The project will be tendered to the highest bidder on revenue sharing model.
Once implemented, all trains will have a customised playlist of music, which could vary statewise.
The onboard Public Announcement (PA) system will also be used to disseminate passenger convenience related information, like delay in arrival, reason for delay, among others. These will be interspersed with advertisements.
Currently, the ministry is considering internet-based radio for a wider reach across its entire network but is open to alternative technology or medium, sources said.
A server on the train will download the content as and when internet network is available and will keep a buffer of 6 to 8 hours in case the train is passing through remote areas with no internet coverage to ensure uninterrupted playout.
According to a KPMG-FICCI study, the advertising revenue of the Media and Entertainment industry is expected to grow at 15.9 per cent in the next five years and will generate Rs 994 billion.
By 2020, the advertising revenue through TV is likely to be at Rs 364 billion, while that from print at Rs 286 billion.
Similarly, revenue from digital advertising is likely to grow to Rs 255 billion and from radio it is expected to reach Rs 43 billion.
Out of Home (OOH) – advertisements on railway property – media is expected to fetch Rs 45 billion.
With 23 million ticketed passengers travelling by train every day, Railway expects to command 10 per cent share of the radio audience after the execution of the project.
Sources said the public transporter’s revenue from radio advertisements is likely to exceed the estimated Rs 113 crore.
The railways has not yet exploited radio and print for advertisement revenue. However, it earns revenue through advertisements on televisions on stations.
“With a captive audience and a wide national market we can easily monetise radio broadcasting. We are also creating assets without incurring any expenditure and simultaneously providing free entertainment and valuable information to our passengers,” according to a railway ministry official.
The ministry will be sending a request for proposal (RFP) by the end of this month. In the following three months, trials will be carried out and the tenders for the project will be out by the end of this financial year.