As content gap narrows, have free-to-air channels become a threat to pay TV?
The Financial Express , Apr 04, 2017
2016 saw a surge in FTA (free-to-air) channel launches, as broadcasters saw untapped opportunity with ratings agency BARC India starting to measure rural markets in late 2015. Amongst the most viewed genres, Hindi movies (52% viewership from rural markets), saw a plethora of channel launches including Rishtey Cineplex, Zee Anmol Cinema, Sony Wah and Star Utsav Movies. Hindi general entertainment broadcasters too laid a sharper focus on their FTA offering.
The FICCI-KPMG 2017 report Media for the Masses: The Promise Unfolds states that the ratings pushed FTA GECs in the top 10 category, and the ad rates for these channels increased by around 50-70% during 2016. In fact, FTA channels are stated to be a big revenue driver this year, as the share of advertising grows from 31% to 39%, as per industry experts. The report also mentions that subscription revenues witnessed a slow growth at 7% due to slowdown in digitisation and the resurgence of DD Free Dish as an alternative platform to pay TV.
With reports of DD Free Dish set to ramp up its capacity of channels from 100 to 250, and the content gap blurring as fresh content is now available to FTA consumers within a week or maximum a month since its airing on its pay counterpart, FTA has the potential to translate into a large advertising market in the future, albeit with risks around loss of subscription revenues. The questions here arise if viewer conversion will take a hit and if it will prove to be a threat to the pay TV model in the long term.
“A good volume of India is yet to be pay. There are several small FTA players and the opportunity for them is to capture advertising and viewership,” says Ruchir Tiwari, business head, Zee Hindi Movies Cluster. “But for larger broadcasters, FTA is a kick-start and catalyst. The short term vision is to capture eyeballs but it could be a tricky call in the long term.” Interestingly, FTA channels from Zee’s bouquet have a significant gap in the airing of content from its pay counterparts, in order to “not hamper” the pay TV model.
Achint Setia, head, corporate strategy and business development at Viacom18, recently mentioned at the FICCI Frames 2017 conference that 7% of FTA consumers are moving to pay as India adds more TV households.
FTA is thus seen by most broadcasters as a way to increase sampling through exposure, to eventually convert them into pay subscribers. But with subscription revenues not contributing more than 30-35% of a broadcaster’s revenues, the advertising model becomes important.
The industry believes that Hindi movies and general entertainment is where the conversation really lies, given its resonance and contribution to viewership, but there shouldn’t be an immediate overlap of content. Experts state that 50-60% of content today is available simultaneously on the pay and free channel, which can create an issue going ahead as the customer will not have any motivation to convert to pay. However, the overlap of audience between FTA and pay in GECs is stated to be less than 10%.
But Basabdatta Chowdhuri, national COO, Starcom India points out that although FTA channels are catering to rural markets, it does not mean that they are growing on the back of re-runs. “Channels like Sony Pal have come up in ratings on the back of latest content that was aired,” she says. Take the case of Colors, which aired the world TV premiere of Bajirao Mastani on April 23, 2016 and then telecast it on its FTA channel Rishtey Cineplex on May 8, 2016 — after a gap of just two weeks.
Well, not only content, but distribution too can face a threat from FTA channels. With DD Free Dish increasing its capacity, DTH operators state that Free Dish has seen an accelerated growth and added 10 million subscribers last year, which is more than the growth of the entire DTH industry put together. As a result, while beneficial to broadcasters, FTA can prove to be a threat to DTH ops in the long term.
“India is still 65% rural and it’s a value conscious market; FTA will have its own pool of audience but there is a surge in viewership of both free and pay channels,” states Anita Nayyar, CEO India and South Asia at Havas Media. However, the concept of windowing and differentiated strategy need to be thought out if the threat to subscription revenues has to be avoided and to ensure pay channels remain relevant too.