Sanjeev Mulchandani, Zonal Head Sales, Zee Unimedia

The Indian Pay TV Industry is the third largest in terms of households after the USA and China in terms of value.

In absolute numbers while China has 378 million households (HH), the USA has 118 million HH, and India has 183 million HH. The penetration level in the United States of America is almost 98 percent, while in China and India it ranges between 70 and 80 percent, indicating a clear upswing of at least 20 percent in next 4–5 years, given the pace of digitization.

Early 2017, BARC (Broadcast Audience Research Council) has updated and aligned its TV universe in line with changing demographics, TV ownership, etc. So new viewership data released in Feb’15 by BARC was on based on the revised Universe Estimate, which was based on results of Broadcast India survey.

Thriving Consumer Driven Market

  • Total TV HH – 183 million
  • Cable TV HH – 106 million
  • DTH TV HH – 42 million
  • Free Dish and other HH – 30 million

Typically there are two types of channels which operate: Pay TV and FTA. Revenue generated by FTA and Pay TV differs in size and value as avenues to monetize channels vary. Below are few illustrations of the revenue generation pattern for Pay TV and FTAs.

  • Revenue for Pay TV is generated through: subscription, ad revenues. events and advertiser funded programs, content syndication and alliances
  • Revenue for FTA TV is generated through: ad revenues, events and AFPs, content syndication and alliances

With advent of BARC, the new audience measurement system, the shift occurred from SEC to NCCS which gives a better understanding of the purchasing power of a household than the earlier SEC which was based on the education and occupation of the chief earner. BARC also started reporting rural data, which was a game changer, as more than 50 percent of TV HH were based in rural India. With all these differences besides also reporting a wider sample of 20,000 m instead of 8000 TAM metres, the landscape of reporting of TV viewing in India changed drastically.

And given the consumption of more than 50 percent in rural India, it was imperative for broadcasters to capture these audiences which lie at the bottom of the pyramid and where subscription revenue would not be the key driver, due to various reasons which include, low affordability, lack of digitization, etc. In 2016, broadcasters started to focus on these rural heartlands, with various FTA’s launches in GEC, movies, news, regional entertainment, etc.

The India television industry is thriving and is doing well, for which one major driving factor is the great advertising bonfire. The advertising contributes to approximately 41,000 crore of revenue vis-a-vis 34,000 crore of subscription revenue, of which only 10,000 crore actually reaches broadcasters, due to under-reporting and pilferage. With the current digitization wave, we expect things to improve.

The typical size of the subscription revenue on the basis of 150 million Pay TV HH and average ARPU of USD6–7, will sound very lucrative in terms of absolute number. But due to lack of digitization, Pilferage, etc., of the total of 30,000 crore revenue generated through subscription, its only 25 percent of the money that flows back to the broadcaster. Once all these loop holes are closed, the Indian Pay TV Industry, offers a very big opportunity for broadcasters, MSO, and DTH players to earn substantial amount of revenues and invest back in content which is key to growth of Industry, which is one reason why players like Hotstar, Netflix, etc. which are Pay platforms are seeing enormous growth.

Currently given the amount of subscription revenues which get ploughed back to broadcasters, we operate at 80–20 AD: subscription revenue for the broadcaster which is way too below compared to western countries, where it is 50–50 all across. Overall industry contribution to GDP of the country has gradually moved up from 0.3 percent over the last 7–8 years to 0.55 percent of GDP as of last year. Eventually with digitization and opening of FDI the industry is poised to grow and the same will lead to increased contribution to GDP.