Can PayTV survive the rise of free streaming?

As traditional TV broadcasters rush to make their content available for free on AVoD (advertising-video-on-demand) platforms, the industry is facing a critical question: Are they devaluing their own content and driving consumers away from paid television (PayTV) services?

With Disney Star, Zee and Viacom18 releasing shows on AVoD within 2-24 hours of airing them on TV, and Sony even putting content on YouTube, cable and DTH operators are raising alarms. They argue this practice is pushing consumers to cut the cord and switch to cheaper online alternatives, while broadcasters claim they are simply adapting to evolving media habits.
Is free content choking PayTV?

Many in the DTH and cable industry are warning that broadcasters are shooting themselves in the foot by making fresh episodes freely available on AVoD platforms. Harit Nagpal, managing director and chief executive officer (CEO) of Tata Play, a seasoned voice in the distribution space, said this strategy has “disincentivized consumers from subscribing to PayTV services.”

“Soaps are stories,” he explains. “If you watch the next episode an hour or more later than the scheduled time, the story doesn’t change. But if you can watch it for free after 9pm, why would you pay to see it at 8pm on TV? The impact on PayTV subscriptions is obvious.”

A senior executive at a large multi-system operator (MSO) points out the harsh reality for low-income consumers. “If people with lower disposable income are forced to choose between paying for DTH services and paying for the internet, they’re going to choose the internet. It’s not just for entertainment anymore; it’s a necessity.”

As a result, AVoD has become the preferred option for many consumers, allowing them to access content for free, while PayTV services lose out on subscriptions. Nagpal says fresh content should be kept exclusive to PayTV for longer periods, enabling broadcasters to monetize through both subscriptions and advertising.

“If a good biryani from your favourite restaurant was delivered to your home for free, would you still go to the restaurant and pay for it?” Nagpal asks, stressing the obvious disincentive caused by this practice.

Broadcasters ‘meet consumers where they are
Broadcasters, however, argue that this is not about killing PayTV, but about adapting to changing consumer habits. A Sony Pictures Networks India (SPNI) spokesperson said AVoD and subscription-video-on-demand (SVoD) platforms are crucial for reaching different segments of their audience, especially in areas where PayTV penetration is low.

“At SPNI, we provide content across linear TV, AVoD and SVoD. These platforms work together to reach different audiences. While AVoD broadens our PayTV offerings, SVoD and TV are still key to our growth,” says the spokesperson.

Broadcasters acknowledge the shift to digital but emphasize that TV still holds value. A top executive at a large broadcast network explains, “We understand the importance of TV and its immense reach. That’s why we premiere shows first on PayTV, offer them early on SVoD, and make them available on AVoD later. We’re evolving with the consumer, and offering multiple options to cater to their habits.”

Despite AVoD’s rise, broadcasters believe that TV remains irreplaceable as a family viewing device, with small screens like smartphones catering only to individual users. “TV still caters to families of four to five people. In contrast, only a few in the family may have personal smartphones with data plans,” the broadcaster adds.

The reality: Consumers are cord-cutting for cheaper, freer options
Nagpal believes that the current strategy undervalues premium content. He argues that content should follow the model set by movies: “Movies first release in theatres, then they go to paid platforms like OTT or PayTV, and only after a few years do they make it to free or AVoD platforms. You will never see Netflix or Amazon Prime content freely available on YouTube within hours—there’s a reason for that!”

Consumers, especially those with tight budgets, are now making tough choices between DTH services and internet subscriptions. And with the Internet becoming essential for work, education and everyday life, many are choosing online platforms over cable TV. This shift is accelerating the trend of cord-cutting, as consumers find ways to get the same content for free or at a much lower cost.

AVoD: A double-edged sword for broadcasters?
While broadcasters tout AVoD as a way to reach wider audiences, the risk is that they are cannibalizing their own PayTV revenues. Nagpal stresses that the bulk of subscription and advertising revenues from PayTV go directly to the content producers. “If there is any harm from making fresh content available too soon on AVoD, the producers stand to lose the most.”

For broadcasters, the balancing act is clear: They need to attract digital viewers without undermining their traditional TV business. Nagpal suggests a more staggered approach—delaying AVoD releases by several years, as is common with premium content like movies.

Can PayTV and AVoD co-exist?
The future of TV distribution will depend on how well broadcasters can strike a balance between PayTV and AVoD. While AVoD offers immediate reach and monetization through ads, PayTV remains a significant revenue driver for both broadcasters and content producers. The challenge is to create a clear distinction between what is offered to paying subscribers and what is available for free.

As Nagpal puts it, “Linear TV will need to follow a similar sequence as the movie industry—first on PayTV, then later on AVoD, with enough time in between. Otherwise, broadcasters risk devaluing their own content and losing out on critical revenue.”

The question remains: How long can TV broadcasters afford to give away their premium content for free before the damage becomes irreversible?