TV-wallahs eager for digital wave

18 Nov,2011

 

By Rishi Vora

 

The television distribution scene in India has for many years seen the dominance of cable wallahs. Digitization only started in a big way when DTH players pumped in huge sums (there was no ordinance then) and succeeded in building a critical base of subscribers in the country. As a result cable operators were seen as laggards. Sample this: there are about 40-45 million DTH homes out of the total viewing population of more than 225 million households, so DTH has grown despite competition from cable and is likely to increase the subscriber base substantially with the recently passed ordinance by the government.

 

As for the cable operators and MSOs, they are left with no option but to invest in infrastructure. Den Networks is investing Rs 1,000 crore and expects to get 2.5 million subscribers in the phase one. Hathway will invest Rs 500 crore and they are also bullish about increasing the subscriber base. Analysts feel that now is the perfect time for MSOs to increase their share in the business.

 

So, while it seems all good for the industry, the fact is that digitization is something that was always talked about, and is now a work in progress as far as complete digitization is concerned. The government has, in a recent development, pushed the sunset day for four metros from March 2012 to June 2012. The date for cities with a population more than 1 million is March 31, 2013.

 

For broadcasters, this is a big relief from the carriage fees, which in the past have resulted in loss of revenues. The four metros is a big market with 20 million households; and digital homes eating into cable and analogue… But, digitization, for broadcasters, also means that the consumer will now have a choice of what channel to pay and watch. That in experts’ minds is a challenge many broadcasters will have to face – to keep their viewers’ interest levels high and for the long run.

 

Subhash Chandra, Chairman, Zee opines, “Digitization will only help the television industry further grow. The government’s decision on clearing the ordinance is a very positive move. It will give a boost to the cable and satellite industry and help create a more sustainable business model for the television industry.”

 

On the growth of DTH players in the county, he said, “DTH is leading the adoption of digital technology. There are about 39 million gross DTH subscribers in the country. Now they have a great opportunity to consolidate their businesses.”

 

However Dinyar Contractor, Editor-in-Chief of Satellite and Cable TV Magazine, has a contrary view to the whole scene. He feels that there is still some time for digitization to happen pan-India (2014) as the ordinance states. And that broadcaster are wary of going digital, or are wanting to delay the process of digitization of TV in India, as the profits are not much, plus there is the risk of losing eyeballs, as there will always be viewers who are not open to the idea of paying and viewing, as against the concept of free-to-air channels.

 

Tarun Katial, CEO, Reliance Broadcast Network Limited, feels, “Digitization will bring-in fair reporting of subscriber base, which will lead to standard pricing and subsequently eradication of local monopoly. It will help companies increase subscription revenues and reduce down carriage fees for broadcasters in a phased manner.

 

Ajay Chacko, President, A + E Networks | TV 18 JV, says that the move will bring in more accountability in the business. And apart from additional subscription revenues, he believes that digitization offers a whole new benchmark for broadcasters, and a platform which is more measurable than cable and analog.

 

Neo Sports COO Prasana Krishnan welcomes the ordinance. “This is the much needed change in the industry. What it will do to the industry? I think it will revolutionize the broadcast landscape in India.”

 

If the ordinance were not passed, Mr Katial is of the opinion that the current capacity constraints in analog cable would have stifled the growth of new channels and introduction of technologically advanced content. “The carriage costs paid by broadcasters which currently remain high in view of the limited bandwidth of analog cable would decrease post digitization. This would allow broadcasters to make higher investments in programming and marketing, thus improving the customer experience,” he explains.

 

Another advantage the industry will see over the years in the fast adoption of HD television and 3D, which will open new revenue streams. As far as television distribution industry is concerned, the ordinance will lead to more transparency and greater accountability. It means opportunity for all stakeholders – broadcasters, distribution platforms including cable companies, MSOs and DTH.

Photograph: Airtel Digital TV HD Recorder from airtel.in

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