Anchor | One Big Idea by Raj Nayak: A Sunset Date to regulate ad inventory?

11 Jan,2013

By Raj Nayak, CEO, Colors

 

Rather than big idea, I would want to term them as big challenges. The satellite industry has been around for two decades now and I am happy to have been a part of this journey for so long. But I have also been able to witness a lot of developments in the industry during these years. From a few channels earlier, we now have over 500+ channels. In the process, a lot of growth has happened by default than by design. It has been a case of trial-and-error as there was no history to lean back on. Almost everybody has tried new things which have mushroomed and grown over the years. The ride has been both good and bad. Good because the industry has grown real fast, thereby providing employment to thousands of people etc.

 

On the other hand, we were also the most unregulated industry and that led to fast growth. This wouldn’t have been the case if we had been regulated because entrepreneurship would have been killed. Also, it has left a lot of broadcasters bleeding. Today, only a few players are making money while the rest are incurring losses. Hopefully, digitization will change all that as it is a step in the right direction.

 

But there is no magic wand; it will happen over a course of time. So the real challenges for the broadcasting industry are: firstly, how do you reinvent yourself? For example, there is a herd mentality in programming. How you break that monopoly is a challenge. On the programming front, I foresee two big challenges. One is spiralling cost because the cost of artistes is going up and very few people are investing in new talent. On the movie acquisition front, the costs have multiplied multi-fold. So somewhere, the industry needs to come together in terms of finding synergies in certain areas where you can control costs. For example, movie acquisitions. Today, all top four GECs are party to driving the prices up. So we need to work together to find a solution that benefits all.

 

As for advertising sales, while we keep talking that the universe has grown 4-5 times in the last few years the yield hasn’t gone up – ad spot rates haven’t gone up. That’s a big challenge that needs to be addressed. And I do not foresee this issue being addressed unless the supply-demand issue is addressed. I may sound politically incorrect out here but the fact is that we need to regulate the total inventory on a television channel. One reason for this was because there was a huge carriage fee with advertising rates not going up… the only way they were going to grow was by increasing ad inventory. If it is done in a planned and phased manner, it will be very good for the industry in the long run. The industry needs to set itself a Sunset Date so as to bring down the inventory that’s there on television. So instead of 20 minutes, a 10+2 minutes may be a good benchmark. As, unless the supply-demand rates change, the ad rates cannot go up. This is a big challenge but one that is doable.

 

I feel a part of the issue will get addressed with digitization and with revenue stream from distribution; it will ease the pressure a bit on the advertising front. Once the balance sheet starts looking better there will be a little more investment that will go into content.

 

Another thing is content differentiation. What happens is when you are successful your appetite for taking risks becomes less. In India, in the fiction shows, the seasons are canned to a large extent which is a big challenge on the team that is involved. At Colors, we are trying to set a new model where we will be launching Season 2 of Na Bole Tum… which will run till a stipulated timeframe only. If it is successful we won’t extend the days but will announce a new Season 3 later. We are hoping this will be a game-changer for us in the future. A similar approach is being given to our other show 24, where we will be doing only Season 1 for now. We may do other seasons based on its success. If we are able to bring some kind of standard practice in the system then we may see things changing as we move ahead.

 

A lot of other avenues that were not available earlier like content on mobile etc will start opening up in a big way with 4G. Broadcasters will increasingly be looking up to digital to bring in more viewers and also revenue for the network.

 

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