Growth prospects for Indian Media in 2015

29 Jan,2015

Base: All respondents, Source: Nielsen Primary survey, 2014

 

By Umesh Jha and Dharnidhar Bapat

 

As far as the media industry in India is concerned, the landscape is going to witness a lot of changes in the area of content offering.The changes are likely to be driven by the expansion of TV content viewership measurement and consumer evolution with respect tomedia content access. Increasing penetration of smart phones,Internet and social media contribute to media content access beyond traditional media vehicles, resulting in opportunities for broadcasters,publishers and brands to experiment with content as well as marketing.

 

There are three major trends foreseeable in the near future besides several other smaller yet significant ones.

 

First, there is an anticipation of the new measurement system which is expected to roll out in the near future. The new measurement system is expected to cover smaller towns (LC1) and rural areas. Moreover, the system is also attempting to measure content consumption beyond TV sets, ie on other screens such as mobile, tablets, laptops, personal computers (PCs) etc, making it possible for even niche content genres to get a big pie of the advertising spend. Therefore, to meet the diverse content needs across consumer segments, broadcasters are experimenting with different topics, newer channels and distribution of content on digital platforms.A lot of broadcasters and producers of content are looking to understand the rural consumer in a bid to widen outreach, and the expectation from the new measurement system is that it will facilitate that. A research conducted by Nielsen helps understand the rural consumption patterns, in which television emerges as the most effective channel in influencing purchase. The target group for this study was NCCS AB, farmers and non-farmers (50-50) across 4 states (AP, Gujarat, Punjab and Maharashtra).

 

The second big trend we foresee is the Phase III and IV OF Digitisation. The sheer numbers are staggering, with a total of140 million Set Top Boxes (STBs) required to complete the final phases of digitisation across India. Of these, according to industry sources, about 110 million would be needed by the cable industry, and 30 million by Direct to Home (DTH)* services. In anticipation of this development, DTH operators are keen to understand key choice drivers of broader and newer audiences. Broadcasters see a higher share of subscription and are working out their pricing strategiesin order to boost bottomlines. With digitisation, contribution of subscription revenue to the total revenue is expected to increase from 67% in 2013 to 71% in 2018. Digitisation should also lead to a drop in carriage fees significantly. (As per FICCI Frames 2014).

 

*Industry Estimates

 

However, a fallout of digitisation can be that broadcasters may choose to go a-la-carte, and lead to standoffs between TV networks and cable distributors. However, given the significant role played by channel packages, it is unlikely that mass channels would take the a-la-carte route.

 

The third major trend is the shift in video content consumption. While the web widens across the nation, rural internet and smartphone incidence is shooting up. In a trend driven by an increasingly young demographic, videos are being viewed on the move, and on far more compact screens than the traditional television. This trend presents a fantastic opportunity for broadcastersto mobilise digital advertising revenues. Figures already show thatdigital media advertising in India grew by 38.7% in 2013, faster thanany other ad category, and digital ad spends accounted for 8.3% ofthe total ad spends of Rs 362.5 billion in India in 2013 (As per FICCI- Frames 2014). Though digital adspends have grown, broadcasters have failed to monetise the full potential of their content viewership on the digital medium.

 

A paradigm shift in content consumption is expected. Controlon content distribution in digital media, viewer profiling and customisation of content specific to this medium are some avenues to boost revenue.

 

The 2014 Budget proposed a Phase III licensing for radio expansion to 294 cities and 839 private channels.

 

The possibility of permission for news content on radio has the potential to reach a far bigger audience with deeper involvement and time commitment by consumers towards radio.

 

EXPECTATIONS FOR THE MEDIA INDUSTRY IN 2015

The industry is on tenterhooks as far as the implementation of some old promises are concerned. With the current government looking conducive to progress and coming out in support of a digital and connected India, the media industry hopes for some sweeping changes to facilitate a boom.

 

1. Implementation of the long delayed phase III rollout of the broadcast expansion for private FM channels will help expand the market for the radio sector.

2. The industry had demanded 49% FDI in news media as opposed to the current 26%. The government is currently mulling over industry views on 100% FDI in news media.

3. 12 minutes per hour advertisement cap by the Telecom Regulatory Authority of India (TRAI) is another issue that industry expects to be resolved urgently – currently the Delhi High Court has put a stay on this order.

4. There is a need for simplification of the framework of taxes in the media industry.

 

In conclusion, 2015 promises to pack in all the excitement of an entertainment blockbuster and change the game for good. Changes are expected across the two broad areas of context and content. In terms of context, the new measurement system and digitisation will push broadcasters and DTH service providers to focus on consumption patterns among smaller markets and rural India. In terms of content, genre experimentation and cross-platform integration are expected to define the coming year.

 

Umesh Jha is Director and Dharnidhar Bahat is Associate Director, Nilesen India. Pubished with permission of Nielsen India.

 

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