The India TV & Radio industry is undergoing huge change. Digitisation is changing the market landscape and opening opportunities for foreign media companies.
Find out what your competitors are up to and how your company can participate in this growing market.
- Television channels and broadcasters/Major Private FM operators
- Digitisation trends, challenges
- Key Players (see table of contents for full listing)
- Content production
- Regulatory Implications
- Multi-Service Operators (Cable Distribution Companies) Local Cable Operators (Lcos)
- Future Outlook
If you're a media owner looking to enter the Indian TV or Radio market or need to keep abreast of key changes and developments this is the report you need to keep you up-to-date in this fast moving, lucrative market.
Executive Summary Indian Television Industry
The Indian Television sector is the third largest in the world in terms of the number of TV Households and has become the preferred advertising medium in India during the past few years. The television sector has been growing at between 12-15% in recent years resulting in an increased share of advertising compared to other advertising media. The TV industry is currently estimated to be worth USD 6.5 billion.
The impending roll out of nationwide digitization of content distribution has opened up a whole new business opportunity and better revenue realizations to all the stakeholders especially for the broadcasters and higher tax collection for the government. Though advertising revenue, which is the largest revenue stream for the television industry, is facing sluggish growth currently due to the economic slowdown, the prospect of higher subscriber revenues post digitization is making the industry optimistic about the future.
The television industry in India, as elsewhere, consists of three basic internal stakeholders:
- Content and Rights
All three segments are undergoing a major transformation in terms of regulation, technology or market dynamics. The role, market drivers and challenges faced by respective stakeholder segments is discussed at length in the subsequent sections.
Despite reaching 150 million households, the overall TV penetration in India remains low at 63% and is growing steadily in line with economic growth and disposable income. The share of Cable and Satellite based distribution continues to be most popular mode of distribution accounting for 80% share among TV households. Direct to Home (DTH), currently accounts for a smaller share but has been the fastest growing mode and holds more promise, reaching approximately 40m households out of the 150m TV households. The DTH industry consists of six large players with pan India presence.
About 30 Mn rural and remote households still use terrestrial mode to view state owned channels. The analog cable sector is on the verge of migration to digital. Technological constraints in analog cable, with limitations in channel carrying capacity as well as poor quality of signals is driving end users to shift to set top box enabled digital cable and DTH to receive customized and high quality content. Irrespective of the regulation making digitization mandatory, the sector wide consolidation has made local cable operators (LCO) an endangered tribe. Digitization means that end users can view any number of channels and broadcasters too will get their correct share of subscription revenue, which was previously suppressed through ‘leakage’ at the LCO level. It is anticipated that each of the suppliers in the chain will improve their average revenue per user. Multi System Operators (MSO), who aggregate content and distribute to LCOs are expected to play a large and key role in digital era. Acquisition of smaller LCOs and consolidating their position against DTH players will require huge investment in upgrading their technological infrastructure. The future unfolding battle will be between the technologically superior DTH with a cost effective network on the one hand and the large customer base of digital cable MSOs on the other.
Television Channels (Broadcasters):
India has seen proliferation in the number of channels over the last five years with over 825 active channels, but revenue is concentrated in a few and profitability in the hands of even fewer
Primarily the leading Hindi and Local language GECS. This has been primarily due to constraints imposed by analog technology in carrying about 60 channels to the end viewers and upon offering differentiated channel packages to consumers. Those popular channels which have been carried by analog cable have generated high TV viewer ratings and a consequent dominance of ad revenues. Digitization is expected to even the playing field somewhat and to improve the economics of minority and specialist channels. The channels which were at the mercy of LCOs, post digitization will be able to reach their end user and offer niche content for both subscription revenues and targeted ad revenues. However, if the pace of digitization is delayed, established television channels will in the meantime have no option but to depend on ad revenues as their main revenue source and not on subscriber revenues. Given the prolonged lull in corporate ad spend in television and a hike in the production cost of content, some channels may be forced to look at a consolidation route for survival.
Convergence of digital technologies is also presenting a new revenue stream opportunity for broadcasters to repurpose and monetize content using new digital delivery platforms such as smart phones, thereby prolonging the shelf life of content.
Content & Rights:
Low cost content production has been the focus of most of the television channels. Most content has been produced in house by TV channels and there are few large size external content production houses in India. Outsourced TV content usually accounts for about 4-5% of the television industry size. The growth has mainly come from the recent proliferation of channels. The production budgets for Hindi and regional fiction shows are lower compared to international standards. However, low advertising revenues on account of poor viewership and in other cases high carriage fees paid to LCOs to be part of the analog band has resulted in severe competition and low margins for the broadcasters as advertisers get enough choice to shop around for great bargains. As a result, broadcasters have had no option but to restrict content costs, the only aspect which is well within their control. Rise in non-fiction shows like reality shows, cricket and films are the only exceptions to this trend due to their high popularity among viewers. Digitization is expected to change the content landscape as well as the broadcasting landscape.We believe that the opportunities for international media companies exist mainly in the area of channel partnerships & content development and for the digital exploitation of content.
Executive Summary Indian Radio Industry
Market developments "Out of home listenership".
India is the fastest growing wireless market, with almost half of the mobile phones population having a built-in FM radio, in addition to transistors/radio sets and car audio systems. The fact that a large chunk of radio listenership is on portable devices and happens out of home, augurs well for future industry growth.
With an increasing number of Radio-enabled mobile phones in the affordable price range, users in metros are switching from traditional radio sets to mobile phones as their primary mode of radio-listening.
According to Industry sources, the current radio penetration levels are estimated to be ~35-38% overall and ~77% in Metros. The figures in the graph below from the TAM’s Radio Measurement clearly indicate the potential of radio, given a significant increase in FM population (barring Kolkata) in Metros.