Unfazed by challenges, Television continues to dominate the media space; expansion of FTA channels, launch of regional channels of various genres in Hindi-speaking markets set to propel the medium even higher
By SIMRAN SABHERWAL
Terrestrial television was introduced in India, way back in 1959, with an experimental telecast that used a small transmitter and a makeshift studio. The big game-changer for Television in India came in 1982 on the back of three events - the introduction of national telecast and color television, and the Asian games held in Delhi – which gave the medium the required impetus. What followed was landmark small screen programming on the national broadcaster Doordarshan. The next significant milestone was satellite broadcast and what started with Zee TV soon led to a multitude of private channels taking over the Indian airwaves. Since then, the growth of Indian Television has been astounding. By some estimates, from just one channel and believe it or not, 41 sets in the country, in 1962, the medium grew to more than 100 channels being viewed in more than 70 million homes by more than 400 million people in 1995. Fast forward to today, the Television universe size is 183 million households (HHs) with a reach of 780 million individuals and an All-India penetration of 64%. This is a 10% jump in penetration levels, from 143 million households in 2013, according to a recent FICCI Frames 2018|BARC report, ‘The Changing Face of TV in India’.
Delving a little further into the data on the TV universe reveals that there are 99 million HHs in rural India as against 84 million HHs in urban India. However, only 52% of rural India is penetrated viz-a-viz 87% penetration in urban India. These numbers once again highlight the fact that Television in India, particularly rural India, has still a lot of headroom for growth and in all likelihood will continue to be a dominant media vertical. Says Rathi Gangappa, CEO, Starcom India, “TV will continue to grow as both electricity and connectivity improve. DD direct will have the biggest role to play. As has been happening in the past years, this growth will largely come from rural. In urban India, fragmentation will pick up pace with more options being available on TV along with TRAI regulations likely to kick in.”
What also needs to be addressed are the challenges that exist onground in rural India that could impede growth. For starters, the data points to the stark reality that growth, development and the much touted ‘achhe din’ has not reached the hinterlands. Even though a larger percentage of rural homes have been electrified, the affordability factor means that a Television set remains out of reach for many. In this scenario, it could be the hand-phone that could be the medium of choice when it comes to meeting a consumer’s entertainment needs. It is estimated that there are close to one billion mobile users in the country, of which over 300 million are smartphone users. This number is expected to more than double by 2020 and falling data prices and increased internet connectivity could mean that people could start consuming TV through the mobile.
Another challenge is the fragmentation of media as per Himanka Das, CEO, Vizeum who says, “While penetration is on an upward trend, fragmentation continues which means optimisation of reach of a TV plan beyond a threshold will continue to be challenging. Also measurement metric change has contributed to better representation of the TV universe.”
The Growth Driver: FTA Channels
The key propeller for the growth of Television in rural areas has been the exponential increase in the number of Free-to-air (FTA) channels. As per the BARC report, FTA channels have grown by 74% since 2015, and now have 31% viewership share, up from 23%. On the other hand, in the same time period, pay channels have grown by 14% and now have a 69% share of viewership, down from 77% two years earlier. But will advertisers and media planners look to allocate more money to FTA channels? Says Das, “The basics of a TV plan optimisation is to optimize reach at an effective frequency based on the brand and the category. That’s hygiene, before one pursues to being disruptive to make the TV plan impactful. As long as media planners are able to deliver efficiency, both in terms of reach and CPT, these shifts in dynamics really do not play an active role.” Gangappa adds that findings from the BARC report has already been inferred in the last one year through the data used for planning. She says, “It has already led to budgets being spread across more channels; not only FTA but even HD. An average national plan now consists of usually 100 channels as opposed to maybe 60 a couple of years back.”
A big reason for this increase has been Doordarshan’s DD Free Dish - a multi-channel Free-To-Air Direct to Home (DTH) service. With a one-time installation cost that could vary from as little as Rs 500 to Rs 3,000, there is no activation charge or monthly subscription charge to be paid once DD Free Dish is installed. This is the big reason for the increase in television penetration because for cost conscious households, FTA channels have become the entry level to television as they don’t have to pay for a monthly cable connection. Even if there is a local cable operator in the fray, the fee is low. Given this, it is no surprise that FTA channels have garnered huge numbers as they are targeting the bottom of the pyramid.
With huge eye-balls, it is no surprise that advertisers, such as FMCG, are looking to target the households that are watching these channels. For broadcasters, this has also given an opportunity to augment revenues. As per the recent Pitch Madison Advertising Report 2018, in 2017, Hindi GEC + FTA contributed to 28% of the overall TV adex, with revenues in the range of Rs 5,500 to 6,000 crore. Of this, FTA channels contributed about 20% and looking ahead, this is set to increase further. However, the ad-rates on FTA channels are significantly lesser than GECs as a 10-second ad spot on an FTA channel is priced around Rs 20,000 to Rs 30,000 while the corresponding primetime rates on a Hindi GEC would be in the range of Rs 80,000 to 1 lakh. While most FTAs channels run with repeat content, Star India made a disruptive move last year in this space with the launch of a FTA sports channel, Star Sports First and then an FTA Hindi GEC, Star Bharat which broadcasts original and not repeat content. The Hindi FTA GEC, in particular, quickly notched up the numbers and in a short time grabbed the top spot in the combined urban and rural market (U+R) as per BARC data. While one has to wait and see if other players follow suit, this could lead to increased input costs resulting in higher ad-rates. However, the pricing on FTA channels will depend also on their input cost. This could likely go up once the uncertainty around the auctioning process for slots on DD Free Dish is cleared and the government re-commences the auction of vacant slots on the platform at higher prices, as it is being anticipated, thereby increasing the entry-level cost. According to Navin Khemka, Managing Partner, Wavemaker India, “If the entry level cost goes up and the viewership is what they are, the pricing will be accordingly determined. Till now, FTA channels were operating in a very entry level space but these channels will now mature with DD realizing its potential and looking for open pricing for it. Accordingly, if the FTAs want to make money, they will have to also start investing in original content, which some FTAs have already done, rather than only repeat content. The moment that happens, the pricing is bound to go up, and the moment you do that, the operation cost will go up.”
On his part Neeraj Vyas, EVP & Business Head – Sony MAX Movie Cluster & SAB TV says, “Everybody is playing the ‘wait and watch’ game right now. One is not very sure about the government policy on the slot auctions on DD Free Dish. A lot of clarity is needed there. Once that clarity is achieved, I assume people will look at putting up original content on FTA channels because it’s a large market, substantially decent for people to invest in.... The FTA space is here to grow, provided more content is put up there.”
FTA channels already have gained a fair amount of spends and will continue to grow as long as they command viewership. Pricing will play its part here in driving growths. It’s important to remember that close to half of TV Ad spend comes from FMCG and they are already moving budgets to FTA since the past year.
RATHI GANGAPPA
CEO, Starcom India
All the FTA channels are seeing high growth in viewership. If you look at their advertising base, these are brands which are deeply penetrated and well distributed in the country. These brands have a very low-entry level cost. The TG for these brands actually patronize these channels. Today, if a brand wants to sell a soap or an entry level washing powder, they will advertise on FTA channels.
NAVIN KHEMKA
Managing Partner, Wavemaker India
It’s not about South vs. HSM, South has four different languages vs. Hindi speaking Universe. Each of the languages in the South is able to deliver strong content. South regional language content continues to drive viewers from South India to spend higher time on TV. Also if you look at macro economic development indices, these are higher in the South e.g. literacy is higher, product penetration is higher, power availability is higher etc. and all this contributes to the above.
HIMANKA DAS
CEO, Vizeum
There is definite potential for rural to grow but rural comes with its own sets of challenges. Social and logistical challenges make penetration into rural a little more difficult than we would like it to. One way to look at DD Free Dish Direct as a platform is the limited number of channels available, but the other way to see it is it was next to nothing a couple of years back.
NEERAJ VYAS
EVP & Business Head – Sony MAX Movie Cluster & SAB TV
The low cost base, combined with the depth of repository of art, literature and cinema that the Southern states have, make for a very potent idea incubator for entertainment content. Regional content is already picking up in demand on various OTT Video-ondemand platforms. Regional movies being dubbed and aired on Hindi movie channels have been a common phenomenon for quite some time now. I liken regional channels as “Bahubalis” whose day has come.
RAVISH KUMAR
Head - Regional Cluster, Viacom18
The Regional Game
The BARC report also reiterated the fact that viewers in South of the country (ie. Tamil Nadu, Andhra Pradesh, Telangana, Kerala & Karnataka) on an average spend higher time on TV. People south of the Vindhyas on an average spent 4 hours, 9 minutes and 25 seconds before their TV screens. On the other hand, viewers in HSM (Hindi speaking markets – Rest of the states comes under HSM) on an average spent 3 hours, 31 minutes and 36 seconds before the tube. What must be kept in mind is that all the Hindi genres combined reaches more than 500 million people weekly and caters to the largest population base. Experts say that when it comes to HSM, the population is primarily served by Hindi content and investments are made only in Hindi content and not in the regional languages in the North, with Bengali and Marathi being the exceptions. Whenever significant investments have been made in the local regional languages, viewership and time-spent has seen an uptick in these markets.
Explaining this Ravish Kumar, Head - Regional Cluster, Viacom18 says, “The latest FICCI-EY report captures South India spending four hours watching television on a daily basis as compared to HSM that spends three and a half hours. While the southern states have a high appetite for consuming content, the content made therein is tailored for audiences specifically based in that region and is flavored with regional nuances, while Hindi GECs need to cater to a larger audience base scattered across States thus reducing the relatability quotient for Hindi content. Therefore while Hindi content has a wider viewership base, regional content has a more engaged though concentrated, base. This high affinity for content consumption also has an indirect effect on the kind of content being produced therein – it is more experimental and innovative, thus increasing the sampling and stickiness across a wide variety of genres. At an infrastructural level, the cost of producing content is also lower than the Hindi market, thus encouraging producers to experiment and innovate.”
On his part Khemka says, “There are four different languages in the South and because the market is fragmented, you can media isolate these markets. The languages are differentiated and a lot of investments have been made to develop content in these local languages. It is also a function of the quality of content delivered. If the regional content is good, people will shift to that local content, otherwise people will stay with the national content. In the North this has really not happened and people here rely on Hindi content. While there are local channels in the North, the quality of content offered is nowhere close to what the Hindi channels offer.” Khemka adds that though Bhojpuri language content has seen a rise, he sees this remaining a niche as it will not be able to overtake Hindi, which will remain dominant in the North and the West.
Looking ahead, the big opportunity, whether in the FTA space or in the HSM, will be a greater focus on regional channels. With Bengali and Marathi emerging as a strong regional play, the way forward could be more regional channels across genres in the North. Says Vyas, “We still haven’t seen regional channels come up in the North. This will be a big driver. Another underserved genre is kids. Kids channels drive a lot of viewership in the urban centres but you don’t really have any dedicated kids channel in the regional space. These channels will drive growth as this space is a little undernourished in terms of the array of channels that are on offer.”
As for how the regional space will pan out Kumar says, “The regional space is heavily under-indexed. It has very strong tailwinds and tremendous headroom for growth given the strong appetite for local content by viewers and the rapidly growing content ecosystem. With greater investments in quality content and faster growth rates, the regional space is outpacing the Hindi GEC.” He adds, “The low cost base, combined with the depth of repository of art, literature and cinema that the Southern states have, make for a very potent idea incubator for entertainment content. Regional content is already picking up in demand on various OTT Video-ondemand platforms. Regional movies being dubbed and aired on Hindi movie channels have been a common phenomenon for quite some time now. I liken regional channels as “Bahubalis” whose day has come.”
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