Demonetisation might help reform cable TV distribution
The expectation is that the analog subscriber base this year will reduce by 37%, according to sector estimates, as consumers migrate to digital cable under DAS
The cable distribution business, long known for dealings in undisclosed money, might have to improve addressability in the wake of the demonetisation of high-value notes.
For, say experts, the incentive to deal in cash, which prompts most to under-report subscribers and therefore revenue, will reduce.
“There are a few things running concurrently here,” says Jehil Thakkar, partner and head, media & entertainment, KPMG. “You have digitisation (under Digital Addressable Systems) which is currently on. DAS is in its third round and the fourth one should commence by the end of this year. The Telecom Regulatory Authority of India has also issued a draft order which has proposed new pricing for TV channels offered to subscribers. The idea here is to make it affordable for consumers. Add demonetisation and what we might see is that cable operators having to clean-up their operations, so that they are far more transparent in their dealings (with broadcasters),” he says.
According to a Ficci-KPMG report on media & entertainment, there are around 65 million analog cable TV subscribers in India, about 37 million digital cable TV subscribers, 44 million pay direct-to-home subscribers and around 15 million free DTH subscribers.
The expectation is that the analog subscriber base this year will reduce by 37%, according to sector estimates, as consumers migrate to digital cable under DAS. This, say experts, could act as a catalyst for cable operators to reduce under-reporting as digital cable subscribers surpass analog cable subscribers for the first time. Demonetisation, they say, could act as a trigger, therefore, for cable operators to make that switch.
Paritosh Joshi, an independent media consultant, who has worked in the past at Star India and India TV, says the challenge remains investment in addressable systems, which cable operators are unwilling to do. “The last-mile cable operator business has always been the challenging piece in the distribution system. For addressability to improve, they will have to be made aware of advantages in making the necessary investments,” he says.
As things stand, under-reporting of subscription revenue per individual or household is estimated to be at least 15-20%. In some cases, it is 25-30%. Broadcasters say the reason is the cable operator's tendency to charge a fixed amount, as opposed to layered pricing based on the channels taken by a subscriber.
DTH, in contrast, has overcome this problem of under-reporting of subscription revenue by going for a pricing strategy based on the number of channels taken by the subscriber.