Vanita Kohli-Khandekar: The multiplexing of TV

MEDIA SCOPE

There is something wonderful happening to the TV business in India. It is getting 'multiplexed'. At last count India had a total of over 10 million digital pay-TV homes. That means 10 million of India's 117 million TV homes had a set-top-box. This coming of addressability or metered homes will do to the TV business what the coming of multiplexes did to films. It will bring variety, revenue flexibility and, therefore, money back into the business.

To figure out the 'why', here is a bit of background. Unlike other markets India faces a peculiar problem when it comes to media products "" advertising usually subsidises them almost completely. 80:20 is the usual split between advertising and pay revenues. In newspapers, this started happening more prominently from the eighties. (In the '50s, the ad-to-pay ratio was 40:60). A bulk of broadcaster' revenues come from the Rs 8,000-odd crore that advertisers spent on television in 2007. While consumers pay for their TV, only 20 per cent of the Rs 12,780 crore generated through 71 million cable homes reaches broadcasters, say estimates.

This was true for films too till seven years back. Under-declaration, especially in non-computerised single-screen theatres, was the norm. Remember that advertising is a sliver of the revenues that a film makes, so unlike TV or print, the industry had nothing to fall back upon. The coming of multiplexes and digital theatres over the last seven years is changing that. It has plugged the cash leakage with more than 2,000 fully-paying screens bringing money back into the system. This has meant more investment and variety in the range of films being made, in pricing and in formats. Depending on when and where you watch it "" on a single-screen, multiplex screen or digital screen, DVD, VCD, satellite TV or pay-per-view on your DTH "" you could be paying anything between Rs 5 to Rs 500 to watch the same film.

It has also unleashed a wave of creativity among writers, directors and producers who were forced to cater to a one size-fits-all 1,000-seater audience. As everyone starts talking to the audience they want to, a Bheja Fry and Mixed Doubles rubs shoulders with Aprahan or Lage Raho Munnabhai. You could argue that it is not just film retail that has set the industry free, it is also corporatisation. To my mind, it is the investment coming into physical 'media infrastructure', in theatres where the consumer first checks out the film that sets the ball rolling.

It won't be long before the same thing happens to TV. So far, more than a billion dollars have been committed to various pay TV systems in India "" DTH, CAS, and IPTV. According to estimates by Hong Kong-based consulting firm Media Partners Asia, more than 37 per cent of pay-TV users will be connected to a digital network by 2015. This, by their (usually reliable) estimates, will total 62 million digital subscribers in 2015. At the current average subscription of Rs 150 per home, that is Rs 11,160 crore. Now assume that at least 50 per cent of this goes to broadcasters "" that is Rs 5,580 crore. (In mature markets, broadcasters get about 70 per cent of pay revenues). That means just over a billion dollars could get added to the TV industry if addressability continues at this pace.

This gives broadcasters 'revenue flexibility' reducing by at least half, if not more, their dependence on advertising. That, in turn, means that they are no longer slaves to rating points. They will soon find it profitable to serve subscribers who want to watch their kind of TV and are willing to pay for it. So watch out for more experimentation with content, more niche programming and more channels catering to narrower audiences.

The variety in programming will offer advertisers more clearly defined audiences to target. It will also bring variety in the way signals are delivered and the price at which they are sold. A telecom operator selling IPTV, a cable operator, a DTH operator or even a digital terrestrial operator (who could be a mobile operator) will all be trying to sell television to you and me.

The multiplexing of the television broadcasting business has begun. As MTV says, enjoy.

The author is a media consultant and author of The Indian Media Business. She can be reached at vanitakohli@hotmail.com