POV: Can digital distribution get in money for broadcasters?

By Anindita Sarkar , afaqs!, Mumbai | In Media Publishing | May 11, 2011
The digitisation of distribution will allow content-on-demand, forcing the broadcasters to improve the content quality. But, will it finally increase subscription revenues for them?

Gaurav Gandhi, COO, Sun18

While DTH has shown robust growth with the subscriber base touching 30 million, the cable industry has not really pushed the paddle on digitising. It is lagging behind on offering enhanced value to the consumer -- both in terms of quality and services.

Analogue distribution is replete with maladies like under-reporting by the local cable operators (LCO), resulting in inequitable distribution of value among the players in the value chain. The broadcaster is the one most impacted by this loss -- it gets just under 20 per cent of the collections. Digitisation will pave the way for cable distribution to improve profitability across the chain. Increased transparency will increase realisation on subscription revenues. Digitisation will also help curb piracy, signal leakages and reduce 'ever-increasing' carriage fees.

S Muthukumar, Senior VP, Lintas Media Group

It's essential to know the critical questions that face the stakeholders in the value chain.

Customers: There are 90 million C&S homes, but most of them do not understand the effect of digitisation.

LCOs: The so-called last mile operator is the biggest challenge facing the broadcasters because of lack of trust and transparency.

MSOs: Want consolidation of LCOs to establish direct access to customers and get greater power over the LCOs and broadcasters.

Broadcasters: Invest huge money on distribution and content to get viewers' attention, but they are far from knowing who their customers are.

Digitisation can help broadcasters derive more benefits by addressing the concerns of LCOs (and MSOs) and the customers by educating them about the benefits -- quality of reception, accessibility to their choice of viewing, and the reasons for the pricing. The LCOs and MSOs have to be given assurance of their continued role in this business.

Sanjay Gupta, Chief operating officer, STAR India

Broadcasters today have limited control on not only who gets to watch their content, but also on how it is monetised. None of the stakeholders, including distributors, even know the exact number of LCOs as there is no licensing or audit mechanism tracking this.

On the other hand, there is the rapidly evolving consumer who demands interesting content, choice and constant innovation. But, the broadcaster's dependence on ad revenue restricts him from moving away from 'mass' or established formats.

The move to a subscription-led business model is the need of the hour and digitisation is the key for that. With digitisation, not only will the broadcasters be able to track the number of viewers at the retail level, the distributor too would be able to potentially deploy a CRM software to manage his subscribers better.

Harit Nagpal, MD & CEO, Tata Sky

Digitisation is often prescribed as a panacea for all problems. But, it is the means to the goal, which is addressability.

Addressability provides transparency on who is watching and what is being viewed which, in turn, enables sharing what the viewer pays with the various stakeholders -- producer, broadcaster, platform, owner of the medium, and the government.

In the absence of transparency, the middleman pockets the money and the broadcaster remains poor and solely dependent on ad revenue for survival. Addressability provides a unified view of the viewer to all stakeholders across the chain. They can then distribute what is paid by the viewer in proportion to their contribution.

Addressability, facilitated by digitisation, will increase subscription revenue. Addressable digitalisation, achieved by a mandated CAS, will lead to an increase in subscription revenue for broadcasters and improve their quality of content.

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