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143 Socio-economic variables for strategic decisions
While the nation gears up to seed set top boxes (STBs), improve headends and convert analog connections to digital, with the emergence of new media, broadcasters and all the other stakeholders of the ecosystem also need to adjust themselves into the equation. On the first day of TV.NXT 2012, a panel discussion focussed on the preparations required for a complete shift and the challenges faced by the broadcast industry. It also dwelt on how various stakeholders can work together to create the required platform and use it efficiently to increase ARPU.
Moderated by Vynsley Fernandes, director, Castle Media, the panel included Pankaj Kedia, country manager, Dolby Laboratories; Ashish Chawla, practice head, IME, Cognizant; M Thangarajan, vice-president and head, business broadcast unit, Tata Elxsi; and Ajay Meher, senior vice-president and head, IT and post production, Sony Entertainment Television.
Fernandes started the session by defining the situation. He asked Thangarajan whether challenges for the broadcast industry is the right term, or should it rather be termed opportunities for the broadcasters?
Thangarajan preferred opportunities and said that a better understanding of the term 'digitisation' was needed. "We have been working with the broadcasters all over the world for the last 10 years. So we have a fair idea of what the world is doing. From that perspective, I see tremendous opportunities for India, Indian broadcasters and the channels," he adds.
Speaking about IP and cloud, he said that these mean a great deal more than just providing one more browser on TV, as misunderstood in India. One can put his EPG on the cloud, applications on the cloud and serve it on TV. "Everybody talks about a long tale of content that we are sitting on, which is not being monetised. One can create apps based on that and we can put it up on the cloud; and now that it's digital and interactive, you can provide these apps to consumers and monetise them. This is not just a thought; we help multiple companies across the world do it. This is a fact which isn't very well realised here," he says.
He said that a possible reason for low ARPUs and subscription could be the fact that we took the mobile model too far in the broadcast industry, and discussed possible ways of increasing ARPU by going beyond video content and increasing the number of channels.
"Tremendous opportunity stares us in the face and the question is whether we have an ecosystem in India. There are many companies including some of us here in the panel, who have done this for multiple years for other countries and we would be more than happy to do it for India, but there are few ifs and buts which needed to be solved," he added.
He also spoke about the presence of a second screen and the possibility of having a personalised login for every user in the household. He compared it with the Amazon Kindle, which suggests personalised books based on browsing habits. Thangarajan said that the same thing can be applied to TV, in fact extended with reference to choice of movies, allowing one to watch it online. "If I am watching it on the TV, I can go into my car and continue from where I left as the content is available on my cloud," he suggested.
Fernandes also brought out broadcasters' concerns about the lack of analytics and proper demographics. He threw a question to Chawla, Cognizant being one of the bigger players in the space. "Why don't we see it quickly happening or is there a road map set for it?" he asked.
Chawla answered, "Most of our customers in the West, too, ask similar questions. Apart from the obvious answer of digitisation, the process also requires a careful look. If analytics are thrown in from the time the product is conceptualised, the end product will be closer."
He said that broadcasters' idea of digitisation is that they should have a product available in the digital media. So, instead of a tape, it becomes a file. But there is a lot more to digitisation, he said, and it's time we spoke of digitalisation and not digitisation. He stressed on the need to change mindsets and accept that instead of a product, a broadcaster is actually selling entertainment as a service.
Turning to the broadcasters' perspective, Fernandes asked Meher of SET about the challenges faced by broadcasters. Meher said that the first and foremost challenge is about content protection. Infrastructure, content re-purposing, selection of media, and the screen of consumption (tablet or connected TV), transporting capability and other similar challenges are being solved slowly, he said.
Speaking on monetisation of content, he said that the issues that need to be addressed are whether viewers want to pay for content, how to work on the monetisation strategy and if one should opt for an ad-supported strategy. These in turn lead to RoI (return on investments) analysis as a large amount of infrastructure is needed to stream and store content. New media, said Meher, doesn't give returns immediately. Even YouTube, the largest infrastructure and content company, is not bringing sufficient profits.
The need for continuous capital investment by broadcasters was also discussed at the session. Fernandes questioned if there was a way for a back end service where the broadcasters can completely concentrate on making the product and selling it.
Thangarajan of Tata Elxsi revealed that plans for such a product are already under way for what is clearly an emerging area. "We all know about the head end-in-the sky (HITS) technology. It is going to happen in India in the near future, where even a cable operator with 40-50 thousand subscribers will be able to do sufficient amount of work. It will not be capital-intensive, while moving towards the model where one earns more when they invest more."
He added that any IT company will be able to set it up, provided it gets requests from the broadcasters to build such a platform.
Fernandes asked why there couldn't be a ready platform for all broadcasters to avail it directly. "Do we have platforms like these available? In the US or other countries, the platforms are set up first, much before the broadcasters take notice of it and use it," he said.
Thangarajan explained that large investments are required for the platform and it could be a big problem if there are no buyers after it is set up. Another thing that could derail the issue, he said, is the openness of the system to be put up. If somebody buys one set of equipment, it will not be possible to avail the services of any other service provider as the APIs that are required to build more applications are not exposed and are very tightly held properties.
Fernandes then turned attention to the B2C part of the business, asking Kedia of Dolby Laboratories about his perspective.
Kedia said that digitisation is being solved at the wrong point. While one talks about broadcast engineering problems, one also has to deal with digitisation in the mind-sets. He believes that it's more about changing the way you think about your content, about what you do with your content and what value you give to your content. He added that 'the mindset is still thinking very analog'.
"It's not the challenges with the technology but how you adopt the openness of the technology and get beyond analog," he elaborated.
Fernandes asked the panel if broadcasters are ready to embrace the offered technology. Chawla said, "We still see a lot of challenges. It's the change adoption issue and not the technology issue. It has happened across the globe, so there is no reason why you cannot do the same here in India. But, the moment I talk about cloud, the first objection is about security. It is very difficult to explain that cloud is actually more secure than most of the captive data sensors that are present. The trouble is that we are still a touch-feel kind of market. It's tough to explain that the product doesn't exist anymore, it is ether."
Fernandes asked if one should wait for the technology to stabilise.
Chawla cautioned that the same situation was faced by music companies in early 2000. The industry decided to wait for the technology to stabilise while Apple came in and stole the scene. Now, one can't wait for the things to stabilise and then take a decision to enter the platform because competition can come from any quarter.
Kedia noted that along with a lack of capability in the supply chain, there is also a lack of willingness across the ecosystem, from the broadcasters to the programmers and distributors.
Thangarajan, however, refuted this and argued that one can't just replicate what happened in the US, UK or France. He said that India needs a different roadmap as it has a different market place and a different mindset. He concluded that a change in mindset will make business sense for everyone.
This was the third edition of TV.NXT, an afaqs! event presented by ABP News.Major stories over the last 30 days