The switchover to a conditional access regime is merely a month and a half away and the noose around pay TV broadcasters is getting tighter. The issue in question is the declaration of their pricing strategies, especially of individual channels, which is crucial for the smooth rollout of conditional access systems or CAS in the four metros. The I&B Ministry has set an interim deadline of June 10 for respective declarations, failing which defaulting broadcasters could be penalised.
In such a scenario, what is the way ahead for special interest or niche channels (as they are commonly called), many of who are pay in nature?
To understand this, let's begin with a genre-wise break-up of the share of viewership and revenues, as indicated by KPMG in its annual report on the entertainment sector, released at Frames 2003 in Mumbai (figures compiled by TAM Media Research).
Mass entertainment predictably attracts a share of 46.80 per cent in terms of viewership with revenues at 57.40 per cent. Regional language is not far behind in terms of viewership with a share of 39.60 per cent and revenues at 17.20 per cent. News attracts a viewership of 2 per cent with share of revenues at 11.30 per cent. Hindi film channels are marginally higher in terms of viewership, at 3.50 per cent with share of revenues at 4.70 per cent. English entertainment has a comparatively smaller share of viewership at 1.60 per cent with share of revenues at 4 per cent. The viewership for sports stands at 3.90 per cent with share of revenues at 2.70 per cent, that of infotainment/kids is 1.80 per cent with revenues of 1.60 per cent, while music channels attract a viewership of 0.90 per cent with revenues at 1.10 per cent.
Apart from news, Hindi film channels and English entertainment, the other special interest genres of sports, infotainment/kids and music attract significantly lesser share of revenues though viewership of sports is higher than that of news and Hindi film channels. The question is: Will conditional access further undermine their bottomlines when put into effect on July 15?
"Traditionally, unique content or special interest channels have been driven by the affluent families. I don't see the scenario changing post-July 14," says a senior media manager with a special interest channel. "In fact, niche channels are least likely to go free-to-air because higher income groups can procure the boxes, which assures viewership."
Agrees Atul Phadnis, director, S-Group, TAM Media Research, "The more upscale you are the more innovative you become. Besides, you are willing to part with a certain amount every month, which means affordability, and, there is acceptance to newer technology."
Amit Ray, executive vice-president, Optimum Media Solutions, however, prefers focusing on the basic mechanics of the business to justify the point of niche channels remaining pay. "I am quite sure that the dependence of special interest channels on subscription is much higher than mass channels where ad rates are higher," he says. "The price deferential between a niche channel and a mass channel is huge at the rate card level, which only gets bigger post negotiation," he adds.
Internationally too the trend points at mass channels being free-to-air and niche channels being pay. But as pointed out by a senior media planner, "It is very difficult to generalise in a country such as ours where each channel has different compulsions governing its business model. I have a feeling though, that most niche channels will remain pay because they risk foregoing their subscription revenues earned beyond the four metros, if they turn free-to-air."
If industry sources are to be believed, news channels, barring CNN and probably CNBC, will be free-to-air. The reason - "there is more supply than demand and building a critical mass is crucial for them." Sports, English movies, Hindi movies and infotainment channels such as Discovery and NGC will remain pay because "procuring content is expensive and ad revenues cannot supplement the huge cost", while the air is still unclear about music and regional channels.
But the parting words of a senior media planner in a Top 10 agency are worth noting, "Niche channels will lose out in terms of reach but will gain in terms of time spent. Currently, by virtue of being aligned to some bouquet or the other, distribution of these channels is taken care of and anybody and everybody watch these channels. That won't be the case when conditional access comes into effect. Since the consumer has to pay, he or she will pick the channel of choice, which in the long run is likely to benefit the niche channels because their target audience will be defined and advertisers who are looking to micro-target will know which vehicle to select, and, will in turn, pay a premium to advertise." © 2003 agencyfaqs!