Al Jazeera English prefers subscription over ads; does it work in India?

In a country like India, where a broadcaster's revenue is still heavily dependent on advertising, will the channel's non-focus on ad revenue be an intelligent step to take the channel forward?

Qatar-based Al Jazeera English's (AJE) India foray sure had been a challenging one. However, as slow and silent as it may be, the challenges seem to have only fuelled the channel's India focus even further.

With an aim to increase its reach from 25 million homes to 100 million Indian television homes (70 per cent of the total 148 million television households) in the next one year, AJE has decided to up its India-centric content by one hour every week.

Consequently, the channel has launched a documentary series titled 'Indian Hospital', which will initially have a six-week run and depending on the performance, will be extended or axed.

Al Jazeera English prefers subscription over ads; does it work in India?

Speaking to afaqs!, Anmol Saxena, bureau chief, India, Al Jazeera English, says, "We are also looking forward to documentaries as and when there is an interesting plot. We either commission them or get them made in-house. Since we have a single global feed, we have to keep the local content limited and relevant to the global audience. However, there will be more India-based content included in shows such as 1O1 East and People & Power." Not to forget that the channel recently tied up with two major DTH platforms (Dish TV and Tata Sky) to increase its footprints across the nation.

Says Diana Hosker, head, distribution, Al Jazeera English, "We have started expanding from the upper (through DTH) and lower (through smaller cable operators) levels in India. The MSOs are not yet targeted by us." Interestingly, the channel claims that of the 250 million households that AJE reaches out to globally, 10 per cent belongs to India.

So, does this increased focus mean that the channel is eyeing a significant ad revenue pie from local/domestic advertising?

Not really! AJE claims that the channel has no plans to increase its advertising inventory for now. The current inventory is about 4 minutes an hour, which is reserved for international ads, while about 2 minutes are reserved for in-house content promos. For the record, the current advertisers on the channel include clients such as HSBC Bank and Qatar Airways. In comparison, other news channels have 24-28 minutes of ad inventory in an hour.

Consequently, AJE could sell a 10-second slot for anywhere between Rs 3,000-3,500, if it plans to advertise locally in India. Now, compare this to a top rung Hindi news channel, and the rate claimed ranges between Rs 1,800-2,000 per 10 seconds.

Saxena says, "We aren't looking forward to advertising very aggressively in India and therefore, do not have a very significant ad inventory in this country. Instead, we will focus on generating revenues through increased subscription. And with digitisation just around the corner, we believe this would be a logical step."

But in a country like India, where a broadcaster's revenue is still heavily dependent on advertising, will this be an intelligent step? After all, distribution eats up so much money that there's little left over for anything else. It costs approximately Rs 45 crore to distribute just one English news channel. Now, while Hindi news channels spend Rs 30-40 crore in distribution, for regional channels, the pricing depends on the market dynamics of that local market. Overall, the TV news industry spends about Rs 600-800 crore on distribution, which is one fourth of the Rs 2,300 crore that it corners as advertising and subscription revenue.

According to Navin Khemka, managing partner, ZenithOptimedia, the move could be a part of the channel's global expansion plan, wherein the channel must not be looking at India from a country perspective; rather, it could be just another terrain to expand the business.

A few others feel that the move could be the channel's experiment in India with local content. "Maybe, it will wait and study the viewership profile it gets, and then look at the market. As it is, with the kind of content that it delivers, the channel will have a very niche viewership base. Documentaries and feature-based content is not everyone's piece of cake. At the same time, it cannot be completely targeted to the male viewers after all," say many.

Meanwhile, courtesy the problems AJE faced during its India foray, some note that the channel could be planning a quiet stay for a while.

However, all said and done, experts do believe that the rates for such channels are decided not on the basis of the TRPs delivered, but are rather dependent on their imagery. Currently, the international news channels make a very small part of the overall media mix for any brand in India. And this is primarily because of the niche profile of audiences that the channels target.

Citing BBC as an example, a media pundit says, "If a brand wants to advertise with BBC, it's not because of the viewership numbers, it is because of the brand, BBC. For viewership numbers, the brands generally approach the national English news channels."

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