6 impact areas where NTO 2.0 will hurt the most
Since 2017, when the Telecom Regulatory Authority of India (TRAI) announced its tariff order for the first time, broadcasters have been in strict opposition to MRP capping. Several petitions, hearings, stays, unholdings and judges later, the broadcasters have not been able to shake it off. In the most recent verdict from the Bombay High Court on the NTO 2.0, the capping on MRP stays at Rs 12 for each channel that wants to be a part of a bouquet.
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Many believe that broadcasters are crying wolf and that the business won’t be as affected as they are projecting it to. But in essence, while the NTO only restricts the pricing, it is going to hit every part of the TV broadcast business. Here we have listed out some of the impact areas:
- Double Whammy for Broadcasters
Broadcasters are going to lose a lot of money. It’s not just about subscription money, but also advertising revenue. How? Here is the logic: In order to be able to keep both the bouquet and a-la-carte prices viable, broadcasters might have to stop pushing some of their ‘non-selling’ channels in the bouquets. This will lead to lower reach and lower sampling, translating to lesser advertising monies.
Subscription money is anyway going to decrease, considering the MRP capping that NTO 2.0 is expected to impose.
- DPOs don’t gain either
While the subscription prices of the channels (both a-la-carte and bouquet) go down, the DPOs will end up collecting less money, thereby reducing their profit margins. More often than not, consumers buy the DPO bundles and the broadcaster bouquets were never really popular on ground. In fact, close to 95% viewership is generated by the DPO bouquets. However, the DPOs too have restrictions on the discounts they can offer while forming the bouquets.
- Consumers ‘might’ save about 10%
Consumers ‘might’ end up saving about 10-15% of their cable bills. Now, that is a very big ‘might’. One has to understand that the Rs 12 price cap is only on those channels which are to be packaged in a bouquet, not for all channels. Now, if a leading broadcaster decides to sell its driver channel only on a-la-carte and prices it at, say Rs 25, NTO 2.0 doesn’t cover that trick.
In such a case, if this whole fiasco is about “whatever consumer wants to watch”, then the consumer might end up paying Rs 25 for a channel which was earlier coming along with 20 other channels, probably for the same price.
- FTAs might lose too
NTO 2.0 doesn’t clarify its position on the BST (basic service tier), which was initially mentioned in NTO’s first phase. BST means that a DPO has to make available 100 free to air channels as the basic package. This went up to 200 channels in the NTO 2.0, however, these need not be the FTA channels. These can be the channels that consumers choose to watch, whether by paying for the pay channels or opting for free ones. BST was intended to save bandwidth. If a consumer is allowed to buy 200 channels of their choice, without paying that extra NCF charges, they might not want to take any more FTA channels, limiting their sampling and content consumption.
- Catalysing the ‘cut-the-cord’ numbers
With OTT coming into the picture around 2013, everyone was pretty much sure about the movement of the majority of consumers from terrestrial TV to digital on demand content. However, the confusion created by the NTO is pushing the consumers to embrace OTT faster. COVID-19 is also a big catalyst in the process as the pandemic created a path for broadband to enter most Indian households. Once a speedy and steady Internet connection is available at a cost much lower than before, going on digital for on-demand is only that much more obvious. To top it all, the confusion in pricing of the channels and hence, the confusion in the overall cable bills has resulted in a lot of conversions faster than anyone expected.
- Survival of the deepest pockets
With the mounting pressures expected on the TV channels, many fringe/ independent channels are bound to shut shop. NTO 2.0 will push many industrialists led channels to leave the market and only those with extra deep pockets will be able to survive the farthest. While most industry experts are suggesting that the profits of the broadcasters are going to decrease, it’s not true that the channels will not earn at all. But who is willing to invest huge amounts only to gain meagre profits is something we all have to wait and watch.