AgVoice | GEC: Key to sustainable revenue streams lie in providing a "content experience' that cannot be readily duplicated

No doubt the media industry earns a large proportion of its revenues from advertising and the Indian TV media industry relies heavily on advertising revenues instead of subscriptions for survival. Global macroeconomic woes and a slowing Indian economy have left most media companies susceptible to volatility in advertising rates and resulted in cash flow problems.

Yes, advertising and marketing budgets tend to suffer first when the corporate sector comes under pressure and the downturn in ad spend certainly had a severe impact in India. That was the reason why industry on the one hand started finding other verticals where Convergence is going to play a major role and certainly Digitization will help increase earnings form subscriber revenue vertical on the other. In fact in 2011, the Indian media & entertainment industry registered a growth of 12 percent from a year ago, to reach 728 billion rupees (US $14.15 billion), according to KPMG. In these circumstances decision by US-based Turner Broadcasting System Inc, a Time Warner company, to shut its Hindi general entertainment channel "Imagine TV' in India is not only surprising but should be taken as frustrating as Turner India has been growing at a compound annual rate of 13 percent in the past five years, the company had earlier themselves told this to news agencies.

Instead of hiding, the TV Industry must create new models to restore abilities to fight and in this race there should be "no place to conceal" from new models and dynamics across the industry. One should fight as the race particularly in general entertainment channels in India is on for almost all rank i.e. number one to five and need is to create innovative niche categories, where one can secure an edge over the other.

Whatever the revenue model be advertisement or subscription based or a combination of both, the key to sustainable revenue streams lie in providing a "content experience' that cannot be readily duplicated. Monetizing the increasing demand for entertainment content, capitalizing on evolving consumption habits, and developing diverse new advertising revenue models are challenges that companies should need to address. The slowdown presents an ideal time to diversify through innovation and capitalization on new forms of collaboration across the entertainment, media and communications value chain.

Advertising spending is undoubtedly under pressure around the globe, as economies battle against recessionary forces not seen for a generation. Yet the number of people who pay for TV has remained relatively stable in India and has in fact grown in comparison with other developed countries during the downturn. This is mainly because people are relying more on home entertainment and avoiding the expense of going out.

Further, in future, the bundling of services will become popular especially if presented in affordable price by MSO's/Cable/Telecom/DTH companies where they can combine Phone, TV, and Internet services. For example in Canada the cable and specialty networks saw growth in their revenue and operating profit in 2009 by presenting bundled service, according to statistics published recently. The Canadian Radio, Television and Telecommunications Commission said that the country's cable, pay-per-view, and specialty broadcast services posted revenue of C$3.1 billion in calendar 2009, a gain of 6% versus 2008²s C$2.9 billion. The measurable gain in the cable and specialty sector's financial metrics came in a year when advertising revenue fell by 2.6%. Many Canadian companies throughout the economy cut back on their marketing budgets as they grappled with a severe financial downturn in late 2008 and into 2009. Canadian pay TV companies made up for the slumping cash revenues from advertising by raking in more than C$1.4 billion in subscriber charges in 2009.

The success of the Pay TV channels all across the developed countries had put a question mark "Whether the days of free TV might be coming to an end"? The business model of free TV (using commercials to provide revenue) is unraveling at ABC, CBS, NBC, and Fox, and the local stations that carry the networks programming. Cable TV and the web have fractured the audience for free TV and siphoned its ad dollars. The recession has squeezed advertising further, forcing broadcasters to accelerate their push for new revenue to pay for programming. No doubt these changes could mean higher cable or satellite TV bills, as the networks and local stations will squeeze more fees from pay TV providers for the right to broadcast TV channels in their lineups, Big Question..¦.are we ready to pay more¦..? | By Rajiv Mishra, CEO, Lok Sabha TV

About the writer:

Rajiv Mishra, CEO, Lok Sabha TV is a broadcast/media professional and founder of Electronic Media Rating Council of India. His contribution in TV Ratings methodology in Europe has been recognised by ITU/EBU in 1996 at Geneva.

He did Masters in Broadcasting from IAB, Montreux, Switzerland, MBA in Media Management from MCNY, USA and a Graduate Certificate Course in Multi-Media from UCLA, USA.

Disclaimer: The opinions expressed in this article are those of the author, and do not reflect in any way of Adgully.