NTO 2.0: With broadcasters unveiling new RIOs, how TV viewing ecosystem will change?

TRAI’s new tariff order (NTO 2.0) will have far-reaching consequences for the Indian broadcast industry. Experts are of the opinion that this would lead to changes in which channels consumer will continue to subscribe to as television viewing is set to become expensive. Along with the mandatory Network Capacity Fee (NCF), the Indian TV consumers are already paying a higher price. Some even feel that OTT platforms could be a gainer as consumers would see them as a better deal where they can catch up on their favourite TV shows, watch sports events, as well as have access to a host of Original series – both Indian and global, besides movies. All in a packaged deal which would be cheaper than annual TV subscription rates as per NTO 2.0.

“The new pricing regime does not augur well for the TV industry in this country. There will be a discernible shift in consumer preference towards digital platforms. People will become selective. Who wants to spend extra? The affluent will likely abandon TV and move to streaming platforms,” asserted a top TV executive.

According to Amita Yakhmi, Associate Vice President-Planning, Carat India, “This will be a very interesting situation. And will let us know exactly how strong a pull a channel has! Smaller channels will easily lose; and the bigger ones may gain some subscription revenue if people are forced to choose. There will definitely be some shift. Might even be cross platform – moving from TV to digital. Anyway, enablement is not a barrier – it would only be a larger consumption pattern movement.”

N Chandramouli, CEO, TRA Research, a consumer insights and brand analytics company, noted that cable and satellite have been under pressure for a long time. “The new MRP, in response to the regulatory compulsions, has increased prices of non-bouquet channels, and may cause some churn. However, the increase in prices will still give most channels a better revenue,” he added.

According to him, there are many video entertainment platforms available now apart from cable – right from OTT to YouTube. The consumption patterns in Tier 2 and Tier 3 will shift with the pricing since this change in price forces consumers to recalculate. “If it was a silent recurring cost, it is not noticed and consumers tend to continue without change. However, when pricing changes, channel choices come into play, the consumer will optimise their outgoings,” he opined.

Chandramouli further said that OTT is gaining a lot of traction, giving content quality, depth, and language choices. This is the biggest growing medium and where it is yet not subscribed, this new MRP will shift considerable middle-income group viewers towards OTT.

Yakhmi pointed out that networks are selectively choosing channels and pricing them above the MRP cap. “This would imply that the channel is not part of a bouquet, but comes in the a la carte selection for a consumer. Due to the new discounting norms of NTO 2.0, the larger and stronger networks will have a slight advantage vis-a-vis others as the former will have the ability to charge higher prices, but will still end up losing revenue on the ancillary and niche channels,” she added.

Regarding the change in audience behaviour, especially with regard to niche-segment channels like sports, Yakhmi remarked, “There is anyway some level of seasonal sports subscription. It could easily see some boost. The point is to see whether the subscription revenue at a higher amount is greater than the one which the channel enjoyed with higher volume of subscribers at a lower rate. The other niche genres tread a thin line anyway and are likely to face a tough scene. Lot will depend on the final pricing of channels from the networks.”

Regarding the change in audience behaviour, especially with regard to niche-segment channels like sports, Yakhmi remarked, “There is anyway some level of seasonal sports subscription. It could easily see some boost. The point is to see whether the subscription revenue at a higher amount is greater than the one which the channel enjoyed with higher volume of subscribers at a lower rate. The other niche genres tread a thin line anyway and are likely to face a tough scene. Lot will depend on the final pricing of channels from the networks.”