Rise of the FTA channels – Some points to ponder
The rise of Zee Anmol, a Free To Air (FTA) channel from the ZEE stable, to the numero uno spot amongst Hindi GECs in Rural+Urban in Week 30 (July 22-28) of 2017 took the industry by surprise. The channel has held on to this position for five straight weeks now. Not just Zee Anmol, FTA channels like Sony Pal, Rishtey, and Star Utsav have also consistently been among the top 10 Hindi GECs for several months now, ever since BARC India started releasing rural viewership data.
According to a report by EY, titled ‘India’s Free TV – A game changing opportunity’, free TV viewership in India is set to register exponential growth, reaching 46 million households by 2020. The report further states that the increase in the number of FTA channels has also led to a significant rise in viewership for genres such as Hindi GEC, Hindi movies and, primarily, the Hindi news genre, in which FTA channels command 81 per cent share of the total viewership.
In a release issued, Ashish Pherwani, Partner – Advisory, Media and Entertainment, EY, had observed, “Free television is increasingly becoming a viable option for channels looking to capture the base-of-pyramid audiences in urban and non-urban areas. With a large subscriber base, it also opens up new avenues of advertising for marketers looking to get reach in some of the fastest growing markets in the country. The change in customer behaviour will also have a significant impact on FTA and pay TV channel uptake, and corresponding spends on subscription income.”
Factors triggering growth of FTA channels
The EY report outlines four key factors which will drive the uptake of free television:
Digitisation of cable TV distribution – DAS IV: The mandatory move towards digitisation will require consumers, particularly those in DAS III and IV markets, to opt for more expensive cable TV options, DTH or free TV options such as terrestrial TV or Free Dish. EY expects the price conscious customers may opt for free television services in the immediate term.
The proposed new tariff order: The new tariff order will make customers choose between the options to either pay more to receive pay channels of their choice or decide that free television would be a better option, given the quantum of quality content on it. This will help further drive subscriptions from price conscious consumers for Free TV.
The fast growth of DD Free Dish: DD Free Dish bouquet is set to increase to over 250 channels, featuring quality content, also including sports being available on its spectrum. This makes the Free Dish bouquet a formidable competition to pay bouquets.
DTT on mobile infrastructure: Another important development relating to mobile television is the emergence of digital terrestrial distribution. Since this is a broadcast technology, the key implication will be that consumers whose mobile handsets have the required antenna would not be required to pay any bandwidth charges. Consequently, once the mobile handset ecosystem matures, DTT could also provide a strong addition to free television services.
In conversation with Adgully, Ashish Sehgal, COO, Zee Unimedia Ltd, observed that globally, free TV garners higher revenue as compared to pay TV and will also see a dramatic shift in the near future.
Rohit Gupta, President, Sony Entertainment Television, noted, “If we see the BARC data, it is for the first time that rural data is getting measured. It’s a very big growing market and opening a door of opportunities for every marketer, which is why no marketer wants to ignore this chance. With BARC’s rural data, we are getting to know the viewership pattern of people from rural areas, and thus it becomes easier for the markets to plan the ROI.”
A Videocon d2h spokesperson remarked that Doordarshan’s FreeDish platform is mainly used by masses from rural areas as it is a very price sensitive market. “Apart from sports, they will never pay for other paid channels if they are getting the same content free after 3 or 4 months. We estimated that around 25-26 million homes have got DD FreeDish, which largely involve the rural market, where people basically use two set top boxes. Whenever they are unable to get paid content on FreeDish, they switch the boxes accordingly,” the spokesperson added.
“Globally, 60 per cent of the revenues come from subscription, while 40 per cent come from advertisements, however in India, advertisements contribute 85 per cent of the revenues and 15 per cent comes from subscriptions. For pay TV players like us, there is no value proposition if we don’t have a firm hold on the vast market of India. The value proposition is extremely weak for pay TV players like us and the urgency from the channels to garner more advertising revenues has messed up the entire pay category. Broadcasters are not accepting it or refusing to accept it for short-term gains,” the Videocon d2h spokesperson added.
The viewership game
Doordarshan is India’s only free public broadcaster DTH service provider through its FreeDish. The country has more than 250 million households. According to BARC India data, around 185 million homes have television sets, out of which roughly, 25-28 million homes have FreeDish connection.
As per the EY report, currently, rural TV viewers contribute to 52 per cent of the overall viewership. However, it is estimated to contribute 74 per cent of the total viewership on DD FreeDish.
Zee Unimedia’s Sehgal informed that at an All India (U+R) Level, FTA channels account for a 25 per cent share. In terms of impressions, all FTA channels put together generate 684 million impressions in HSM U+R. In fact, Hindi GEC FTA garner 334 million impressions, double that of Hindi GEC pay TV at 161million impressions. All FTA channels reach 556 million viewers (71 per cent coverage) at an All India level (Source: BARC, Wk 31-34, TG: NCCS 2+). The genre has grown by 28 per cent over the last two years.
Implications of growth for broadcasters, distribution companies & content creators
The Videocon d2h spokesperson admitted that pay distributors are definitely getting impacted since the churn prices are rising. “Being in the business, one must understand the proper balance between subscription and advertising revenue models. Advertising is an unpredictable aspect, however one can predict the subscription revenues. So, if you are a business person, you should have more subscription, which will give assured revenues.”
Both Sehgal and the Videocon d2h spokesperson felt that distributors need to constantly find innovative pricing strategies to keep a check on the price conscious consumer from shifting to FTA channels. “Also, going forward there would be the DTT (Digital Terrestrial Television) model, which would make content consumption platform agnostic and make it a level playing field for digital as well as broadcasters,” the Videocon d2h spokesperson added.
Giving a broadcaster’s standpoint, Sehgal of Zee Unimedia noted that with fragmentation of mind-space and platforms, it is imperative that they garner newer audiences at a faster pace and added that the key here is deeper penetration in the rural belts, which establishes their presence to not only give them new revenue opportunities but move these audiences to the pay platform in the near future. “The entire FTA genre comprising private broadcasters garnered Rs 2,600 crore in 2016-17, which is expected to grow by 30-40 per cent in the coming days. With the addition of sports FTA, the genre might surpass the estimates for next year,” he added.
Sehgal further said, “For content creators, FTA gives an opportunity for greater shelf life for their content, as most channels thrive on re-runs of popular shows/ movies. It also opens an opportunity to convert these viewers from FTA to pay channel platforms. Many channels are also exploring creating new content to cater to these viewers. This is in line with the global trend, where FTA channels provide far more differentiated content compared to the pay channels. Going forward, more and more FTA channels will create new content as per the taste buds of the relevant audiences/markets.”