Will NTO 2.0 disrupt the sports broadcasting ecosystem in India?

With the deadline for implementation of TRAI’s new tariff order (NTO 2.0) extended till April 1, 2022, there is some respite for broadcasters and consumers. All the broadcasters have already put up the revised channel rates on their websites in preparation of implementing NTO 2.0 from the earlier deadline of December 1, 2021.

Industry experts that Adgully has been in conversation with have spoken about the various implications of the hiked channel prices and a reconstitution of channel packs without the driver channels by broadcasters under the new tariff regime.

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NTO 2.0: TRAI extends implementation deadline to April 1, 2022

In this report, Adgully seeks to understand the sports broadcasting ecosystem post the implementation of NTO 2.0 rates. Leading broadcasters have already removed their key GECs and sports channels from their channel bouquets. How will this affect the way people watch sports on TV in the coming days? Will people subscribe to sports channels on a seasonal basis, which is popular in countries like the US, whenever there is a major tournament like the IPL or a cricket or FIFA World Cup in season?

While stating that the new pricing regime will affect the way people consume sports content on TV, a leading media analyst, who did not wish to be named, noted, “There will be ups and downs in TV subscriptions. People will subscribe only for the events they want to watch. Subscriptions may become events-based as people will start subscribing to the particular match they want to watch. For example, recently, Viacom18 bagged media rights for FIFA World Cup 2022. With the NTO 2.0 in place, you could say that sports fans may go for seasonal subscriptions for such sports events.”

Paritosh Joshi, Principal, Provocateur Advisory, also agreed that seasonal subscriptions could become a reality. He said, “I have friends who consume IPL in the US. They get a season pass. Whatever cable network they are on, they can buy the season pass for a particular period, a week or two. I think we may see a similar trend here in India. In cable TV, seasonal passes can happen very easily. People may pick the seasonal passes. It is like buying a movie ticket. Once the movie ends, you leave the theatre. That theory will be applied here too.”

A senior broadcaster, too, felt that NTO 2.0 will have an impact on sports TV subscriptions. However, he added that a lot will depend on how the channels are sold on the ground. On DTH it will be sold on a la carte. “We don’t know how they will price it. On DTH, it will definitely be given as a la carte. Whenever there is a direct consumer touch point, it is easier to do it. For example, the likes of Tata Sky and Airtel will find it easier. But I don’t know if LCOs and MSOs will be able to provide on a la carte basis. I am not sure whether they will have the sufficient capability. How they deal with it is something that needs to be understood,” remarked the senior executive, on condition of anonymity.

According to him, it will depend on how these MSOs and DTH operators will package it.

Naturally, consumers will go for a la carte. “But if that is the natural consumer behaviour, it will be easier for DTH consumers to switch on and switch off easily. There is technology and they will be able to manage it. But when it comes to MSOs and LSOs, there could be challenges on the ground in terms of executing,” the senior executive added.

Sports broadcasting is huge – you are talking about at least 40 crore people watching on TV. While tournaments such as IPL has been seeing increasing traction on digital (Disney+ Hotstar), the senior broadcasting executive didn’t expect everyone to watch it on smartphones. “It is not possible for everyone to have a smart TV or an Amazon Fire Stick either. Not everyone has a smart TV to watch a match on Hotstar. So, it will have an impact,” he said.

Shaji Mathews, media consultant and former CEO of KCCL and VP at Star TV, had a different take on this. He was of the opinion that there won’t be any significant impact as such. Sports channels are events-based. And the major subscribers to sports channels are youngsters. They are very net-savvy and updated. And as such, remarked Mathews, there is no threat to subscription revenue at all.

“There are mainly two types of sports channels. Those that are priced high and others that are in the lower priced category. Broadcasters will split the events within these two categories in such a way that the consumer will not feel the pinch or be affected by a price change. Those channels in the lower price category will be included in the bouquet. Broadcasters will share the events accordingly,” said Mathews, who subscribes to the strong view that NTO 2.0 will not disrupt the ecosystem and will have little impact on TV consumers.

Explaining further, Mathews said, “For example, cable operators will make a bouquet for Rs 250 and add two sports channels for Rs 50. This will be done in such a way that consumers will not be burdened. Consumers will effectively pay the same price. So, DTH consumers will not mind paying Rs 50 extra. Nobody is going to abandon anything.”

He further said, “Cable operators will manage. You know that is their strength. They know the pulse of the consumers as they work closely with them. Consumers’ interest is the interest of the cable operator’s. They will manage whatever difficulty is there. Practically this will go smoothly. I don’t see any major anomalies happening in sports.  Broadcasters will manage in such a way that neither they nor the consumers are hurt.”

DTH, however, will be slightly different as it mostly caters to the upmarket category.

The industry, pointed out Mathews, has gone through bigger problems than this and it has managed well. “Like for example, shifting from analogue to digital by installing 100 million set-top boxes, and that too within a stipulated deadline, was a mammoth challenge. The broadcast industry sailed through that phase rather smoothly. If the industry could manage that, this is nothing in comparison,” he concluded.