Alternative revenue streams in television broadcasting

Executive summary

Broadcasters are in trouble. Carriage fees is bleeding the industry, while competition is driving down advertising rates. The number of channels is increasing while there is no infrastructure to support the presence of these channels. The audience has a shorter span of attention and they are fragmenting. Under reporting of subscription fees have been a traditional problem and the advertising revenues are growing at slower rates every year. When faced with such a scenario Broadcasters are looking various avenues to increase revenues.

This dissertation critically evaluates the possible sources of revenues which have emerged in the last ten years and seeks to explore which of these possible sources could be a significant contributor to the revenue mix in the coming years.

The sources of revenue explore include:

  1. B2B sales (Format selling and Syndication)
  2. Earning from retail consumers (Mobile/Online streaming of content, Pay per view, Merchandising and Subscription - DTH only channel)
  3. Seeking newer advertisers (Advertising innovations and Private treaties)
  4. Additional solutions to current advertisers (AFPs, Branded properties in shows, Partnerships, Product placement and Paid editorial)

The paper concludes that moving forward the most significant contributors to the revenue mix of a broadcaster would be:

  1. Mobile streams
  2. Product placements
  3. Subscriptions revenue from DTH only channels which sell a service using DTH simply as a delivery mechanism
  4. Advertising innovations

Background

Traditionally a broadcaster made money in the following way -

  1. Subscription revenue from consumers
  2. Advertising
  3. Building properties

While the major costs included -

  1. Acquisition of content (and related rights)
  2. Government licenses
  3. Carriage fees
  4. Costs for any organization in business (marketing, human resources etc.)

It is widely believed that there was serve underreporting on part of the local cable operators (LCO) and multi service operators (MSO). Therefore of the actual amount paying by a consumer a broadcaster received only 5-10% of the money. This was not seen as a battle which could be won. Therefore broadcasters choose to focus on advertising instead.

The amount of advertising a channel gets is based on the TRPs or television rating points which a channel/show garners. How this system work is a third party organization (TAM), collects viewership data from around 7000 households and gives rating on the basis of this. Therefore what percentage of the budget should be spent on Channel X vis-avis Channel Y is often based on how they are rated.

This meant very limited revenues from subscriptions and a significant reliance on advertising. Therefore the game was to maximize audience as this would lead to some subscription revenues, plus highest ratings and therefore maximum advertising revenues.

The other approach was to build properties and then try and monetize the same. A few examples of these would be NDTV Indian of the year, or conferences by CNBC. The idea was that once a property was build there would be many advertisers who would want to attach themselves to it. A number of players have managed to build these properties, but, there is only so many events a channel can look at look at every year and this was more done by news and music channels in forms of awards.

We are living in times when this eco system is changing, and these changes are not just limited to the television broadcasters but the media & entertainment sector as a whole.

With DTH touching almost 20 million users, implementation of CAS and other forms of cable distribution (IPTV, digital cable etc.) the traditional cable operators might be passé. The implication of this is that broadcasters will soon have much lower under reporting, which will completely change their revenue structures. Further, it may be possible to charge for content to consumers rather than providing eyeballs to advertisers. This is game changing!

In the past few years we have seen some television channels entering with mega launches and the number of news articles talking about the crores spent on carriage fees is endless. It is this carriage fees which is now bleeding the industry.

Another cost which has significantly become larger is the marketing costs. With increasing clutter, content faces the same challenge as any other product and therefore a large advertising budget (or managing barters) has become a lot more important. Therefore in terms of marketing and carriage fees the costs have gone up significantly.

Studying the television broadcasters is critical to the media and entertainment sector as some of the most significant changes has been happening in this sector. Further in terms of complexity the TV broadcasters have a wide range of variables as compared to other sectors within the media & entertainment pie.

While there have been a few articles in newspapers and magazines on how broadcasters are coping up or the innovations that the broadcasters are trying, there is a clear lack of availability of work which is relevant to the Indian context, aggregates the numerous attempts made by broadcaster to find additional revenue streams and understand the viability of them.

Given the above this dissertation seeks to examine the various revenue sources for a broadcaster.

Literature Review

For organizations to make money and to survive in the long run, they must have constant sources or streams of revenue. Revenues come from sales, and the various categories of sales of a service or manufacturing firm are known as revenue streams. While measuring and reporting revenue is the domain of accounting and finance departments in organizations, determining new sources or streams of revenue is the responsibility of top management, strategic planners, and marketing forecasters.

Research framework

Need for the study

Television shows are increasingly not getting high viewership in terms of absolute numbers. The number of channels has significantly increased, therefore, time spent per particular channel or show is on the decline. While the advertising rates continue to move northward. Therefore the ratio viewership to cost is declining. Added to this is the fact that due to the increased channels, the advertising revenue per channel is eroding. Therefore there is a need to understand the possible alternative revenue sources for broadcasters.

Research Objectives

  1. To critically evaluate the revenue models which have emerged in the past ten years
  2. To explore the possibilities for newer revenue sources which will be a significant part of the revenue mix in the next decade

Research Design

Primary Research

Depth interviews of 12 respondents who are industry professionals in the areas stated below. The category chosen represent the various stakeholders who play a role in the financial side of TV broadcasting.

Type of respondent

Respondents profile

Advertiser (2)

  1. Marketing Head, Future Group
  2. Assistant Media Manager, Vodafone

DTH provider (1)

  1. General Manager, Reliance Communications (BIG DTH)

Media agency (2)

  1. President, Mudra Radar
  2. General Manager, Mindshare Fulcrum

Media expert/consultant (3)

  1. Partner, E&Y (Risk Advisory Services - Media)
  2. Partner, Acendo
  3. Owner, Quantemplate

MSO (1)

  1. Head - Finance, Hathway

TV Broadcaster (3)

  1. CEO, Star CJ Networks
  2. Vice President, NDTV Media
  3. Ex-Manager- Distribution & Network Development at Discovery Channel

Research Question

To evaluate and gauge the potential of the following streams of revenues -

B2B sales

  1. Format selling
  2. Syndication
  3. Earning from retail consumers

  4. Mobile streaming of content
  5. Online streaming of content
  6. Pay per view
  7. Merchandising
  8. Subscription - DTH only channels
  9. Newer Advertisers (finding new people to earn money from)

  10. Advertising innovations
  11. Private treaties
  12. Solutions (newer ways to earn money from existing advertisers)

  13. AFPs
  14. Partnerships
  15. Product placement
  16. Paid editorial

Findings

B2B sales

Format selling

Format selling is when a show concept is sold typically in geography and is then adopted. For this the broadcaster gets a piece of the pie. Indian Idol and Kaun Bangea Corepati are example wherein Indian companies have purchased formats. While selling format can lead to significant revenues, the quality of content currently is not of the level which can be sold. A good surrogate for this is also Bollywood cinema and the animation industry where content wise IP is not big business/very few if any companies are trying to build up IP. Most of them are content with going the purchasing IP route. The one area wherein IP has been built in India has been mythology, but, in terms of monetization of such IP there is limited capacity due to the cultural barriers. Therefore, building once content which is of a quality that commands a price we may see this moving ahead. It is not for the lack of awareness or trying that this is not a revenue generator.

Syndication

Syndication is the selling of content usually in a new geography or an alternative platform within the same geography. Therefore if a show like Hum Paanch is available on a Kingfisher flight (and Kingfisher has paid for this content) or if Hum Paanch is sold to a broadcaster in Nigeria who then runs the show on his channel then a broadcaster typically earns revenues from the same. This is extremely common in print journalism wherein Indian Express may carry an article from NY Times. There were two ways Syndication could have moved forward: Geography - what happened was that broadcaster like Zee established a distribution presence in UK, USA, parts of Africa and the Middle East. These are the areas which has a significant proportion of the 25 million NRI population. However, there has been limited if any monetization by selling content to other broadcasters. The other route was to find alternative platforms for distribution and while this has been explored there has been limited success. Selling to airlines has limited success and is generally viewed as a much stronger market for movies vis-à-vis TV content. But there has been limited success for broadcasters with large libraries. However the number of buyers is very limited. Further, other platforms such as mobile are more of a revenue share model in which the individual customer is required to pay which therefore don't classify as syndication.

Earning from retail consumers

Mobile streaming of content

There are about a total of 100 million TV screens in India. While there are about 500 million handsets. Therefore, even if 20% of these handsets have capability to stream TV content then the number of TV screens and Mobile TV screens are equal. MTNL and BSNL already has the capacity to stream TV and with 3G coming in mobile TV has seen a growing interest. However, there are issues of capacity in 3G and the current GSM broadband is said to be better suited. The implications of Mobile TV would mean: significant revenue from subscriptions, ability to command higher advertising revenues (as the number of viewers would increase) and there would be major implications on viewership data. Sports, news and music channel would benefit the most as they are the genre best suited for a small screen and a user who is on the go. With VAS revenues amounting to close to 15% of revenues for a telecom player, it is a reasonable surrogate to suggest that consumers are willing to spend.

Online streaming of content

Rajshri is the leading Indian firm which streams online content and Hulu is the international player known for its online streaming. However, each of these are supported by advertising and there been limited if any success on being able to charge users for content. The areas where streaming of content looks likely are sports and news. However, as of now there has been no monetization on this front from the user end. Added to the fact that news has not been able to generate a high number of visitors even when free streams are provided, indicating that this may be a tough battle. The examples in which we have seen monetization is for sports where Youtube has paid IPL, however in such deals the IP lies with BCCI and therefore there is nothing for a broadcaster. There has been some success for Rajshri for the NRI audience who are hungry for Indian content and one of the reasons for their success is a very large library. But even Rajshri is a mix of advertising and content is charged only for the very latest content or on downloads.

Pay Per View (PPV)

Till about a year back PPV was being touted as the next big thing. There were a few issues, such as that of DTH and analog being only one way. But nonetheless there was immense optimism of monetization of content. But, even post DTH hitting the 20 million mark the use of PPV remains limited. But what is causing the optimism to sink even further, is the fact that there is almost minimal use of the free movies given as part of the DTH subscription, leading people to believe that if the free movies are not being watched (only about 5-10% of usage is reported for the free movies/content given away by DTH) then the chances of getting people to pay is almost nil. We do need to take into account that most of the PPV revenue was not expected to come from new content, as it is in foreign countries wherein, sports broadcasts, special episodes and new movies are part of the PPV. But the common belief now is that there will be limited earnings from PPV at least for broadcasters. There may still be some potential for movies and perhaps cricket to be able to monetize on a PPV, but, the sense of optimism and severely declined.

Merchandising

Across the board the largest problem with merchandising was the issue of piracy and lack of legal action against the same. Most of the attempts have been by sports and Bollywood, but, the experience of broadcasters like STAR who tied up with Future Group was fraught with difficulty as they saw similar merchandise at one-fourth the price levels on the market within weeks. There is also the issue of merchandisable IP. Simpsons which is over a 1 billion USD brand in merchandising is the world benchmark. As far as Indian broadcasting is considered characters who can be turned into merchandise for kids or adults are simply not very good. Once IP is built there may be more of an interest from a consumer end for merchandise which currently does not seem to exist. In India, MTV has experimented with merchandising of MTV and Roadies with limited success. Disney has had some success of their characters but are more of an international phenomenon which is imported and therefore have been monetized. But other than this there has been very limited experiment with merchandizing and there is no focus on building IP which may become merchandisable.

Subscription - DTH only channels

These can be divided into 2 broad areas:

  1. Wherein a broadcaster decides to be available only on the DTH platform and not on the analog/CAS platform. In here while there might be a possibility to charge in the future, currently such channels are more FTA (Free to air) wherein they have existing content and simply put it. This would typically happen say when a BBC having multiple channel simply uses the DTH platform to provide content and in hope of getting some advertising revenue and build a user base. They may be able to monetize this user base sometime in the future. In India currently such a model is supported purely by advertising. Further, for such a concept it will only work when you have some already existing programming and simply want to put it on air. It is not a feasible option for a broadcaster who is looking to set up shop as the revenue options are not great and by not going to cable you are eliminating about 70 million users therefore reducing your chances of attracting advertisers, making the business model unfeasible.
  2. The other way a few companies have been approaching this is to consider the platform as a delivery mechanism and make the channel a service and then charge for such content. Topper, which is available with TATA Sky is one such example. Topper provides tuition like service for students from standard ninth to twelfth. So they have contract with teachers whom they record and then using the TATA Sky platform broadcast. It turns out to be a relatively cheap option for consumers and due to the scale involved each consumer has to pay a lot lesser. This is a concept which can be extended and therefore can be monetized.

Newer Advertisers

Advertising innovations

Advertising innovations are elements which are in addition to the FCTs. The push-back/L shape during cricket matches, tickers and logos during the content are examples of innovations. Advertising innovations is one of the few areas where channels manage a healthy premium. It happens so because they are almost creating new inventory, without requiring additional time. Which essentially means with the same content, they now have more inventory and therefore greater revenues. What this also does is gives small advertisers a chance to enter who would not be able to otherwise afford a 30 second spot on national television. It also eliminates the requirement of a TV spot, which may be a barrier to smaller players. Lastly, it allows for a last minute decision to purchase inventory as it is only a static logo/image which is displayed. Measurability of effect is the biggest issue as there is no way yet to calculate the returns on such activities. Further, while there is some monetization, today, it tends to be part of a deal wherein these non-FCTs are thrown in with the purchase of FCTs as a sweetener. Therefore large scale monetization of this is not yet proven. But given the desire of smaller players with limited budgets, such innovations may start contributing a small chunk of advertising revenues, but, given that such innovations do not require additional inventory and are pure profit, it is an extremely attractive proposition for broadcasters.

These innovations have been actively encouraged in sports broadcasting and news, but, the adoption of the same in genres such as GECs, movie channels and music are limited and if any. Further, there is almost no separate monetization of these innovations and for such channels getting advertisers to pay separately for the innovations will be a challenge.

Private Treaties (PT)

The concept of PT is the barter of stock with advertising inventory. This concept came into the fore with BCCL pioneering it and with great results in particular for Future Group. A PT has an immense advantage for a mid size, fast growing organization - ability to advertise without any impact on cash flow. Added to this fact, the deal came with some editorial support. In such a deal the media house (typically with presence in the news segment) was looking to exit, usually at the time of the IPO. Therefore, post the IPO it was in the interest of the media firm involved to showcase the IPO in the best possible light. With Times of India, Economic Times and Radio Mirchi, the advertising and editorial support was massive. Though the deals were massively in favor of BCCL, it turned out to be a good deal for many small and mid-sized organizations. So what BBCL was doing was in effect becoming a Private Equity using their already available inventory. Therefore it is easy to see why it was more than attractive for a media house. No cost, no cash, just give away a part of your existing inventory in exchange for stock and exit at the time of IPO. With the stock market at an all time high, this concept was taken up by CNBC, Jagran and HT among others. The problems came in terms of the difficulty in valuation on which there was no agreement. Further, for many of the broadcasters who are funded/have shareholders to answer to (unlike BCCL) they were questioned on their expertise and were told to stick to publishing/broadcasting and not private equity, the deals which BCCL stuck were too much in favor of themselves leaving a bad experience for may who took part and with the economic downturn and the stock market moving southward the private equity space took a serious beating. There are still no standards on valuations, and very few players with the ability to provide the editorial support which BCCL can provide.

Solutions

Advertiser Funded Progammes (AFPs)

Wheel Smart Shrimati on DD would be an example of an AFP. The idea of an AFP is that an advertiser, using a production house, creates programming content and then buys inventory from a broadcaster. The advertiser pays more for an AFP. This is usually in a ratio of to the amount of air time used. While DD charges a ratio of 6 times, the charges are much higher on private network. Added to this fact, most broadcasters are not willing to give away their prime slots to AFPs and generally tend to give some of the most undesired slots for them. This added with the high costs tend to make AFPs unfeasible and therefore we tend to see much more of sponsorship or title sponsorship but not AFPs. The upside of an AFP for a broadcaster is other than the higher revenues generated, it tends to bring the cost down by about 10-15%. However, for a broadcaster, their desire is strongly maintain their own programming therefore, the high costs for advertisers who are looking for AFPs.

Partnerships

When the NDTV Imagine and Kinfisher deal took place, many expected a spate of such deals which has not come through. The upside for a broadcaster is the large chuck of cash infusion such a deal bring in, but, may lead to reduced credibility. From an advertiser point of view there are issues of return and actual impact which are difficult to measure. Further, there is the requirement of the right fit between the advertiser and channel which may not always happen. Due to this neither the advertiser nor the broadcasters seems to have gain immensely and therefore both the advertisers and the broadcasters have stayed away from more such partnerships.

Product placement

Ford with their product placement in 24 have set the global benchmarks for how product placement should be done. For advertisers product placement has major upsides, when weaved in well within a story, there is greater credibility and is more memorable. The only issue is that product placements are not scalable. For a broadcaster there is increased revenue without any inventory and if it does not harm the programming then they tend to find product placement beneficial. Therefore while both parties regard product placement as mutually beneficial one of the key reasons we may not have seen it become big is the lack of quality integration of product placement with content. This is largely due to the fact that production planning in Indian broadcasting is still not very professional. One good example of product placement was with Kyon Ki Saas Bhi Kabhi Bahu Thi where Singapore Tourism was a sponsor and for a whole week the family spent time either planning to go to Singapore or spend were in various places in Singapore with the story moving forward. Such integrations help broadcasters with additional revenues and provide far superior returns for an advertiser.

Paid editorial

Media-Net with Bombay Times brought the idea of a paid editorial to the fore. How Bombay Times executed this was by allowing individuals or organizations to pay a fee and provide editorial content as desired. This was followed by a small disclaimer simply stating it was a Media-Net article while it merged seamlessly with the editorial content. Thus, while it created some controversy it became a parallel revenue stream for the newspaper. While broadcasters have not adopted such an approach mainly due to the fact that while in print there is a mechanism by which you can separate the serious paper with the frivolous supplement the television offers no such option. But, while that may be true, alongside significant advertising deal, editorial support such as coverage, reports and reviews are often provided. Therefore while there is no direct monetization of editorial content, primarily due to the ethical and credibility considerations on part of the broadcasters, in practice there is paid editorial which is being provided as a value add to advertising deals, and in the future there may be scope of monetizing this separately.

Conclusion

B2B sales

Format selling

Positives: Additional revenues with no additional cost or inventory use

Negatives: Nil

Changes required: Need for quality formats/content which are original and desired, hence can be sold

Potential: Weak

Syndication

Positives: Additional revenues with no additional cost or inventory use

Negatives: Nil

Changes required: Need for content which will be command a price

Potential: Weak

Earning from retail consumers

Mobile streaming of content

Positives: Large potential user base, Consumer comfortable with paying for Value added services, no issues of underreporting, can generate additional revenue on advertising and subscription front

Negatives: Small screens not best suited for television viewing

Changes required: Government regulation and backend to be setup

Potential: Strong

Online streaming of content

Positives: Additional revenues with no additional cost or inventory use

Negatives: Lack of inclination at consumer end to pay, low bandwidth leads to slow streaming

Changes required: Better bandwidth

Potential: Weak

Pay per view

Positives: Monetization of old content, additional revenue for special events

Negatives: Lack of inclination at consumer end to pay

Changes required: Two way capability of STB

Potential: Limited

Merchandising

Positives: Additional revenue stream

Negatives: Wide prevalence of piracy

Changes required: Greater protection of IP and legal action against piracy

Potential: Weak

Subscription - DTH only channels

Positives: Lower costs, ability to convert platform as a distribution mechanism and charge accordingly

Negatives: Smaller user base

Changes required: Greater adoption/experimentation on part of broadcasters

Potential: Strong

Newer Advertisers

Advertising innovations

Positives: Creation of new inventory leading to additional revenues, ability to attract newer advertisers, no costs involved, can command premium

Negatives: Nil

Changes required: Currently provided as an add on in most cases - should be able to generate revenues separately

Potential: Strong

Private treaties

Positives: ability to attract newer advertisers, barter is only of existing inventory so there is no cost involved

Negatives: Problems of valuation, bad experience of advertisers with BCCL, unwillingness on part of broadcaster's funder to allow them to venture into private equity, inability to provide diverse inventory

Changes required: Accepted guidelines on valuation

Potential: Limited for an individual broadcaster, Strong for a PE player who can purchase inventory Solutions

Advertiser Funded Programmes

Positives: Strong interest on part of advertiser as he gets to customize show as per needs, ability to charge premium on part of broadcaster, lower costs for broadcaster

Negatives: Unwillingness to give good slots by broadcasters, high inventory rates is prohibitory

Changes required: Willingness on part of broadcasters to compromise which seems unlikely

Potential: Weak

Partnerships

Positives: Additional stream of revues, large influx of cash

Negatives: Difficult in finding the right fit, may lead to harming credibility, bad experience of NDTV Imagine and Kingfisher

Changes required: Nil

Potential: Weak

Product placement

Positives: Highly desired by advertisers, ability to charge premium on part of broadcasters

Negatives: Lack of integration with content, difficult to scale

Changes required: Better integration with content

Potential: Strong

Paid editorial

Positives: Highly desired by advertisers, ability to charge premium on part of broadcasters

Negatives: Loss of credibility for broadcaster, no direct control, sale or customization available

Changes required: Willingness on part of broadcasters to compromise which seems unlikely

Potential: Limited but useful as it currently exists

Future research

As there is almost no research in any of the 13 revenue streams in the Indian context there is the possibility of further research into any of the areas. The current body of research which exists may provide pointers but don't factor into account the various issues which are specific to India. Example, any study in the area of merchandising will not account for the high level of piracy present in India. Further, the large levels of under reporting leads to minimal subscriptions leading to a strong reliance on advertising revenue. Such issues do not factor into revenue models or studies done in United States or United Kingdom where such studies have taken place.

Specifically, the feasibility of Mobile Television in India, Return on investment in product placements and how to convert a television platform into a delivery mechanism for a service should be looked at.

Appendix

Discussion Guide

Media Landscape

  1. How do you think the media landscape has change in the last 5-10 years? (Name 2-3 significant changes)
  2. Within TV what do you think have been the 'game changing' moments?
  3. Revenue Models (for advertisers and media agencies the area of questioning the expenses on the below areas)

  4. What are the primarily sources of revenue for a broadcaster?
  5. Are there any challenges facing any of the revenue sources?
  6. Are the revenue sources sustainable? Why?
  7. What are the emerging/new sources of revenues that have emerged?
  8. Which of these have maximum potential?
  9. In what genre of channels have they emerged?
  10. Is this a fad, or do you think it is going to be part of the revenue mix moving further?
  11. How do you think the revenue mix is going to change in the next 5-10 years? Why?
  12. Comments/Potential of the following : (to probe only on areas which have not been spoken about)

SET - 1 (emerging revenue streams)

  1. Online streaming of content
  2. Mobile/3G streams
  3. Private treaties
  4. Merchandising
  5. Paid editorial (Media-Net)
  6. PPV
  7. DTH only channel
  8. Advertising innovations
  9. Branded properties within shows
  10. Partnerships (NDTV-Kingfisher)

SET - 2 (traditional revenue streams)

  1. Advertising
  2. Subscriptions
  3. Events
  4. SMS & Mobile tie-ups
  5. Syndication
  6. Format selling
  7. Product placement
  8. AFP/Funded shows

Other areas to question

Are there any major costs for broadcasters which have emerged in the last 5 years?

What will be the key challenges facing broadcasters in the next few years?

Transcripts[1]

Advertiser

  • Spend is divided into Free Commercial time (FCT) and non-FCT
  • FCT is the traditional advertising
  • Non-FCT includes tickers, bands (on screen) during the content
  • The major spend is towards FCT and as of now most of the non-FCT are given as part of a bulk deal
  • The key area of focus is on integration with content
  • This would be partnerships on air as well as on ground activities
  • Have explored the option of equity and are in favor of it when the business is growing. The main attraction of this of businesses is the cash flow it allows them. However, quality of inventory offered and valuations can sometime be an issue
  • Merchandising while desirable is fraught with piracy and lack of legal action
  • There is not too much attention paid to advertising innovations and branded properties as they are not a separate expense but are an add-on when buying inventory
  • AFP are generally regarded is desirable however lack of good slots and high costs severely discourage such shows and keep them to a minimum. They are also done in addition to the routine activities and are one of events due to the high costs involved
  • While they find great value in product placement the execution and integration of product placement leaves much desired

DTH Provider

  • Has seen rapid growth with the number touching the 20 million users mark
  • The issue with DTH is that of it being one way and the need for a technology which is two way
  • Find broadcaster benefit as it enables them to charge higher and there is no issue of under declaration
  • Great for niche channels who would otherwise not be able to be present
  • While the number of subscribers is climbing, the ARPUs continue to remain an issue indicating that revenues from subscription may not be as high as anticipated
  • Limited adoption of pay per view

Media agency

  • Find the growth of regional television as a key trend, states examples such dubbing of Hollywood cinema in regional languages and the increasing number of regional channels
  • States there has been significant fragmentation in the media
  • Find the gap between the number one and number two channels has reduced and the longevity of a channel to be able to be number one has also reduced
  • Finds mobile TV a realistic possibility post the adoption of 3G
  • Thinks broadcasters are trying to figure their way around private treaties without much success
  • While there is no direct way to pay for editorial content finds it possible as part of the a deal with FCTs where editorial support is provided
  • PPV has tremendous potential especially at the bottom of the pyramid
  • Broadcaster need to manage their inventory better
  • Building a larger subscription revenue base is the way to go
  • Product placement can be used occasionally but lacks scale
  • Partnerships are one of cases where in you might find a good fit, but, don't see too many advertisers commit significant money

Media experts/consultants

  • Rise of niche and regional channels
  • DTH touching 20 million users mark
  • Mobile TV with 500 million users having serious potential
  • Non-monetization of the growing base (channels still use CPRP as an evaluation currency vs CPT) unlike Print's stagnating or declining base
  • Waking up to the potential of a Solutions approach but very very slowly
  • Heightened focus on yield management
  • Selling of a inventory is at a show level and not a channel level
  • Inadequate feedback on part of the channel to advertisers
  • A client focused solutions approach. Most channels have realized that they are under-valuing the very properties that could earn them premiums and have set up or are in the process of setting up distinct Solutions team/department which approach clients on their own (aside from the regular sales team). This ensures that such properties do not get clubbed with deals and are able to get the right value
  • Private treaties need an entirely different capability of being able to evaluate businesses. (TOI had to create a whole diff capability which not many TV broadcasters may be willing to invest in)
  • Limited potential in online streaming due to a small user base and unwillingness on the consumers part to pay for content, the same applies for pay per view
  • The key areas of concern around merchandising revolve around piracy but may still be undervalued in terms of potential
  • Low base high growth. Great as it connects the consumer revenue directly to the channel with no middlemen
  • Advertising innovations is one of the few areas where channels manage a healthy premium. Measurability of effect is the biggest issue
  • Partnerships (NDTV-Kingfisher) - Good from the revenue perspective for the channel but dilutes editorial credibility which may eventually impact viewership
  • Syndication - Most lucrative but both clients and channel need to ensure saleability (to viewers). Programs should be able to attract viewership!
  • AFP is not an attractive proposition owing to the lack of good slots and high rates charged, but, if used well can help in saving cost by about 5-10%

MSO

  • Costs for broadcasters include placement fees and carriage fees
  • Issues of under reporting are more at a LCO level than a MSO level
  • Many larger broadcasters (especially GECs) may loose from digitalization as people may not be willing to pay
  • Content will play a key role as it will be difficult to get people to pay once CAS is implemented
  • Example of ESPN whose subscription revenues drastically dropped once CAS was implemented suggesting an unwillingness to pay

TV Broadcasters

  • Belief till a year back was that the budding pay TV market would grow once the problem of inadequate digitalization was solved. Digitalization has progressed but with a battle based on price points the ARPUs are suffering
  • Earlier believed that there would be a better balance between subscriptions and advertising, but, increasingly this is not the case
  • Ad rates based on CPRP vis-à-vis CPT
  • Issues relating to under declaration
  • On current capacity an analog house can only receive 50 - 70 channels, and with increasing number of new channels the actual consumer choice has not increased
  • Lack of investment in analog homes with DTH and HITS quite small
  • Destructive competition amongst channels is ensuring that even with inventory going up the actual revenues are not
  • Find mobile TV, product placement and syndication as possible sources of revenue
  • The next phase is when the TV screen stops being an entertainment one way box and allows for transactions
  • Topper, a paid service on Tata Sky is one such example
  1. The transcripts do not detail the discussions and are only indicative of the flow of the interviews conducted

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