Indian television industry: Up, Up and Away

In the past year, television as a sector has grown in an unprecedented manner. The medium saw changes by way of new genres establishing themselves, more channels added to the scene, changes on distribution platforms and hike in ad rates across channels. Needless to say, at the end of it all, television has seen revenues coming in from advertising sales and subscriptions. One indication of where the sector is headed comes from STAR India’s decision to spin off two entities - STAR Group and STAR Entertainment, in order to structure its growth.

Another pointer towards the growth in the sector can be seen in the top lines of the 2005 annual edition of the FICCI - PricewaterhouseCoopers’ report, ‘Indian Entertainment and Media Industry - Unravelling the potential’. For the television industry, the report forecast that it would grow at a compound annual growth rate (CAGR) of 24 per cent and would be of the size Rs 42,700 crore from its present size of Rs 14,800 crore. In comparison, the Indian entertainment and media industry itself is poised to grow at 19 per cent (CAGR) to reach Rs 83,740 crore by 2010 from its present size of Rs 35,300 crore.

Subscription revenues are projected to be the key growth driver for the Indian television industry over the next five years. The report indicated that subscription revenues will increase both from the number of pay TV homes as well as increased subscription rates. The buoyancy of the Indian economy will drive the homes - both in rural and urban (second TV set homes) areas - to buy televisions and subscribe for the pay services. New distribution platforms like DTH and IPTV would only increase the subscriber base and push up the subscription revenues.

AdEx India, a body of TAM Media Research shows that the coming in of other kinds of media has reduced the share of television in the overall advertising revenue pie. From the 42 per cent of the market that it claimed in 2004, in 2005 this share dropped to 41 per cent unlike mediums like print, radio and Internet, which have shown growth. The good news for the advertising revenues is that from a Rs 116 billion market in 2004, in 2005 the figure was at Rs 132 billion and this meant a huge increase in absolute revenues for television.

AdEx further shows that the maximum contribution to the TV revenues continue to come from mass channels, which claim 40 per cent of the share, which is a dip, given the 47 per cent the genre had in 2004. Regional language channels increased to claim 25 per cent and the next significant contributor are news channels. Interestingly, despite the fact that many new mediums have seen growth and industry leaders firmly believe that people are spending lesser time on TV, in comparison to 2004, viewership has increased in 2005 - regional channels again taking the majority share here at 37 per cent and general entertainment channels are at 33.6 per cent. Some of the key changes include names like Reliance making a foray in the entertainment space. The corporate major has already put in a framework for digital distribution through channels like Internet Protocol TV (IPTV) and is also working on having presence in the broadband and DTH platforms.

Addressability platforms itself have seen a boost, leading media experts to believe that the face of television as we know it is all set to change. With the coming of new distribution mechanisms, all aspects of the television business - from ad rates to content creation will undergo changes. However, another point that has been said on forums is that with the coming of new addressability platforms will not impact the importance of content - if at all getting the right content would be more important than ever.

Almost every genre is seeing more players added, leading to clutter in each segment. Consolidations have been predicted for some time but the first example to hit the industry was IBN’s decision to take over Jagran TV’s Channel 7 and more of this is expected going forward. With mobisodes becoming a reality, interactivity being induced in almost every element of television, consolidations and spin-offs becoming the order of the day.

Recent key trends in the television sector