On day two of TV.NXT, Vivek Couto, executive director, Media Partners Asia spoke about the potential and challenges of the television market in India and China
Much has been discussed and comparisons drawn while discussing the two most prominently emerging economies of the world -- India and China. On the second day of TV.NXT, Vivek Couto, executive director, Media Partners Asia talked about the television industry in both countries, in his discourse titled 'India v/s China: Does the Comparison Hold?'
Couto began by quoting eminent media owners on their views on the Indian and Chinese markets. He quoted News Corporation's Rupert Murdoch, Liberty Global Inc's Mike Fries, Jimmy Lai of Next Media, Phil Kent from Turner Broadcasting and Ben Way from Macquarie Group. The quotes showed that the common perspective is that the Chinese market is fiercely regulated by the government; while India has a long way to go when it comes to infrastructure and investments.
Saying that China is ahead of India when it comes to infrastructure, Couto attributed this to government spends. "Government funding is the key to China's infrastructure drive. However, content is a challenge China faces," Couto said.
Armed with statistics, Couto projected that digital TV penetration in India, which currently stands at a little over 20 per cent, will reach only around 60 per cent by 2020. China, on the other hand, is at par with India now; but is expected to achieve 100 per cent digital TV penetration by 2015.
He expects that broadband penetration, too, would remain rather subdued in India. In China as well, broadband penetration would not be too high, as digital TV penetration will continue to race way ahead.
Couto said that competition is widespread in the Indian television market; while it is more controlled and regulated in China. He supported this with data, citing that more than 15 groups have 30 per cent of the pay-TV market share in India; while just six cable groups have the same share in the Chinese market.
TV penetration, he pointed out, is much deeper in China. And even though the pay-TV penetration in India is almost double that of its Eastern neighbour, the revenue per capita is significantly low.
According to statistics, the pay-TV penetration in India and China stands at 78 per cent and 42 per cent, respectively. The TV revenue per capita, on the other hand, is $5 and $36, respectively.
Couto also pointed out that the government strongly regulates the Chinese market; and no foreign direct investment is allowed in Chinese TV stations, cable (49 per cent indirect) or DTH.
He described the unique structure of the Chinese television industry, which comprises 18 nationally distributed channels, 268 provincial satellite channels and 850 local city channels. Of these, the provincial satellite networks are offered free nationwide, across 32 provinces.
However, he pointed out that China does not have enough content to fill the breeding digital pipes, which gives the online video industry the opportunity to grow further.
Couto said that digital scale and value would continue to outpace television. "Online video is steadily growing in China and is getting corporatised a lot more," he said.
He further pointed out that there is very little content that the Chinese audience wants to pay for. He also stated that there are widespread illegal TV homes in the country.
In China, IPTV has just begun and has not been fully licensed yet. As of December 2009, there were 3.3 million IPTV subscribers in China, as opposed to 171 million cable subscribers.
Since the Chinese industry is so closely regulated by the government; TV investor exposure is much stronger in India, with players such as News Corp, Viacom, Sony, Time Warner and Astro.
However, there exists a wide gap between the content revenue in both countries, with China clocking $8.9 billion and India only $2.7 billion.
While advertising revenue continues to be the main contributor, it is significantly higher in China at $ 8,399 million; in India, it is $2,033 million. Channel subscription revenue in India and China stands at $662 million and $476 million, respectively.
Couto ended his presentation with the daunting question of whether China could overtake India in TV infrastructure, considering that the costs to upgrade to digital TV were a sizable $8 billion in that country. And while China could boast of investors such as its government, Macquarie and Blackstone; the question remains over who would pump in $3 billion, which is required for upgrades to digital TV in India.
(TV.NXT was organised by afaqs!, in association with Big CBS (main sponsor) and Star News (associate sponsor). The other sponsors include UTV Action, Bloomberg UTV, Sony PIX, Sahara Samay and Mastii TV.)
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