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August 20 2007
Indian TV watershed coming into view
Ashling O'Connor, Bombay
The Times
(c) 2007 Times Newspapers Limited. All rights reserved
- Government may allow 100 new channels
- Demographic is an advertiser's dream
More than 100 new channels are awaiting government approval in India as media companies jostle for position in a second wave of expansion in the television industry.
However, the surge towards 300 channels could come at a heavy cost for new entrants, as up to $1 billion (Pounds 500 million) is pumped into a fast growing market with technical shortcomings and a dearth of creative talent.
According to analysts, a distribution backlog, high content creation and carriage costs and a lack of qualified production staff will make it difficult for standalone channels operating outside of a handful of powerful media houses to survive.
So far, the Indian Broadcasting Minister has received applications from more than 50 companies for permission to launch 130 channels in the next 12 to 18 months.
They include Zee TV, NDTV, Reliance ADAG, BAG Films, INX Media, UTV Broadcasting and Viacom 18, a joint venture between Viacom, of the United States, and TV 18, of India. They constitute the next stage in the development of one of the world's fastest-growing media industries after the introduction of cable and satellite in the early 1990s -and if all the applications are successful, the number of channels in India will jump from about 200 to 300, raising questions about whether the market can absorb such a proliferation.
"Everyone is saying they're launching a channel, but we'll see how many are serious," Shantonu Aditya, the executive director of UTV Broadcasting, which is preparing to launch nine channels, said. "I think about 20 will be launched by two to three groups, mostly existing players. We believe there is space."
UTV plans to invest more than $200 million over the next three years. Its first launch will be a general entertainment youth channel under the Bindass brand, the second a movie channel.
Rival established media houses have similar plans, lured by what is forecast to become Asia's most lucrative pay-TV market by 2015. There are 110 million television households in India, of which about 70 million are cable, and this number is set to double over the next few years. India's population is 1.1 billion and with half of those people under the age of 25, the country has an advertiser's dream demographic. Furthermore, with about 15 million new televisions sold every year, the number of households with a second set is also rising rapidly.
Broadcasters hope that this will mean room for more niche channels.
"You can ask: 300 channels, isn't that enough? But when you break it down into segments, such as Hindi or sport, then the number takes on a different complexion," Peter Mukerjea, a former Star India chief executive whose company INX Media is planning 12 channels, said. "This market is far from saturated."
There are a number of hurdles ahead. First, it may not be physically possible to accommodate more channels because analogue cable is at full capacity. The digital transition is slow, with just a third of viewers in big cities getting the mandatory set-top boxes this year, despite government decrees and a media campaign.
More importantly, the subscription model is not robust enough and revenues are small. Satellite broadcasting is still in its infancy, reaching an estimated three million homes.
Advertising revenues will be more thinly sliced. Timmy Kanhari, a media analyst for PwC in Bombay, said. "These channels are very gung ho about subscription revenues, but any stable income is still extremely doubtful for the next two to three years. There is going to be some blood spilt before this whole process settles down."
BIG NUMBERS ON SMALL SCREEN
110 million TV households in India
40% of viewers still have one-channel black-and-white sets
15 million colour sets sold this year
$3 average cable revenue per subscriber a year
$10.5bn Expected value of pay-television market 2015
- Doordarshan, the public service broadcaster in India, was launched in 1959
- Colour television was introduced to the country in 1982 to coincide with the Asian Games
- International channels that are available include HBO, CNN, Discovery and BBC Entertainment
- Advertising revenue growth is 13% to 15% a year and the market is expected to be worth $11 billion by 2010
- Government target of digital cable switchover by January is to be missed
Source: Media Partners Asia
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