Absence of Digitization, main culprit behind ‘Imagine TV’ no show !

All eyes on India

India has finally rekindled its cable digitisation programme and upbeat growth is now forecast in the country’s already sizeable pay-TV sector. Gün Akyuz reports.




India’s pay-TV sector has attracted a steady stream of inward investment over the past decade, thanks to its sheer scale (160 million TV homes by 2015) and rapid expansion of an upwardly mobile younger adult demo (65% of the population are under 30). The latest example is Sony Pictures Television’s deal this month to take a 30% stake in Indian broadcaster MAA Television Network, which owns a stable of Telugu-language channels.


However, the country’s faltering cable digitisation programme has hindered its established but fragmented cabsat pay-TV industry’s route to profitability. This, as well as strong comptetion, may well have been a contributing factor in Turner Broadcasting System’s recent decision to close its Indian channel Imagine.

A key culprit is India’s sizeable cable infrastructure, which remains largely analogue thanks to the absence of a legislative framework to convert to digital. The programme launched in 2006, but digital still accounts for only around 7% of India’s 90 million or so cabled TV homes.

At the end of 2011 the cabsat sector totalled a sizeable 136 million TV homes (source: PINC Research), yet pay-TV channels remain heavily dependent on ad revenues. Notably, while channels continue to compete for carriage on restricted analogue bandwidth, local cable operators are able to under-report subscriber levels thanks to unaddressable (and untraceable) analogue set-top boxes. Also, they reportedly fail to pass on as much as 80% of subscription revenues to pay-TV broadcasters.

India’s already sizeable pay DTH market has gone some way to counter this creaking analogue cable infrastructure and practices. It now accounts for more than 40 million TV homes, but is also one of the most competitive markets anywhere, featuring six DTH operators – among them Tata Sky, Zee-owned Dish TV and Reliance Digital TV – all competing for a slice of the sector.

However, a government mandate to digitise India’s cable networks is now back on track, with a number of investor reports from the likes of PINC, KPMG and PwC now forecasting significant growth for India’s cabsat industry.

Tarun Katial

Tarun Katial

A report issued to clients by Mumbai-based PINC (aka Pioneer Investcorp) in December, for instance, forecast “a revolution” in the country’s cable and satellite sector on the back of the long-overdue digitisation. According to the report, India’s pay-TV industry, which currently generates around INR270 billion (US$5.36bn), is forecast to reach around 83 million digital TV homes (21% CAGR) between 2012 and 2015. And as a whole, India’s cabsat sector is set to cover 166 million homes over that period, including 64 million DTH and 20 million digital cable subscribers.

Under the latest timetable, India’s four largest cities – Delhi, Mumbai, Madras and Calcutta – turn fully digital by this June, followed by 35 other cities with more than a million residents in 2013, and then nationwide by 2015.

This won’t necessarily translate into significant extra landgrab for pay-TV players. Consolidation is already underway in a cluttered market of well over 500 channels, six DTH firms and several multiple system operators and local cable operators. But the overhaul will allow existing players to turn a profit, and PINC estimates this could begin to happen in 2013.

“We see great opportunity in the Indian television industry, which projects a high growth rate,” says Tarun Katial, CEO of Reliance Broadcast Networks. “Accurate reporting of subscriber bases, regulated pricing and the formation of an organised sector at a pan-India level will surely be the positives that can be expected from this migration to digital.” But he warns: “Generating finance for this mammoth migration stills remains a crucial factor, especially for the smaller players in rural and semi-urban areas.”

Ajay Chacko

Ajay Chacko

An immediate challenge is the not inconsequential capital outlay required for the first deadline in June, with about seven million digital boxes and around US$500m in hardware required, says Ajay Chacko, president of A+E Networks/TV 18. “This time around, one hopes that it will go through. But India being India, you can’t say it’s done until it’s done,” he notes.

And not before time, as India’s TV ad market is showing signs of strain. Worth around US$2.5bn, Indian TV advertising had been growing at annual rates of up to 20% over the past five years, but has now slowed to around 10-12% in urban areas. This, in turn, has sparked a shift by many players who are turning to local regional audiences as an alternative route to growth.

One of India’s largest general entertainment channels, Sony-backed SET, is among several now focusing on growth by making itself relevant to small-town as well as metropolitan audiences in the Hindi-speaking heartlands.

A more recent entrant into the Indian channels business is Reliance Broadcast Networks, through its joint-venture English-language channels partnership with CBS Studios International set up in autumn 2010. The venture, Big CBS Networks, has pioneered three entertainment channels called Big CBS Spark, Big CBS Prime and Big CBS Love, offering Indians new US content virtually simultaneously with its US airing, thanks to its digital infrastructure.

But the venture is also increasingly focusing on the regions. The latest Big CBS launch, in January, was regional Punjabi-language channel Spark Punjabi. Last year, Reliance also launched the separate, wholly owned Hindi-language net Big Magic.

“India’s booming regional television industry with limited regional entertainment options is an opportunity that we are leveraging,” says Katial. The firm’s parent Reliance Group, which spans radio and mobile infrastructure as well as a DTH platform and its growing channels business, stands to benefit from cross-promotional marketing. Spark Punjabi, a fledgling ‘best of’ net carrying content from Big CBS’s English-language channels, is backed by a regional network of 22 radio stations. “It is seeing some very good traction, and is already the number one channel in primetime,” says Katial.

Meanwhile, Big Magic, which launched in April 2011 targeting India’s Hindi heartland (Madhya Pradesh, Uttar Pradesh, Bihar and Jharkhand), is now the number one channel in the region, says Katial. Positioned as a network with local content built around local insights ‘for the people, by the people,’ it includes India’s first devotional singing reality show Big Bal Kalakaar, which launched this January.




Other local schedule drivers on the channel include comedy series Hasya Panchayat, Hamaar, Nadaaniyan and Bulbulay, and music show Des Hamaar Sangeet.

But Reliance is also looking further afield for ideas for Big Magic, such as its recent deal with FremantleMedia for a local version of gamehsow Let’s Make a Deal, due to launch on the channel in the second quarter.

The company is also in the final stages of preparing two channels under a separate channel agreement forged last year with Europe’s RTL Group. Originally due to launch in December, a Hindi-language action entertainment channel is set for an expected June premiere, with a second reality-based channel to follow.

Another approach is TV18′s new joint-venture channel with A+E Networks, History TV18, which launched last October with no fewer than seven language feeds (English, Hindi, Tamil, Telugu, Bengali, Marathi and Gujarati) to tap into India’s different regions.

The channel also appears to have unlocked a growing appetite for factual entertainment, says Chacko. “Around 55-60% of the country watches general entertainment, but this is changing gradually,” he says. History TV18 launched on the back of viewer research and feedback indicating an opportunity for other forms of entertainment serving semi-urban, small-town India, as well as urban India.

The channel draws from the extensive A&E library, using shows with an Indian connection, such as Ice Road Truckers, which launched with an episode set in the Himalayas.

“Thrill and adventure shows like Ice Road Truckers and IRT Deadliest Roads have done well, but so have information shows done in a palatable, interesting format, such as Sliced and Food Tech, with a little bit of a connection with history,” says Chacko. “People understand that it’s a history connection, rather than a history lesson. Extensive local research before we launched indicated that if we provide universal shows with local context and languaging, people are ready to experiment with new forms of content.”

History claims to have shaken up the league table in the factual entertainment space, with viewing for the genre soaring by 59%. The channel has a weekly viewing reach of up to 23 million out of around 50 million households. Within a month of launch, History TV18 was the number one channel in large cities. It’s now also the leading factual entertainment channel across India in cities of one million-plus, ahead of Discovery and Nat Geo, and is second to Discovery across India as a whole. Its lead in bigger cities is significant, as it represents 70% of all viewing of factual entertainment, and such towns are home to about 70% of affluent Indians.

“In some areas factual entertainment is beginning to take off. Although I wouldn’t say it’s mainstream yet, it gives us enough positive figures to take things to the next level and introduce more local programming with increased budgets and take bigger risks,” says Chacko.

Leading the way to the next level is History TV18′s first format, a local adaptation of the BBC’s 100 Greatest Britons, remade as Greatest Indians. However, it will deviate fairly significantly from the UK version, as a cross-platform production made in association with TV18′s joint-venture news channel CNN IBN. The show, now in pre-production, is due to launch on History TV18 towards the end of April.

Impressive audience gains notwithstanding, the aim is to grow History TV18′s revenues before launching more local channels, says Chacko. “That’s the big challenge, and I wouldn’t say we’ve crossed that hump yet. It could happen over the next six months to a year, but it all depends on whether subscription revenues come raining in from June.”

Gün Akyuz

Gün Akyuz23-04-2012©C21Media

Digital uncertainty

The mandated digital switchover for cable homes is to be universal—implemented in the whole country by 2014, in the four metros by 30 June this year

Talking Media | Sevanti Ninan

Over the next three months, the four metros are going to see an amazing scramble to achieve a technological shift with a deadline. The mandated digital switchover for cable homes is to be universal—implemented in the whole country by 2014, in the four metros by 30 June this year. The ministry of information and broadcasting (MIB) claims there will be no extensions. Come 1 July and, whoosh, the analog signal will be switched off. India is irrevocably set on the path to universal digitization.


But is it? There is the physical improbability of what is sought to be achieved. To take Delhi, as a case study, MIB estimates 5,000 cable operators, five national-level multi-system operators (MSOs) and 3.3 million cable and satellite connections. Covering all those homes in 90 days means seeding 36,000 homes a day with set-top boxes (STBs). Even if all local cable operators (LCOs) were fired with missionary zeal to achieve this, which they are not, it would take a lot of doing.

Earlier this week, ministry officials attempted to sweet-talk an assembly of cable operators and MSOs into keeping the deadline. MIB is using everything from resident welfare associations to Facebook to chivvy the LCOs along, and get consumers to demand the boxes.

It has behind it the big service providers, some of whom have joint ventures with broadcasters. There was some significance to the fact that this meet which the Federation of Indian Chambers of Commerce and Industry (Ficci) organized in Delhi between ministry officials and the service delivery crowd was chaired by Sameer Manchanda, promoter of DEN Networks Ltd, the cable TV distribution company that has a 50:50 joint venture with News Corp.’s Star TV Group. Star DEN, in turn, has a joint venture with ZeeTurner. The Sun Network has long combined broadcasting and distribution interests, but over the past few years other big broadcasters have been getting into distribution to protect their own interests. That includes direct-to-home (DTH) operations such as Dish TV India Ltd and Tata Sky Ltd.

So far the dominant media discourse on digitization has been about broadcasters needing to get pay revenue due to them because cable operators under-declare, and needing to shed the carriage fees that LCOs levy to accommodate channels in their limited bandwidth. The industry is not achieving its potential because it is hobbled by the loss of revenue on these two counts. (Cable operators counter this argument by saying that pay channels are a third or less of all channels on offer, and free-to-air channels provide television rating points, or TRPs, to the broadcasters which get them advertisement revenue.)

Digitization is expected to bring in transparency, increase distribution capacity, and give the consumer choice, better TV signals, and price regulation, since the Telecom Regulatory Authority of India will set the upper limit for what they can be charged.

But does MIB need to hustle the process along so much? TAM figures on TV homes show that with the advent of DTH, people are opting for digitization in numbers have that brought DTH to a third of all C&S homes and 28% of all TV homes. There are now 42 million digitized homes. As people are able to afford it, they opt for digitization. So we would have got there, sooner or later.

And does digitization end carriage fee demands? No, DTH operators level carriage fees, too, as does Doordarshan’s free DTH service DD Direct. There are simply too many channels around, and too many new entrants, for bandwidth to be limitless enough to accommodate them all.

What media coverage taken up with the problems of broadcasters does not address is the issue of access for those at the bottom of the viewership pyramid.

Academic papers on the digitization experience in other countries point to the fact that it threatens two things: universal access and the public service broadcaster. So what is the score there? Doordarshan’s terrestrial service will remain analog for now, the switch-off date for it is 2017. People who cannot afford cable have the option of accessing its free-to-air signals through the antennae they now use.

Cable operators have lots of poor customers too. Can they afford set-top boxes? At the Ficci interaction, MIB additional secretary Rajiv Takru made two breezy assertions in this regard: give it to them at Rs. 30 a month rental, “anybody can afford that”. He also said, “Stop bothering about the consumer who does not want to pay for services.” Ask the cable community and they will tell you that there is enough gold at the bottom of the pyramid to make it difficult for them to shed their low-income clientele. And renting is easier said than done. What if a migrant labourer migrates with his set-top box, asked an LCO plaintively.

Are we then looking at the making of a new digital divide, this time in television access? Or should we take heart from the government’s poverty reduction figures and assume that we’ll soon be a country where the poor can afford digitization?

Sevanti Ninan is a media critic, author and editor of the media watch websitethehoot.org. She examines the larger issues related to the media in a fortnightly column.

(courtesy: Sevanti Ninan & livemint.com)