It can be a game changer

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The Indian television industry is preparing to usher in one of the most significant changes in a decade with the Digital Addressable System (DAS) for television content coming into effect across the four major metros from November 1.

The upgrade from an analogue to digital system is expected to be a ‘game changer’ for the industry and will have a direct bearing on advertising.

The TV advertisement pie is currently estimated at Rs.11,500 crore and KPMG in India said it grew 12 per cent in 2011.

Digitisation will lead to broadcasters having more transparency on the number of subscribers and a more accurate picture of cable and satellite (C and S) households. Underreporting of C and S household numbers has been a major issue, leading to a loss of revenue for the exchequer.

It will also benefit viewers as it offers wider choice. Digital TV will offer more than 500 channels as opposed to 100-120 offered by the cable operators. This will impact the contours of the industry.

“In the short term, with access to many more channels, viewership will get spread across genres and advertising budgets may rise,” says L.V. Krishnan, CEO, TAM Media Research. “Advertisers can adopt a more segmented, targeted approach.”

In the long term though, he feels, there will be a significantly higher impact of advertising, “particularly as local advertising increasingly comes on board. We can expect regional channels to get a 30-40 per cent share of it and about 10-15 per cent growth from the migration of local print and radio advertisements to TV.”

At a more fundamental level, digitisation will change the way broadcasters generate revenue. Most channels depend on advertising for revenues but digitisation will hike subscription revenue. “Subscription, as a revenue stream, will definitely increase,” says Jehil Thakkar, partner & head, media & entertainment sector, KPMG in India. “In fact, subscription revenue for broadcasters is estimated to grow at a cumulative annual growth rate (CAGR) of 29 per cent from 2011 to 2016, driven by higher declaration as a result of digitisation, as well as increased bargaining power of broadcasters through aggregation of distribution.”

While there were doubts about the preparedness of the industry to implement the switchover in time, industry players are confident.

R.C. Venkatesh, CEO, Dish TV, the leading direct-to-home (DTH) player, says: “The DTH industry is well prepared to implement the switchover in the four metros. We were prepared last time as well. Out of the existing 45 million digital homes in India, 40 million are DTH subscribers. The DTH industry has invested Rs. 20,000 crore already.”

Even the Multi-System Operators (MSOs) claim to be ready.

“It is a change in the ecosystem and the transition phase could be rocky but the National MSOs are completely prepared for a smooth implementation,” asserts Ashok Mansukhani, whole-time director, Hinduja Ventures, and president, MSO Alliance. “MSOs have spent hundreds of crores to ensure timely deployment.”

http://www.thehindu.com/news/national/article3875070.ece
 
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