FEATURES
India: Free Radicals
08 December 2014
8 December 2014: Free-to-air channels in India are the flavour of the month. Why? Because, among other reasons, advertising on these so-called FTAs is forecast to double over the next three years.Zee Anmol is a huge hit in small-town India. The free-to-air satellite channel, launched in 2013, dominates the list of top 50 shows watched by between 20 million and 25 million free-to-air homes. Zee Anmol is the US$714-million Zee Entertainment Enterprises’ third free-to-air offering after 9X and Zee Smile.Late last year, Viacom18, a joint venture between Network18 and Viacom, launched its free- to-air channel Rishtey.Reliance Broadcast Network's Big Magic has become a favourite in the Hindi-speaking heartland of Bihar, Jharkhand and Uttar Pradesh, thanks to shows such as Har Mushkil Ka Hal – Akbar Birbal (The Solution to All Problems – Akbar Birbal).There are, by some estimates, more than 300 free-to-air channels in India – just over a third of all channels available. At just under 7% of all the time spent viewing television in India and with about US$21 million in advertising, the so-called FTAs are a fast growing part of the US$7.7-billion Indian television business. According to one estimate, the advertising on FTAs could double over the next three years."A FTA is a must for any network," says Raj Nayak, the chief executive of Viacom18 channel Colors.The spectacular rise of ad-driven free channels in a market starting to see pay-TV revenues thanks to digitisation seems contradictory. But it is because of digitisation that the fortunes of free channels are burgeoning.While most of India was analogue, a one-size-fits-all pricing, programming and distribution strategy worked. Currently, about half of India's 160 million TV homes are digital. A bulk of these homes pay to watch fresh, premium content on Star Plus or Zee, among dozens of other channels. Others are ...
8 December 2014: Free-to-air channels in India are the flavour of the month. Why? Because, among other reasons, advertising on these so-called FTAs is forecast to double over the next three years.Zee Anmol is a huge hit in small-town India. The free-to-air satellite channel, launched in 2013, dominates the list of top 50 shows watched by between 20 million and 25 million free-to-air homes. Zee Anmol is the US$714-million Zee Entertainment Enterprises’ third free-to-air offering after 9X and Zee Smile.Late last year, Viacom18, a joint venture between Network18 and Viacom, launched its free- to-air channel Rishtey.Reliance Broadcast Network's Big Magic has become a favourite in the Hindi-speaking heartland of Bihar, Jharkhand and Uttar Pradesh, thanks to shows such as Har Mushkil Ka Hal – Akbar Birbal (The Solution to All Problems – Akbar Birbal).There are, by some estimates, more than 300 free-to-air channels in India – just over a third of all channels available. At just under 7% of all the time spent viewing television in India and with about US$21 million in advertising, the so-called FTAs are a fast growing part of the US$7.7-billion Indian television business. According to one estimate, the advertising on FTAs could double over the next three years."A FTA is a must for any network," says Raj Nayak, the chief executive of Viacom18 channel Colors.The spectacular rise of ad-driven free channels in a market starting to see pay-TV revenues thanks to digitisation seems contradictory. But it is because of digitisation that the fortunes of free channels are burgeoning.While most of India was analogue, a one-size-fits-all pricing, programming and distribution strategy worked. Currently, about half of India's 160 million TV homes are digital. A bulk of these homes pay to watch fresh, premium content on Star Plus or Zee, among dozens of other channels. Others are falling off the television map because they cannot afford the higher prices that come with digitisation; for these a bouquet of FTAs is the answer.As the market of about 800 million viewers divides into those who can pay and those who cannot, between new TV set owners and those who have had one for a long time, the business models driving different parts of the Indian TV market are segmenting.The former one-size-fits-all mindset is now breaking up to cater to the different markets within India – each at different stages of growth and maturity."FTAs are more for smaller geographies where paying ability and infrastructure are challenges," says Sidarth Parashar, media buyingagency GroupM's head, pricing and investment. FTAs work particularly well in poorer parts of metro-India and in small-town and rural India. Marketers such as Hindustan Unilever or Procter & Gamble use these channels to hawk soaps and shampoos to prosperous villagers and in semi-urban India, the fastest growing part of the Indian economy today. If small-town and rural growth has been a huge factor in deciding ad spends in the past, what is driving FTA growth now?Two major changes have pushed broadcasters to start paying attention to this market in the last couple of years.The first is that the penetration of TV in rural India has risen sharply thanks to the array of distribution options now available – cable, direct-to-home (DTH) and even mobile.DD's Freedish, a free satellite service offered by state-backed broadcaster Doordarshan (DD), has been the biggest catalyst in this market. At an estimated 18 million homes, DD's Freedish is bigger than privately owned and operated commercial platforms Tata-Sky and Dish TV.Freedish is either bringing TV to homes that never had it or replacing dreary Doordarshan programming delivered to about 10 million terrestrial homes. More than 30 channels, such as Zee Anmol and Star Utsav, pay anywhere between US$500,000 and US$1 million a year to be on the platform."It is not FTA but good content coming onto cheaper platforms that is finding its market," says L.V. Krishnan, TAM Media Research's chief executive. TAM, a Nielsen-Kantar joint venture, is currently the only agency providing TV ratings in India.Krishnan reckons that there are so many emerging markets in India, by languages, geographies or by genres, that there will always be a market for FTAs at the basic level. He draws an analogy with English-language entertainment; for a long time, older seasons of popular English-language shows have had a market in different parts of the world, including India. Similarly, the older seasons of popular Hindi shows have a market within other parts of India.India currently has 234 million homes and 160 million TV homes. This is rising by between six million and 10 million every year. "Good content is defined by what is available," says Krishnan, adding that, for many homes, the FTAs, no matter how old their content, are offering fresh content.Krishnan reckons that most shows reach only 30% to 40% of the target audience in their first telecast and 60% by the second telecast. So the potential to keep finding new audiences and to monetise them exists for a long time.Earlier, these homes wouldn't have mattered to programmers. Until about three years ago, almost all programming was focused on the top 40 Indian towns (of a total of more than 160) that housed the sample homes on which TAM calculated its ratings.This then brings us to the second reason broadcasters are focused on small-town and rural India – they will soon start showing up on ratings numbers for the first time.Previously, India ratings have not fully captured small-town India and rural India was largely left out. A new industry body, The Broadcast Audience Research Council (BARC), is working on a new rating system. BARC will cover 20,000 homes, roughly twice that of the current system. And it will include rural and small-town India. These are the markets that companies selling financial services, consumer products and services are very interested in. BARC data is expected from the second quarter of 2015.This is pushing broadcasters to get their FTA act together.There is a third, albeit tangential, reason.Bharat Ranga, Zee's former chief content and creative officer, says that a lot of below-the-line or non-mass media money could soon start coming to television. More than 40% of the US$7.2 billion that marketers spent in India in 2013 went to events, on-ground activities and other things. As TV and audience measurement spreads to the media-dark areas, there is the hope that some of this money will start coming to TV.The popularity of FTAs is simply evidence of that, say some broadcasters. "Because Bihar is such a media dark market, inventory (on Big Magic) is usually sold out," claims Tarun Katial, Reliance Broadcast Network chief executive.However, FTAs are a big story only in the Hindi heartland. This is because penetration in the Hindi-speaking markets – the largest in the country – has always lagged behind potential and is just playing catch up. In markets such as Kerala, Tamil Nadu or Maharashtra, the big penetration push came in the 1990s and the early part of the millennium, then came the FTAs. Most audiences in these markets have outgrown FTAs. But as they move to pay, it is the FTA channels they started with – such as Sun TV in Tamil Nadu or Eenadu in Andhra Pradesh – that have set the context. Similarly if Rishtey becomes popular, "when those markets go pay, the brand would have been established," says Nayak. As incomes start to rise, and propensity to pay increases, the hope is that viewers will be willing to pay a subscription fee for brands they already know and like. Natural evolution or wishful thinking? Past experience says its the former. Future performance will determine the rest. twitter.com/vanitakohlikContentAsia Issue 6, 2014