Every morning before work, and in the evening, after coming back home, Srikanth Iyer figures out how to spend his free time. When not out and about in Bengaluru city, the 33-year-old software professional surfs the Internet for a while, and either listens to music, or decides to watch something on Television. And that something, on many a day, is a show on National Geographic, Discovery channel, or TLC.
On being asked what he watches, he rattles off names of shows such as Dead by Dawn, Africa’s Deadliest, and Wild Encounters that he says are regular choices for him. He also watches cookery shows by celebrity chefs Gordon Ramsay (Gordon Ramsay: Uncharted), Sarah Todd (My Restaurant in India), among others.
Audiences like Iyer are the ones that broadcasters of niche channels have banked on, especially last year, which saw the implementation of the New Tariff Order (NTO) by the Telecom Regulatory Authority of India (TRAI) on February 1, and a consequent dent in their viewership and revenues. Even as the industry completes a year of being in the NTO ecosystem, with broadcasters having looked for ways to modify and grow themselves in the meantime, further amendments to NTO and interconnect regulations were released by TRAI on January 1, 2020. Though the new amendments are far from being implemented as broadcasters have gone to court against TRAI, what experts say is that niche channels will face big problems due to capping on the number of Free to Air (FTA) channels by a broadcaster, and may end up moving directly to OTT/digital platforms in the extreme case.
NAVIGATING THE NTO ECOSYSTEM
Niche channels (English Entertainment, English Movies, Infotainment, and Lifestyle) faced a setback in 2019, especially English language channels that are said to have lost both audiences and advertisers. As the year passed, additional toll from a weakening economic environment further pressured the channels, something that has impacted the media and entertainment industry as a whole.
Phrases such as ‘reset for the industry’, ‘huge transition’, and ‘biggest disruption for the industry’ were commonly used to address the change in the ecosystem following the implementation of NTO.
Girish Menon, Partner and Head, Media and Entertainment, KPMG India, believes that niche channels have been facing headwinds since the implementation of the NTO, especially the ones that are not part of a big network. “Big broadcasters with presence in niche segments have been able to place some of their niche channels in the bouquets that they offer. In addition, their relationships with distributors enables them to position some of these channels in different DPO packs,” notes Menon.
Even in terms of advertising money, there was a move towards bigger broadcasters, which cushioned the impact from the decline in niche channels.
AND NOW, HERE’S NTO 2.0
Here’s how amendments to NTO, recommended by TRAI, affects niche channels
By Tasmayee Laha Roy
How the new tariff order (NTO) regime has affected broadcasters who offer niche channels has to be seen now in the light of NTO 2.0 – the Telecom Regulatory Authority of India’s amendments to NTO announced on January 1, 2020. The talking point is whether the new recommendations - intended to address market anomalies as per TRAI - are actually jeopardising the future of niche offerings by broadcasters.
Broadcasters with niche channels complained that NTO had no cap for the maximum number of Free to Air (FTA) channels offered by a broadcaster earlier, so niche channels could move towards FTA. However, capping has now made the segment highly competitive.
Niche channels are generally the non-driver channels which were bundled in a bouquet by broadcasters in the NTO regime. But has capping MRP of a channel at Rs 12 against the earlier Rs 19 actually helped in creating more opportunities for all channels as TRAI claims?
Explaining how NTO 2.0 impacts niche channels, Naval Seth, Deputy Head of Research at Emkay Global says, “Broadcasters have been pushing non-driver channels along with mainstream channels in bouquets. We believe that the reduction in channel pricing cap will impact broadcasters only if a large proportion of subscribers shift to a-la-carte model and subscribe to fewer channels. Large broadcasters (Zee, Star and Sun TV, etc.) that have driver channels (featuring in top 3) across the genres will have limited impact or risk of revenue loss due to the shift to a-la-carte. However, the impact could be in the form of lost advertisement and subscriber revenues due to the non-subscription of non-driver channels.”
“The audience looks for convenience. They don’t want to scan through a-la-carte offerings for niche channels. The niche channels will, therefore, be ignored,” says a senior member of the broadcaster fraternity who wants to remain anonymous. English, for instance, is one niche category that has been amidst bad times since the implementation of NTO and NTO 2.0 seems to provide no relief to the category.
A KPMG report titled India’s Digital Future – Mass Of Niches mentions that the introduction of the new regulatory order in the last quarter of FY19 has added to the challenges with the uptake of English pay-TV channels taking a hit and channels expecting a drop of 25-30% in their revenues post the NTO. Only the channels/broadcasters that have been able to place themselves in a sufficient number of DPO packs are likely to find decent pick-up.
So where does it leave the niche channels? Will they look for greener pastures in terms of newer platforms? “We believe that India will remain a bouquet subscription market while increasing options of lower a-la-carte offering do pose risk for broadcasters amid rising acceptance of OTT platforms,” said the analysis by Emkay Global.
“There was a flight to the leaders in terms of advertisers,” says Jehil Thakkar, Partner and Leader, Media & Entertainment Sector, Deloitte, adding that while marketers were not sure whether they would pick a small channel or not, they would always look at having channels from larger networks. Industry experts, and BARC data, however, indicate that while there has been some impact, many of the channels have weathered the storm and have held their own.
“On the entertainment side, there was a period of flux, primarily because the first set of adoption was for the base, or base plus one packs, and therefore, the adoption for English entertainment took some time,” says Vivek Srivastava, President, Strategy and Business Head, English Entertainment Cluster, Times Network, adding that in about three or four weeks after NTO came in, the channels were back on ground.
There was a period of data blackout initially that also impacted the niche channels, say some of the experts. “There was only back-up data at that point of time, and niche channels struggled quite a lot then,” says Anand Bhadkamkar, CEO, Dentsu Aegis Network India. Over the last six months that has settled down, he adds.
Navin Khemka, CEO, MediaCom South Asia, says, “A combination of various factors like NTO, premium pricing, SD feed, HD feed, OTT players’ aggressive content led to audiences migrating to newer platforms.”
Ashish Pherwani, India Media & Entertainment Leader, EY, also says, “What we’re seeing is a movement of English audiences to OTT because of the quantum of excellent content, getting bundled at low data prices.” He adds that the infotainment channels have held up in the post-NTO scenario.
However, according to Karan Taurani, VP - Research Analyst (Media & Consumer Discretionary), Elara Capital, niche channels of broadcasters will face big problems due to the capping on the Free to Air (FTA) front. As per the earlier order, there was no capping for maximum number of channels in FTA, which implied that more niche channels would move towards FTA. Now, as per the amendments in NTO, DD channels will not be a part of the FTA pack and distributors cannot give more than 160 channels in the FTA pack. “This capping is a negative for the ancillary channels of broadcasters as the FTA cap makes the segment highly competitive. We expect niche genre channels to move directly to OTT/digital in that case,” explains Taurani.
NICHE & NOTEWORTHY
