Revenues for television broadcasters in India are estimated to have risen by 13.2% year on year during the 2010-2011 financial year, with the popularity of general entertainment channels sustaining this median pattern.
According to a new report on by India Credit Rating Agency (ICRA), advertising revenue continues to be the key driver of broadcaster revenue contributing about 80% of income, says the ICRA, which sampled a number of India’s general entertainment and news broadcasters for its July 2011 TV industry study.
Conventional analogue cable TV distribution, however, remains ‘plagued’ by under declaration of [the] subscriber base, according to the agency, which pinpoints both an ‘inability to grow the subscription pie adequately and competitive pressures’ as limiting the ability of channels to invest in content.
The report authors point to the advent of digitisation as offering a significant boost for subscriber figures.
“While the number of direct-to-home (DTH) subscribers witnessed a growth of 62% in 2010-11, the pace of digitisation is set to get a fillip by the recent move by the Ministry of Information and Broadcasting requiring the four metros in the country to be fully digitized by March 2012, and the rest of the country to be digitised by December 2014,” says ICRA.
“This is expected to improve the subscription revenues in the medium-term, thereby providing a healthy upside for the broadcasters,” the agency adds.
Digital distribution will, ICRA believes, help remove the capacity constraints faced by India’s extensive and fragmented analogue cable distribution network, and begin to rationalise the carriage costs for broadcasters. Digitisation should also make niche channels more viable, given the increased ability for broadcasters to target niche audiences with an effective reach.
Competition between the vast array of same genre channels competing for audience share is only set to increase with the clearance in May of licenses for 75 new channels. Although recent efforts to consolidate channel bouquets may improve the bargaining power of broadcasters to some extent, ICRA suspects their pricing power will remain under pressure because of the vast number of channels coupled with consolidation among media planners at one end and the direct to home (DTH) and large multi system operators (MSOs) at the other.
The growth recorded in broadcaster’s subscription revenue has, says the report, been facilitated by increasing digitisation – and predominantly by the addition of subscribers to DTH services in India. DTH companies have witnessed a median revenue growth of 22.8% in the fourth quarter of 2010-2011, compared with the same quarter in 2009-2010, says ICRA.
The industry estimates advertising sales grew 17% during the last calendar year, driven by an increased spend on fast moving consumer goods, services, and cars, according to FMCG.
Even the relatively weak performance of news broadcasting companies, which witnessed a year on year revenue growth of 7% during the year was, says ICRA “buoyed by the strong Q4 performance with a year on year growth of 18.2% during the quarter.
“Traditionally, news broadcasting companies face seasonality with H2 being usually stronger than H1, led by the parliamentary budget sessions and the festive season facilitating higher advertisement spends by the advertisers,” added ICRA.
Ultimately, the agency believes India’s television broadcasting industry has performed well in the past year – boosted by revenues generated by the ICC Cricket World Cup during the fourth quarter of the 2010-2011 financial year, and a healthy growth in income from general entertainment channels.
According to a new report on by India Credit Rating Agency (ICRA), advertising revenue continues to be the key driver of broadcaster revenue contributing about 80% of income, says the ICRA, which sampled a number of India’s general entertainment and news broadcasters for its July 2011 TV industry study.
Conventional analogue cable TV distribution, however, remains ‘plagued’ by under declaration of [the] subscriber base, according to the agency, which pinpoints both an ‘inability to grow the subscription pie adequately and competitive pressures’ as limiting the ability of channels to invest in content.
The report authors point to the advent of digitisation as offering a significant boost for subscriber figures.
“While the number of direct-to-home (DTH) subscribers witnessed a growth of 62% in 2010-11, the pace of digitisation is set to get a fillip by the recent move by the Ministry of Information and Broadcasting requiring the four metros in the country to be fully digitized by March 2012, and the rest of the country to be digitised by December 2014,” says ICRA.
“This is expected to improve the subscription revenues in the medium-term, thereby providing a healthy upside for the broadcasters,” the agency adds.
Digital distribution will, ICRA believes, help remove the capacity constraints faced by India’s extensive and fragmented analogue cable distribution network, and begin to rationalise the carriage costs for broadcasters. Digitisation should also make niche channels more viable, given the increased ability for broadcasters to target niche audiences with an effective reach.
Competition between the vast array of same genre channels competing for audience share is only set to increase with the clearance in May of licenses for 75 new channels. Although recent efforts to consolidate channel bouquets may improve the bargaining power of broadcasters to some extent, ICRA suspects their pricing power will remain under pressure because of the vast number of channels coupled with consolidation among media planners at one end and the direct to home (DTH) and large multi system operators (MSOs) at the other.
The growth recorded in broadcaster’s subscription revenue has, says the report, been facilitated by increasing digitisation – and predominantly by the addition of subscribers to DTH services in India. DTH companies have witnessed a median revenue growth of 22.8% in the fourth quarter of 2010-2011, compared with the same quarter in 2009-2010, says ICRA.
The industry estimates advertising sales grew 17% during the last calendar year, driven by an increased spend on fast moving consumer goods, services, and cars, according to FMCG.
Even the relatively weak performance of news broadcasting companies, which witnessed a year on year revenue growth of 7% during the year was, says ICRA “buoyed by the strong Q4 performance with a year on year growth of 18.2% during the quarter.
“Traditionally, news broadcasting companies face seasonality with H2 being usually stronger than H1, led by the parliamentary budget sessions and the festive season facilitating higher advertisement spends by the advertisers,” added ICRA.
Ultimately, the agency believes India’s television broadcasting industry has performed well in the past year – boosted by revenues generated by the ICC Cricket World Cup during the fourth quarter of the 2010-2011 financial year, and a healthy growth in income from general entertainment channels.