1. Content is king, but revenue poor on English GECs

Content is king, but revenue poor on English GECs

Rising costs of broadcasting new shows simultaneously as the US, and lesser ad slots mess up profit margins for channels

By: | Published: May 24, 2015 3:31 AM
English GECs, Game of Thrones, HBO, Homeland, White Collar, Star World, Vampire Diaries, Zee Cafe, Anurag Bedi

From Game of Thrones on HBO Defined, to Homeland and White Collar on Star World and Vampire Diaries on Zee Café, English GECs are enthralling Indian audiences with the latest seasons of widely popular shows.

From Game of Thrones on HBO Defined, to Homeland and White Collar on Star World and Vampire Diaries on Zee Café, English GECs are enthralling Indian audiences with the latest seasons of widely popular shows. But the revenue from all the new shows that these channels are airing is not proportional to viewers’ enthusiasm. Despite this, media networks continue to buy expensive content.

As Anurag Bedi, EVP and business head, Zee Studio and Zee Café, says, it’s the demand for such content that has forced broadcasters to shift from repeat format to original content. “Teenagers living in metros and tier-II cities, who follow these shows on their smartphones, are the primary consumers of premium content on the television screen. Hence, to maintain viewership, it has become important for broadcasters to focus on original content,” says Bedi.

The cost of acquisition of English content has seen a steep rise in the past couple of years. Library content or old seasons, which earlier used to cost $2,000-3,000 per hour, today come at a cost of $8,000-10,000 per hour, depending on the popularity of the show. The cost of acquisition of English soaps, which are either simulcast or aired within 24 hours of being aired in the US, is $13,000-14,000 per hour. “With content no longer being sold at cheap rates, broadcasters tend to ink long-term deals. The tenure of content deals varies from two-three years, which allows broadcasters to air the shows multiple times,” says Rajni Menon, vice-president, Carat India, a media planning and buying agency.

Agrees Saurabh Yagnik, executive vice-president and business head, Sony Pix and AXN India, who says that three kinds of deals are inked today. “The first one being called ‘Premiere/First Output’. As per this, a broadcaster can either telecast a show along with the US or within 24 hours of it being telecast in the US. After this, one usually looks to build a library by acquiring old seasons. Finally, there are times when a broadcaster acquires library content along with the new season, besides telecast right for seasons under production,” says Yagnik.

However, despite spending a good amount of money in buying the telecast rights of English content, when
it comes to making profits, broadcasters are yet to strike it rich.

“There are not enough subscribers for these channels, so this leaves the  broadcasters with limited subscription revenue and their dependency on advertising increases. This is also the reason why despite being an ad-free channel originally, Star World Premiere  and Star World HD today run ads. One should not be surprised to see all of them resorting to advertising in future,” says Menon.

Compared to standard-definition channels, which show 12-16 minutes of ads in an hour, premium channels only show two minutes of ads and HD channels show four minutes of ads.

On an average a 10-second commercial on an English channel is sold for R1,500-2,000. Broadcasters can charge R5,000-6,000 for a 10-second ad spot in case of current seasons. Weekends are the only time when broadcasters actually sell the ad slots at a premium rate. The weekend package, which includes six to seven hours of back-to-back telecast of a show, is sold for R30,000-40,000. For example, Star World, which recently launched ‘Binge Weekend’, showcased Homeland Season 4 on May 2 and 3 as part of this initiative.

Analysts believe that the fate of English GECs is similar to that of sports channels. “While broadcasters pay a huge amount of money to acquire content, they are not able to retrieve even half of that cost. English GECs plays a key role in distribution. For example, if a media network wants to distribute its channels in south Mumbai or Delhi and does not have an English channel as part of the bouquet, the network will not find many takers. Therefore, from the point of view of a holistic offering it is important to have at least one English channel,” says Jehil Thakkar, partner and head, media and entertainment, KPMG in India, an audit firm.

  1. P
    Pavan R
    May 25, 2015 at 12:34 pm
    Nice story, hree; offers interesting perspectives on a genre sold more on perception than ratings / rankings. With content acquisition costs rising and subscription revenues plateauing, things will not be too easy. But network and bouquet strength on distribution and s will definitely stand some of these businesses in good stead.
    Reply

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