A few years ago, quite early in my sales career, during a sales review meeting where we were brainstorming on strategies to optimise revenue, there was a heated discussion to a suggestion made by one of the seniors to offer freebies to customers to ring in incremental sales. The big debate was — will customers respond to freebies? It was unanimously agreed by all participating that freebies always work across customer segments/markets and will deliver the required results.
On one hand, the growth in DTH services, advent of HD and now emerging 4K technology has meant an increase in costs with regard to investments in quality content, programming and distribution if they have to keep pace with the growing consumer demand and competition. But on the other side, consumers are really not ready to pay increased subscription fees for real value content, especially when it comes to their daily dose of TV viewing since they are quite happy with the content provided by existing FTA channels in their basic package.
Free-to-air channels due to their availability to be tuned into TV homes free of cost (urban and rural) have increased their penetration across markets, especially in tier-II, tier-III and rural markets. This has led to an increased share of viewership leading to higher ratings and GRPs. This in turn has made them cost effective and viable options for advertisers/media agencies fixated with GRP and CPRP (cost per rating point) benchmarks for campaigns. It has also meant achieving reach and OTS (opportunity to see) objectives at much lesser costs, making FTA channels a very attractive option for their brand campaigns across clients.
This trend is quite clear in some genres such as GECs, movies, news, niche etc where FTA channels have suddenly made huge gains from a viewership and rating perspective making them hot favourites for advertisers and media agencies.
Given this backdrop, the temptation for hitherto pay channels to go the FTA route is very high, especially as they have already invested in good content and can be confident of getting good ratings, making them the obvious choice when it comes to advertising for brands. It is much easier for the larger networks with multiple channels in the same genre to employ the FTA route for select channels in their bouquet making their advertising offering more attractive as they would be able to offer better bang for the buck.
It is not a very complicated choice for them, as compared to standalone channels, given their upside with regard to the revenue from advertising as compared to the subscription revenue, which is still a very tough market and much harder to come by. With increasing penetration of TV across markets and the growing number of advertisers on TV, this trend is here to stay at least for a short to mid-term period.
The author is a media consultant and former CEO, Percept Media