Attributing this wild growth to Indias burgeoning economy, analysts warn that the countrys total advertisement pie may leave too little for too many because ad spends are not growing at the same rate as the number of TV channels.
There may not be enough money for all the broadcasters, says one observer of the media and entertainment industry. But this may not really lead to a bust, feels another.
The channel space is considered to be booming right now mainly due to revenue they are able to garner. Television channels get revenue from two major sources advertising and subscription. As the advertising spend is measured as a percentage of the GDP of the country, as long as the country is on a fast-track of growth, there is no reason for the GDP to fall, Smita Jha, principal consultant (entertainment & media practice), PricewaterhouseCoopers, says. The economics show that there is no reason for the channel boom to go bust, she adds.
But there will be a consolidation of sorts with many weak channels being forced to exit the fray or sell their businesses to larger, more established broadcasters offering a bouquet of channels. Those broadcasters offering a number of channels in a bouquet have a better chance to survive as they offer the advertiser an all-or-nothing deal where the advertiser has to buy space on even the weak channels, Jha says. This allows a weak channel to make money as well, she points out.
With around a 100 million households with TVs in the country, most of which are analogue, the advertiser has only one tool to gauge returns the TRP system. This is not always accurate, but with the move to digitise televsion, concerns over addressability will take care of themselves. A broadcaster will be able to know exactly what and how much a person watches on a channel and the same goes for advertisers, says an analyst.
In around 100 million homes with TVs, there maybe 4 million viewers who essentially watch a maximum of around 20 channels. Of these, the major ones will remain the more popular as they can afford to have compelling content but some others might be removed or added to the list depending on the content, Jha says. This leaves major broadcasters like Star and Zee in a dominant position, while other individual channels may just get replaced by those with content that the viewer finds more interesting, she says.
But stand-alone channels may not always be at the receiving end. Star -and ABP-promoted MCCS, which has the news channel, Star News, has seen phenomenal growth and has now even branched out to regional news channels. Decidedly, distribution is the key.
Existing broadcasters are now entering niche genres by putting together unique content. This gives advertisers a focused viewer base that attracts a premium.
Apart from this, there is a wide range of stand-alone channels coming from virgin broadcasters with no previous experience in the broadcasting space. But they have deep pockets to take on the competition and stay in business.
The space is booming and 2008 will see even more expansion and consolidation compared with 2007.