Over the past two weeks, two serials, an epic, a top-grossing film and a dance event has hooked most viewers on television. With the remote controlling the TV like never before, thanks to an explosion of channels across diverse genres, viewer loyalty cannot be taken for granted.

And if 2008 drove this point home, 2009 will be tougher because of the circumstances. For while the Indian TV industry is poised for phenomenal growth in the next five years, fact is no one really budgeted for a severe global financial crisis.

Are the industry fundamentals strong enough to ride out the storm? Depends on who you put the question to. While nich? channels claim that thanks to different programming, the viewers are with them, general entertainment channels, GECs as they are known as in TV jargon, admit that the age-old formulaic, follow the leader strategy will not work anymore. Remember the very public ouster of one of the ?popular? saas-bahu serials from one of the top GECs?

Already, there?s talk of ?consolidation? and ?a shakeout?. Ask the players what?s in store for 2009-10, and they say that?s a long period for the TV industry. Hear Nitin Vaidya, COO, National and Regional Channels, Zee TV: ?For the television industry, the period 09-10 is very long. It is beyond prediction.? It?s just been days since the Nai Dunia Group bought over INX News and Nai Dunia CEO Vinay Chhajlani, also founder MD of language portal Webdunia, affirms the TV industry in India is ?nascent? and ?still needs to mature?.

A lot of that growing up, point out analysts, will happen in 2009. As long as there were funds, new channels were being floated at random and analysts point out that some took on a lot more risks than they could afford.

Suddenly, with a severe liquidity crunch across sectors, it?s forcing a rethink on costs ? and everything else. Smita Jha, Associate Director, Media and Entertainment Practice PwC, says there were no large deals in 2008, no new investments in old channels and expansion plans are on hold. But having said that, Jha points out that there?s tremendous growth potential because TV has barely covered 50% of the country, direct-to-home TV has 10 million subscribers in a country of a billion plus people and the ratio of advertisement revenue on TV is still low. ?Even a 0.1% increase will have big money coming in,? she adds.

According to a Ficci-PwC report, the Indian television industry is projected to grow by 22% over the next five years to reach and estimated Rs 60,000 crore in 2012 from Rs 22,600 crore in 2007. But first, there are certain issues, like content, distribution charges, channel costs and so forth to be sorted out.

GECs hit a rough patch

It?s been particularly tough for general entertainment channels. For almost a decade there was no competition and in 2008 there was too much. At least two new players, Viacom 18?s Colors and NDTV Imagine, did their bit to shake up the market, the former with a reality show and new soaps, the latter by bringing epics back on primetime. ?There are many players now dishing out variety and we have moved into an era where we can?t take viewer loyalty for granted,? says Albert Almeida, Business Head, Sony Entertainment Television.

Quality content and programming will be the main focus in the coming years. Vaidya of Zee TV admits that the biggest challenge of leading channels will be how to maintain profitability. But he claims Zee is at an advantage because ?We have been in the industry long enough to know of its intricacies and nuances. We have also harnessed and utilised new talent with Sa Re Ga Ma Pa and will soon be coming with a new dance reality show, Dance India Dance, that aims to showcase nation?s dancing talent.? That?s the only way to stay profitable, says Vaidya, ?We have to break through the clutter.? Says Anooj Kapoor, Business Head, SAB TV: ?If GECs are able to offer differentiated programming, they will be able to sustain. Thanks to the recent spurt of multiple themes in commercially successful films, the consumer is no longer satisfied with more of the same on television and is thus looking for fresh and differentiated content.?

Niche channels upbeat

Varied content is an area which is keeping nich? channels optimistic. Says Shantonu Aditya, Executive Director, UTV Global Broadcasting: ?In the Hindi GEC space, there are too many channels and too much clutter. They will have a difficult 2009. But there?s a great opportunity for special interest genres.?

?With viewership getting fragmented, there?s a great future for nich? channels but it?s going to be a challenge for mass channels,? adds Aditya. Says Nina Elavia Jaipuria, Vice President and General Manager, Nick India, ?There is always increased sampling when a new channel is launched but eventually it is the content that helps in sustaining the ratings. A host of channels were launched last year due to which viewership continued to get fragmented and this will eventually lead to consolidation in the coming years.?

?Actually, the taste of the viewer is changing, they want entertainment with information,? confirms Rajiv Bakshi, Director, Marketing and Communications, Discovery, Networks Asia-Pacific. ?Our 9 ?o clock viewership has gone up by 62% in the fourth quarter of 2008 and the prime time viewership has gone up by 47% in the same quarter. Our channel share is 126% higher than Star Movies on the 9 ?o clock slot,? he adds.

Path to growth

Aditya says digitisation will drive the next wave of growth. Already, there are several players in the direct-to-home space, thus offering a variety to viewers. ?If earlier we had a buffet menu, now there?s a la carte menu,? points Aditya.

According to Vikas Bali, President, Den Network, there was an irrational exuberance that impacted the news channels first and then the GECs. ?A few years ago there were only three to four GECs, while currently we have almost eight or nine major GECs. Some of these channels were successful and there were others that fell out of the race. Thus, in the coming years we will witness consolidation in the Indian television industry. There will be a marked growth in TV content and from a distribution point of view; this growth will be a major advantage,? he adds.

2008 saw a sharp rise in the number of DTH players as well. Players like Reliance, Bharti, Sun Network etc entered the DTH sector. New distribution platforms like DTH and IPTV are likely to increase the subscriber base as well as push up subscription revenues. Says Tejal Shah, Vice President, West and South, India Media Exchange: ?Digital platforms like DTH services will have a positive effect on the TV industry due to the transparency that both broadcasters and advertisers will be provided with. DTH will also bring an enhanced quality of content that will in turn amount to an overall growth in this sector. This year DTH will be the biggest driver of revenue.?

Despite the economic meltdown, analysts feel that overall ad spends on TV are likely to rise by 8% as the reach of the medium is quite high. There will always be the channels that will outshine other channels and they will continue to raise the price of their ad spots. For instance, Colors continued to hike its inventories despite the economic slowdown.

Says Kapoor of SAB TV: ?In the Great Depression of 1930, the entertainment industry grew as others fell. In times of recession, people would turn more and more to television viewing in order to distract them from the prevalent gloom. So GECs should be able to sustain themselves.? Also, he points out that while advertisers of high investment products like consumer durables may curtail advertising budgets as consumers become conservative in spending, people will continue to buy daily consumption items. ?Thus FMCGs will continue to advertise and provide revenues to channels,? he adds. Ask Vaidya whether advertising has slowed down on TV and he quips: ?It hasn?t as of now. And if it does, we will surely be affected.?

How the bigger picture will unfold only time shall tell.

With inputs from Monalisa Roy

Back to the drawing board

For the last two years, when the TV industry was witnessing an explosion of growth, costs were escalating too. For instance, absurd amounts were being paid for channel placements and distribution. But all that?s about to change soon.

?Last year carriage fees ? the money a channel has to pay to the cable operator or the direct-to-home player were high, now it?s coming down,? says Shantonu Aditya, Executive Director, UTV Global Broadcasting. As most TV channels look at ways to cut costs, there?s lots of ?Re-evaluations and renegotiations going on,? according to Albert Almeida, Business Head, Sony Entertainment Television. ?Every rupee is going to be fought for. Excess of costs in distribution, content and production will be rationalised,? says Almeida. ?2009 will be the year of managing your bottomlines,? predicts Almeida. ?It will be about ensuring margins are protected.? For a leaner, tighter operation, some production houses are looking at other options too. For instance, UTV is already present in Sri Lanka and the Maldives with two of its five channels and will be on the US direct-to-home platform from January 26. Says Nitin Vaidya, COO, National, Regional Channels, Zee TV: ?It?s all in the content and its promotion. That?s the only way to go. Provide relevant content and then promote it sufficiently.? There?s clearly a shift also happening in the regional TV space. ?The momentum is picking up,? says E&Y?s Farokh Balsara, National Sector Leader, Media & Entertainment Practice. ?There?s growth potential in Bengali, Marathi, Gujarati, Malayalam and other language channels. The industry is just waking up to capture that,? he adds. ?Given the liquidity crunch,? says Balsara, ?There?s going to be a lot of focus on new alliances? everyone will try to de-risk as much as possible.? Channels are already going back to the drawing board to find out the best way possible to steady the ship.