Although TRAI has granted a breather to the broadcasting industry by allowing players to sell their existing packs/plans/bouquets to subscribers till January 31, broadcasters such as Times Network, Viacom18 and ZEEL have already launched value packs and drawn up fresh à la carte price lists. Experts believe that the TRAI tariff order — that mandates broadcasters to declare their channel pricing as well as whether a channel is free-to-air (FTA) or pay — will lead to greater transparency across the value chain, but reviewing channel pricing and creating the right bouquet of channels will be crucial. “Broadcasters need to ensure that the packages/value packs are attractive enough for viewers to consider them. This will, in turn, ensure viewership,” says Navin Khemka, CEO – South Asia, MediaCom.
However, experts say that the TRAI order lacks impact without the 15% discounting cap on the bouquet price.“The 15% cap would have changed the dynamics significantly and allowed for a real level playing field,” says Kinjal Shah, VP and co-head – corporate sector ratings, ICRA. Khemka informs that broadcasters are currently offering 30-50% discount on the bouquet price. “The removal of the cap will help broadcasters maintain their penetration, especially in the case of niche channels,” he adds.
No bargaining chip
ICRA notes that the tariff order has changed the structure of the broadcasting industry to B2C (selling à la carte to consumers directly) from B2B (selling a bouquet of channels to distributors). This will create a system that will lead to greater transparency among broadcasters, distribution platform operators (DPOs) and subscribers.
Earlier, the broadcaster and the DPOs would arrive at a lump sum content cost, which would be bouquet specific. The DPOs would then sell the entire bouquet to customers. Under the new system, the revenue sharing arrangement between broadcasters and DPOs will be on cost per subscriber basis. Even the carriage fee used to be negotiated in a similar manner earlier and would vary widely for different broadcasters while even being changed every year. Now, the carriage fee will be calculated on per subscriber basis and will decrease if the market share increases.
“The need for negotiations on content costs — which was earlier the norm for dealing with large broadcasters — goes away, leading to more transparent pricing. The ability of broadcasters to preserve their profitability through strategic pricing of channels and the creation of a bouquet of channels is now important,” says Shah. This, she says, would entail extensive cost-benefit analysis on the part of broadcasters. “Any channel that has an MRP of more than Rs 19 cannot be part of the bouquet. Broadcasters’ bargaining power with DPOs has reduced due to transparent pricing.”
Need to be different
In the current regime, cable operators and DTH players still have the right to create the package, but the differentiation will come from their services and value added offerings such as movies on demand. Today, Tata Sky and Dish TV have exclusive offerings, including their own movie channels.
“The tariff order will help build deeper understanding and analytics on content and channel preferences of consumers,” says Prathyusha Agarwal, CMO, ZEEL. For DPOs, Khemka says, the differentiation will come from the additional services offered, such as tie-ups with OTT players. “It will become a content-led game and also pave the way for DTH players to start investing in content,” he adds.