The challenge for broadcasters is always about higher revenue realisation from their content investments. For distributors—be it cable or DTH...
The challenge for broadcasters is always about higher revenue realisation from their content investments. For distributors—be it cable or DTH—it is always about higher revenue realisation from their existing customer base.
Advertisers are always looking for more focused targeting on television, reducing spillover and ensure higher ROI on TV investments. And most importantly for viewers, it’s about being able to get the best quality experience when watching TV. HD channels are the perfect solution to the above and hence the high growth in HD channels—at last count it was more than 50.
While DTH players were the first to introduce HD offerings, now with digitisation of cable rolling out across the country, the neighbourhood cablewala is also rolling out HD offerings protecting its customer base and increasing revenue realisation. Broadcasters have found a strong new revenue stream charging for HD offerings and creating more niche offerings within the HD space—HBO Defined and HBO HITS, Colors Infinity, Star Movies Select, etc.
And HD channels have evolved from being only HD feeds of the same content to now standalone, superior software HD content feeds which really gives consumer value. So we now have TV shows premiering simultaneously in India on HD channels, as they launch in the US. This means no waiting for months before shows air in India, by which time anyways most turn to Torrents to download the content. As broadcasters are able to charge high subscription fees for HD channels, their ability to deliver more recent content is viable.
The key challenges for HD channels remain in the space of being able to provide advertisement-free HD feeds. Given that the subscription rates they can charge are limited, revenue realisation has to be boosted by advertising. Hence the number of 100% advertising free HD channels still remains very smaller with the majority depending on ad revenues. As a result, HD channels which originally started with shorter ad breaks have over time moved to longer ad breaks almost equaling those of the SD feeds.
From an advertiser perspective, HD channels provide a much required alternative for sharper targeting on television. With the high subscription fees for HD channels and the still above-average costs for good quality HD TV sets, HD channels make for a powerful proposition to target more affluent audiences on TV. So advertisers with greater focus on metros and upper socio-economic classes, would rather first invest in HD channels and then deploy investments on the SD channels. This allows for still being able to use television without the large investment that one would require in a pure SD era.
Willingness to pay high subscriptions will remain a key challenge for broadcasters and distribution platforms.
Hence dependence on advertising will continue, which will therefore continue to give consumers a less than desired viewing experience. While ad breaks are still less than SD channels, they have grown over the last 12-18 months. HD channels will also need to differentiate content they are offering viewers to justify the premium being charged.
Similar content on SD feeds takes away from their uniqueness and the value perception. Also HD content is more relevant in certain genres like movies, sports, infotainment, etc. What would be the role of HD channels for general entertainment channels and their offerings of daily soaps remains to be seen.
By Anand Chakravarthy
The author is managing partner, Maxus