Broadbandindia Magazine

To offer better audio quality and sharper picture tomillions of its viewers, Indian broadcasting sector plans to go completely digital. Information and Broadcasting minister Ambika Soni said that digitalization of the Cable TV Services is one of the key thrust areas identified by the Ministry because of the “advantages digital mode offers in terms of efficient utilization of available spectrum, better quality of picture and services, various interactive and niche services and transparency above all.” She noted that the trend worldwide has been to fix sunset dates for complete switch off of analogue services.

“While India as yet has not declared any sunset date for complete migration, it is now being increasingly felt that by 2017 we should also aim for complete switchover”, the Minister stated. The Telecom Regulatory Authority of India (TRAI) has already suggested a threestage process for digitalization, wherein tier one  cities would be covered by 2013, tier two cities by 2014 and tier three cities by 2017, they said.

Digital transmission enhances audio and picture quality

Digital transmission enhances audio and picture quality and sooner the transformation process takes place, more beneficial it would be for the broadcasting sector  in the country, Information and Broadcasting minister official sources said. By going digital, Cable can offer its viewers 16 times sharper image than is available  currently under the analogue mode of transmission. The standard for signal transmission over digital cable television systems in the United States is now fixed as both 64-QAM and 256-QAM ( Quadrature Amplitude Modulation), which is specified in SCTE 07, and is part of the DVB standard (but not ATSC). This method carries 38.47 Mbit/s using 256-QAM on a 6 MHz channel, which can carry nearly two full ATSC 19.39 Mbit/s transport streams. Each 6-MHz channel is typically used to carry 7–12 digital SDTV channels (256- QAM, MPEG2 MP/ML streams of 3–5 Mbit/s). On many boxes with QAM tuners (most notably the DVR boxes), High Definition versions of local channels and some cable channels are available.

Digital Cable allows for the broadcast of EDTV (480p) as well as HDTV (720p, 1080i, and eventually 1080p). By contrast, analog cable transmits programs solely in  the 480i format (the lowest television definition in use today). Digital cable channels typically are allocated above 552 MHz, the upper frequency of cable channel  78. (Cable channels above channel 13 are at lower frequencies than UHF broadcast channels with the same number, as seen in North American cable television  frequencies.) Between 552 and 750 MHz, there is space for 33 6-MHz channels (231– 396 SDTV channels); when going all the way to 864 MHz, there is space for 52 6-MHz channels (364–624 SDTV channels). In the U.S., digital cable systems with 750 MHz or greater activated channel capacity are required to comply with a set of SCTE and CEA standards, and to provide CableCARDs to customers that request them.

The key to future

With piracy looming as a major threat, most media analysts stressed the need for speeding up the process of digitalization. Turner Broadcasting System International president Louise Sams, who is also EVP and General Counsel for Turner Broadcasting, Fox Filmed Entertainment CEO James N Gianopulos, and Ficci SVP Harsh C Mariwala particularly emphasized on this and also said this had opened up several other mediums for entertainment content. Sams also stressed on the increasing investments by Turner in India and said that apart from having come to India with  CNN in 1991 and Cartoon Network and Pogo in 1995 and 2004 respectively, the conglomerate had now entered Hindi entertainment by acquiring Imagine TV which had been started by NDTV.

“India has emerged as the largest revenue market in the Asia Pacific region. India was also where we made our largest investment overseas in 2009,” said Sams. Cartoon Network had been the first international channel to show Indian animation films overseas in 2001.Turner had also entered into a fruitful alliance with Subhash Chandra’s Zee Group to create Zee Turner.

Gianopulos said digitalization was redefining Hollywood and Bollywood. As against the VHS 10 years earlier, entertainment was now being transmitted through  DVD, BD Live, PPV, VOD Cable, VOD Online, Digital Copy, ECopy, EST, Streaming, Flash Media and Mobile Video.  Gianopulos said the high costs of production in America had forced producers to move out and seek new tie-ups, and India was a favourite destination. He said India had great stories, but these would not sell unless they were told with the global audience in mind. There was need to act local but think global. “There is need to make films for everyone. We also have some movies made for someone’, he added. He said this was one of the reasons for films like ‘My name is Khan’ getting released in 44 countries including the United States, and becoming the first global film from India.

Referring to the revenues from entertainment, he said the United States earned $10,675 million from a population of 340 million in the domestic market while a sum of $19,235 million was being earned from 6,500 million people in the international market. India had a 93% share in the international market in entertainment as compared to 60% in Japan and 53% in China. The international revenues of ‘Avatar’ comprised 40% from just 17% of the screens in India. But he regretted that while a film fails at the boxoffice in India, it succeeds in pirated versions. Infringement of copyright needed to be checked very strongly.

Growth Engines

The Indian television industry is poised for a giant leap forward. With growth engines coming from advertising and subscription revenues, the segment is  estimated to touch Rs 521 billion by 2014, up from Rs 257 billion in 2009. A CAGR of 15.2% over the next five years will be fuelled by wider digital penetration, fiercer competition in the TV distribution business, and deeper advertising support.

Ad revenue will grow at a rate of 15.6%, slightly higher than subscription income that is set to run at a CAGR of 15%. The turning point is the improvement in the global economy. The slowdown had hurt the television industry in 2008-09 as it grew at 7% during this period, compared to a 14% grow in the year-ago period. Digitization will be the sweet spot as it increases transparency and unlocks undisclosed revenues for broadcasters from the cable TV operators. The share of broadcasters in the subscription pie is expected to go up from 18% in 2009 to 27% in 2014. The share of subscription revenues in the top line of broadcasters is expected to increase from 26% to 33% by 2014. Subscription revenues for them are growing at a CAGR of 24% compared with the segment’s ad revenue growth of 15.6%. 2009 saw show budgets being cut by 15-20% and certain cost effective formats becoming popular with producers. The disadvantage of reality TV is that it is more expensive than fiction and does not generate high TRPs compared to fiction.

On the advertising front, KMPMG notes that in 2009 regional general entertainment channels became popular with advertisers. Their ad spend grew to 29% compared with 21% in 2006. Their share came at the expense of Doordarshan which was earlier preferred by advertisers looking for a regional reach. Ad volumes on regional channels increased by 12% due to new channel launches and increase in FCT. The year gone by has not been good for English and Hindi news channels as both lost share. This was compensated to an extent by growth in the regional news channels. This reached a 3.4% of all India viewership in 2009, up from 2.6% in 2008. The share of Southern news channels reached 5.8 %.

2009 was also tough for music channels with viewership shares dipping across all TGs. They are finding it more and more difficult to attract and retain interest due to more competition from GECs and other genres. The maximum loss of share has been in the 25+ TG. A new development that took place was an attempt at re-positioning music channels, drawn from the fact that MTV and Channel V started focusing on non music content. The kids genre grew their all India viewership across TGs. A positive trend for 2009 was that apart from children, the channels managed to attract the 15+ TG and adults as well. Kids channels tried to create a 360 degree communication platform by interacting with kids through sites, phones etc.

Challenges

The lack of transparency in analogue cable systems has traditionally been a challenge for broadcasters. LCOs still garner almost 75% of subscription revenue due to under declaration while broadcasters get 20% and MSOs 5%. This scenario could change with the higher penetration of digital platforms. Carriage fees eased during 2009, amounting to a payout of Rs 10-12 billion by broadcasters. Another challenge lies in having an extended audience measurement system for the broadcasting industry. Though the current measurement system captures information from 8000 TV homes, the coverage is limited and the trends may not be descriptive of the entire nation.

The focus of advertisers is likely to rest on 360 degree connect with consumers. This may give rise to a need for multimedia campaigns. Broadcasters, thus, can  expand their portfolio of services or tie ups with other players to offer ad packages. “A continued focus on operational effectiveness and cost efficiency is likely to help improve overall profitability,” the KPMG report says.