MPA: Indian TV Market to Reach $11.6 Billion by 2012

HONG KONG, March 17: A new survey from Media Partners Asia
(MPA) predicts that the Indian television industry will grow at an average
annual rate of 16 percent to generate more than $11.5 billion in annual
revenues by 2012 versus the current figures of $5.5 billion, and total revenues
will reach close to $19 billion by 2017.

According to the report, TV industry subscription revenues
in India could climb from $3.8 billion at the end of 2007 to reach $7.8 billion
by 2012 and $12.3 billion by 2017. Key drivers include the increasing
deployment of new digitized pay-TV distribution systems through direct-to-home
satellite and also through cable networks, as well as the continued expansion
of analogue cable television distribution. Digital pay-TV subscribers,
including cable, DTH and IPTV, could grow to 38 million by 2012 and 57 million
by 2017. In India, cable will have 67 percent of TV homes by 2017; DTH pay-TV,
excluding DD Direct, with 17 percent; and IPTV with 1 percent.

MPA sees the market for pay TV growing from 82 million homes
at the end of 2007 to 137 million by 2012 and approximately 164 million by 2017.
This means that household penetration could climb from 64 percent in 2007 to 82
percent by 2012 and 85 percent by 2017.

MPA has recalculated its digital pay-TV distribution
forecasts, based on net subscribers as opposed to gross numbers, which are currently
being used by DTH operators. This calculation incorporates analysis of
subscriber churn on both digital DTH and cable networks. With this methodology,
MPA estimates the total market for digital pay-TV (DTH, mandated CAS and
voluntary CAS) at approximately 4 million subscriber homes (DTH, 3.2 million;
cable, 800,000). MPA predicts that this digital base will grow to 38.2 million
by 2012 and 57 million by 2017. This means that 30 percent of television homes
in India will have digital TV by 2017 with 55 percent still on analogue. By
2017, 32.3 million homes will get digital pay-TV through DTH, 22 million
through cable and less than 3 million through IPTV. In comparison, MPA
forecasts that China will have 185 million digital subscriptions by 2015 but notes
that the vast majority of Chinese digital homes will be subscribers to
free-to-air TV channels through utility cable networks. China is forecast to
have only 43 million digital pay-TV subscriptions by 2017, which means that
India, with 57 million addressable digital subscriptions, will remain the
largest accessible pay-TV market for media owners, distributors and investors.
MPA forecasts show digital cable subscribers growing to 12.5 million by 2012
and 22 million by 2017.

Indian broadcasters generated $2 billion in aggregate
revenues in 2007, but this share is fragmenting rapidly with the launch of
hundreds of new TV channels, including new offerings in key ad spend
categories. Distribution costs are increasing along with marketing and content
expense, lowering margins and earnings visibility not only for new entrants.

Economic growth and increased cable TV penetration continues
to boost TV advertising growth, though TV’s share of the overall advertising
pie will come under threat in the long term through the growth of out-of-home
media, online and radio. TV had a 42-percent share of the advertising pie in
2007 with advertising growing by 19 percent to reach $1.48 billion. MPA sees TV
advertising growing at an average annual rate of 19 percent between 2007-2012
to reach $3.5 billion by 2012. TV advertising could reach $6.3 billion in net
terms by 2017.

MPA has downgraded its estimates on subscription revenues
for TV channels in India by approximately $1 billion because of the effects of
price regulation in the medium-term as well as the increasing emphasis on
lowering content spend by DTH and cable platforms due to aggressive price
competition and long breakeven periods for emerging digital services. At the
same time, MPA has upgraded its estimates on advertising growth due to a robust
economy and the long-term effects of an expanding subscriber base for cable and
satellite television.

MPA also predicts that the DTH market will grow from a net
installed paying user base of 3.2 million at December 2007 to reach 25 million
by 2012 and more than 32 million by 2017. DTH operators will be generating $2.8 billion in annual revenues by
2017.

—By Irene Lew