India’s TV Market Poised for Growth till 2013

September 17, 2009 World Screen
LONDON: All sectors of the Indian TV market are expected to show growth until 2013, according to new research from Screen Digest, with pay-TV operators looking for investors as the recession eases.
 
Just as the Indian economy is forecast to grow 4.3 percent in 2009 and 6.5 percent in 2010—lower than in past years, but much better than Western Europe and the U.S.—Screen Digest predicts that the TV market will see growth as well, with the number of TV households rising from 133 million last year to 191 million by 2013, outstripping increases in the population and households in the same period.
 
While analogue cable TV accounted for 89 percent of all pay-TV homes in 2008, Screen Digest believes it will increase its subscriber base from 80 million to 113 million by 2013. Yet despite its large base, forecasts see slow conversion to digital. Since it reaches an affluent middle-class audience, satellite TV is perhaps the more attractive prospect, not just for operators including Dish TV, Sun Direct TV, Big TV, Airtel Digital TV and Tata Sky, but also for the wider media industry due to its transparency in reporting. At the end of 2008, these players accounted for 10 million all-digital households, up from 750,000 in 2005.
 
Aravind Venugopal, Screen Digest’s Research Analyst for Television commented: “The sudden drop in advertising revenue brought about by the recession has been a wake up call for the Indian media industry which has until date seen tremendous growth. A welcome respite will be the easing of foreign ownership regulations. If the regulations are eased as planned, India can expect to see a strong inflow of foreign funding, followed by a round of consolidation especially in the cable and satellite pay TV sectors. This inflow of funds will also be crucial to the digitization of the nation’s analogue cable TV networks, necessary not just for the cable operators themselves to be able to compete with satellite, but for the entire TV value chain.”
 
IPTV services in the Indian market are also set to expand, with broadband penetration of TV households expected to increase from the current 4.2 percent to 13.4 percent in 2013.
 
Hindi channels account for the majority of the TV advertising market. Screen Digest believes that while the outlook for the top three or four Hindi-language channels in the general entertainment space is good, ever-increasing competition and pressures on advertising revenue will see some of the smaller channels either fold their operations or merge with bigger channel groups. However, the company’s analysts believe that the future growth potential will be in regional channels, as an example, News Corporation’s Star TV is already looking to tap into this market with a $100 million investment.
 

Although there has been a spurt in channel launches, Screen Digest reports, a number have been delayed by the challenging economic environment. As channel numbers increase, so have the key costs for broadcasters, particularly carriage fees, expanding operations and staff salaries. In some cases broadcasters have seen their costs increase by 40-50 percent. The recession has forced a re-examination of cost base, resulting in some retrenching and pay cuts, notably NDTV and Zee. Easing of regulations governing foreign ownership in Indian media is in the pipeline, and may provide a welcome respite to several cash-strapped Indian companies.  

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