Compared to an average penetration of 90 per cent in most other countries, India’s 50 per cent TV penetration offers immense opportunities, particularly when coupled with other factors such as increasing advertising expenditures (up 23 per cent between 2005 to 2006); a willingness of households to spend more on channel subscriptions; a need for new programming formats; and India’s current economic prosperity.
In addition to a largely untapped market, use of new technology like HDTV and the possibilities of interactive and mobile make India a highly lucrative market to be in.
That said, the opportunity to become a reach-driven channel via the GEC route is quickly becoming a tough task. With three established GECs - Sony, Star TV and Zee TV - and other deep-pocketed players such as 9X and NDTV Imagine tapping the same segment, the space is getting saturated. The top three command 80 per cent of the advertising revenue in the category, leaving the others to scrap among themselves for the remaining 20 per cent.
“A channel can command a premium on its ad rates only if it is among the top three. With so many channels being added in the Hindi entertainment category, the going will not be easy for new entrants,” says Rohit Gupta, president, network sales, licensing and telephony, Sony Entertainment Television. “It remains to be seen how these start-ups will recover their investments in programming, marketing and manpower.”
According to Gupta, in the entertainment space, to make roughly Rs 400 crore from advertising (an average annual spend), a channel’s prime time weekly gross rating points (GRP) should be close to 100. The new players begin at 10 to 12 weekly prime time GRPs.
Chances are that channels which do not constantly reinvent themselves with higher quality services and additional offers may perish. However, the advent of the direct-to-home platform will help new channels connect directly with consumers and build revenue through new subscriptions. In a marketplace dominated by cable operators, broadcasters do not earn much through subscriptions and depend heavily on advertising revenue, which, in the general entertainment space, is difficult to come by. Each new channel that is launched eats into the revenue of another channel.
There also exists tremendous opportunity in targeting specific audiences. “There is a multitude of advertisers in the Indian market who need to cater to specific audiences, thus creating a need for a media vehicle to help them reach relevant audiences, along the lines of NDTV Good Times and Aastha,” says Dhiren Amin, director, strategic planning, Euro RSCG India. “Golf, cooking, gardening, horse-racing, motoring and 24-hour sports news are segments where future growth lies.”
