The Indian television industry is going through a challenging time, especially in the past few years, after the internet boom. TV channels are forced to come up with new and innovative content to retain subscribers. Despite intense competition from online, on-demand content, the industry has room for growth and expansion.
This is mainly because the TV market penetration in India is still at 64 per cent (it’s 80 per cent in China). To retain this market, companies such as Zee TV, Sun TV and Star TV have taken steps to increase programming hours, diversify the content and types of shows screened, and broadcast new movies. And as TV has the widest reach, delivering entertainment to larger audiences, despite the inroads made by digital advertising, advertisers still opt for television channels as their primary mode to reach a huge number or viewers.
About 45 per cent of revenue in the media industry comes from television, according to a Ficci-EY report. The television industry is thus expected to survive and grow despite the emergence of alternative viewing platforms. The report predicts that the TV industry is set to grow to ₹862 billion by 2020.
Revenue to grow
Though OTT (over the top) players such as Netflix and Amazon Prime offer a wide variety of programmes (sometimes ad-free), including original content, any time and anywhere, the content from companies such as Zee Entertainment and Sun TV still contributes to a large chunk of TV viewership in India.
According to the latest reports, 77 per cent of viewership is driven by GEC (general entertainment channels) and movie channels. With cable TV continuing to dominate the industry, followed by DTH players, content providers still have a market for the growth of subscriptions.
In India, over 30 per cent of households are yet to get television screens. This provides ample expansion opportunities for content providers such as the Star Network or Sun TV. Though this space is highly competitive, quality content providers can win the market. Hindi remains the preferred language of content consumption but regional languages are picking up fast, offering scope for a greater number of subscribers to channels such as Sun TV and Zee.
On the advertisement front, better content, prime-time viewership and original content attracts advertisers to a channel.
For instance, Zee Entertainment. It is one of the leading players in Hindi GEC, Marathi and Oriya GEC market. It is able to provide 500 hours of content every week across eight languages. Some weekday shows, such as Kumkum Bhagya , Kundali Bhagya on Zee TV, and Mazhya Navryachi Bayko, on Zee Marathi, are hugely popular with viewers, attracting not only subscribers but also advertisers. Zee also gets viewership by broadcasting new movies. The company has one of the biggest movie library collections and has dedicated channels for Hindi movies, classic movies and English movies.
Differentiated and dedicated channels are the key to increasing advertisement and subscription revenues. Nearly 57 per cent of Zee’s revenue comes from advertisement while 28 per cent is from domestic subscription. The company plans to increase its content hours, which will not only widen the subscriber base but also rake in additional advertisement revenue.
Revenue from distribution, says the Ficci-EY report, is expected to increase to ₹494 billion, while advertisement revenue is set to go up to ₹36.8 crore by year 2020.
Adapting to change
According to the Ficci-EY report, online videos drew 250 million viewers in 2017, a jump of 64 per cent over 2016. Realising the market potential, a number of OTT players, such as Netflix and Amazon Prime, have entered the market providing content such as live sports, live events, reality shows, movies, TV series and their own original content. Most of the players offer ad-free content, for now. Though their fee structure is still higher than cable TV, the content volume is high on their OTT platforms. TV channels are unable to compete with those volumes. But given the minimum number of OTT players, content providers such as Zee Entertainment and Sun TV have entered the OTT space, with their own mobile applications and special features.
For instance, the Sun NXT app from Sun TV provides live TV in four languages, a wide range of movies, live shows, music videos, TV series, classic movies and unlimited access to songs. Sun TV will have the edge in reaching a large audience because of its TV market penetration. Netflix and Amazon Prime not only have to compete on the subscription fee but also with domestic OTT players such as Sun NXT.
The Zee5 app, on the other hand, not only provides regional content across all languages (where Zee channels have a presence) but also offers international content – English movies, TV series, live shows and reality programmes. Zee5 offers original digital content in six languages too.
Hence, despite the intensifying competition, , the TV industry still has headroom for growth, provided it can leverage its market reach and adapt to change. How content providers adapt, survive and provide content via all platforms will be critical to cementing their market position.