Despite concerns over challenges arising from connected TV and potential subscriber losses due to the new tariff order, the Indian television industry remains resilient. The second quarter has shown a robust trend, indicating that the traditional television industry is here to stay, with both advertising expenditure and subscription revenues expected to grow.
Experts predict an 18-22 percent growth in adex and a potential 20 percent jump in subscription revenue.
Listed broadcasting companies that have already announced results for the second quarter confirm the same.
TV18 (including the subsidiary Viacom18) reported a 12 percent increase in subscription revenue from Rs 453 crore in Q2FY 23 to Rs 506 crore in the corresponding quarter this fiscal. The overall revenue for the quarter saw an annual increase of 20 percent, driven by strong growth in advertising revenue across all clusters.
Factors driving Q2 growth
“Appointment viewing has become prominent in the pay TV ecosystem. Close to 355-plus pay TV channels are available, which are not impacted by any disruption in the market… The first half was fully packed with entertainment shows and international cricket/sports including the Asian Games. The overall adex is expected to grow up to 22 percent,” said a domain expert, asking not to be identified.
Cricket events propel adex surge
The growth in advertising sales has only begun, said the expert. “India is a cricketing nation, and with major events like Asia Cup, ICC ODI World Cup and more than three India-Pakistan matches during the peak festive season, it’s surely going to attract a lot of ad spends to tap consumers, which will lead to Q3 showing further jump,” the person said.
NTO 3.0 impact and mixed reactions
In November 2022, the Telecom Regulatory Authority of India (TRAI) issued the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff (Third Amendment) Order, 2022, or what is popularly called NTO 3.0 or NTO 2.1 (for new tariff order). It was implemented earlier this year and was expected to kill the subscription business as it reinstated the Rs 19 cap for TV channel inclusion in a bouquet. It also allowed broadcasters to offer a maximum discount of 45 percent when pricing its bouquet of pay channels over the sum of the MRPs of all pay channels in that bouquet. In the revised pricing, broadcasters had increased the price of some bouquets by 10-15 percent.
However this didn’t bring down revenues from subscriptions. For instance, TV18, as mentioned earlier, saw a jump in the segment. As per Zee Entertainment’s Q1 results, they clocked a 18 percent growth in its subscription revenue in the period compared to the same period last fiscal.
While some experts expect that the NTO 3.0 will gradually convince consumers to move away from linear TV to digital viewing, others said that the immediate effect is not as bad as was expected.
“As of now the threat is limited. However, in the long term, we would expect this to negatively impact the subscription base of paid TV,” said an expert who asked for anonymity.
Some stakeholders like distribution platform operators and associations of local cable operators have protested against the tariff order. To address these concerns, TRAI issued a consultation paper, ‘Review of Regulatory Framework for Broadcasting and Cable services’, on August 8 this year. However, there has been scant progress, and the regulatory body has already announced the third extension for submission of comments.
According to a person in the know, “The body is now being run by an acting chairman and the government is now in election mode. There is little possibility of expecting any changes anytime soon.”
Disclaimer: TV 18 is an entity which comes under Network 18 Media & Investment Limited. Network 18 is a subsidiary of Reliance.