Industry experts say TV distribution revenue is likely to go up this year on the back of price hike by broadcasters following the implementation of NTO 3.0
Television distribution revenue has seen a downward trend in India in the last few years, but 2023 could be different. Industry experts are anticipating a growth in subscription income this year due to the hike in the prices of TV channels. Veterans in the sector say television distribution revenue is likely to go up this year owing to the implementation of the new tariff order (NTO 3.0) which allowed broadcasters to hike channel prices.
According to Anuj Gandhi, Founder, Plug & Play Entertainment Pvt Ltd, “Overall, Pay TV is not in the growth phase anymore. Subscriber numbers are not growing as there is DD FreeDish in many places and that has done phenomenally well. Apart from that, there has also been growth in connected TV (CTV) and OTT.”
“However, this year the TV distribution revenues are likely to be up due to the increase in the price of TV channels since the implementation of the new tariff order,” shared Gandhi, the former Group CEO of Indiacast Media Distribution Pvt Ltd.
Expressing similar sentiments, during the Q4 FY 23 conference call, Punit Goenka, MD & CEO of ZEE Entertainment Enterprise Ltd (ZEEL) said it was hard to predict the actual growth in subscription revenue of linear TV but he was optimistic that the trajectory will be towards growth. According to him, it is a question of balancing pricing versus churn.
ZEEL’s subscription revenue for FY’23 was up by 2.7%, led by growth in ZEE5 and ZEE Music, partially offset by decline in linear TV subscription. According to the company’s Q4 financial report, subscription revenue for Q4-23 were lower by 5.3% QoQ and down 1% YoY. On the other hand, Network18’s consolidated subscription revenue grew by 19 % to Rs 538 crore in Q4 FY’23 as compared to Rs 451 crore in Q4 FY’22.
Experts, however, opined that while connected TV and free to air (FTA) channels are experiencing considerable growth in terms of number of subscribers and consequent revenue, there are not much expectations where pay TV is concerned.
According to Karan Taurani, Senior Vice President, Elara Capital, the number of subscribers on linear pay TV is not growing and the industry is witnessing a declining trend of 2-4%. But the good news is that CTV and FTA subscribers are growing, he added. “The growth happening on FTA is about 8-10%. But Pay TV is stagnated in terms of overall household base numbers. If you look at total TV household base number, including CTV, you will see a growth, but if you see the Pay TV universe, it might not see a growth,” Taurani said.
Sharing a similar opinion as Gandhi, he said, in terms of Pay TV subscription revenue, the growth will only happen because of price hike, it will not happen because of an increase in households’ base.
“But price hike growth is very limited, it can’t be more than 4-5% on a sustainable basis. If there is a decline of 2-3%, effectively you will see a very small growth of 2-3% on the TV subscription side,” Taurani explained.
Another senior distribution head too shared the same opinion, saying this year will witness an increase in subscription revenue on the back of a price hike by the broadcaster. However, the number of subscribers might not see a positive growth or there will be marginal increase as the distribution platforms are offering different packs at a discounted price, he opined.
According to another distribution head of a leading TV network, the television distribution revenue trend is negative and the price of the channels may have gone up but that will not help increase the revenue. He said that on an average, the subscriber base for TV is dropping by 1-1.5% every month.
Industry experts say only big sporting events on TV, such as the upcoming ICC Men Cricket World Cup, could take up subscriber number leading to an increase in revenue.
The amended new tariff order (NTO 3.0) was issued by TRAI in November last year after which the broadcasters announced the price hike. It came into effect on February 1 this year. The NTO 3.0 reinstated the Rs 19 MRP cap for TV channel inclusion in a bouquet and also allowed broadcasters to offer a maximum discount of 45% 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%.
