The challenge for broadcasters is always about higher revenue realisation from their content investments. For distributors—be it cable or DTH—it is always about higher revenue realisation from their existing customer base. Advertisers are always looking for more focused targeting on television, reducing spillover and ensure higher ROI on TV investments. And most importantly for viewers, it’s about being able to get the best quality experience when watching TV. HD channels are the perfect solution to the above and hence the high growth in HD channels—at last count it was more than 50.
While DTH players were the first to introduce HD offerings, now with digitisation of cable rolling out across the country, the neighbourhood cablewala is also rolling out HD offerings protecting its customer base and increasing revenue realisation. Broadcasters have found a strong new revenue stream charging for HD offerings and creating more niche offerings within the HD space—HBO Defined and HBO HITS, Colors Infinity, Star Movies Select, etc.
And HD channels have evolved from being only HD feeds of the same content to now standalone, superior software HD content feeds which really gives consumer value. So we now have TV shows premiering simultaneously in India on HD channels, as they launch in the US. This means no waiting for months before shows air in India, by which time anyways most turn to Torrents to download the content. As broadcasters are able to charge high subscription fees for HD channels, their ability to deliver more recent content is viable.
Increasing number of HD channels in India
With digitization, the HD wave is not only hitting the Hindi general entertainment channels, but regional channels as well. The HD channel boom began in 2015, with several broadcasters launching new HD channels or HD versions of their existing SD channels. The Indian television space has seen several high-definition (HD) channels being launched in the last 18 months–as many as 29 since January 1 last year, out of which 11 were started in 2016. With the ecosystem getting more conducive for greater adoption and consumers seeking better-quality pictures, more are expected in the near future. The total HD count in India is 67 channels, out of a total of more than 500 in the country, with the first having been started in 2010 by National Geographic. The next year saw 22 channels being launched in the infotainment, sports, general entertainment and movie genres.
Regional markets haven’t seen too many HD channels but that may be about to change. “The penetration of HD has remained low in regional markets owing to non-availability of local language channels in HD format,” a Star India spokesperson said. “We believe in creating value for consumers and have been focusing on HD not just since the last one year, but much earlier than that.”
Star India has the highest count of HD channels with 23 in its portfolio, followed by Viacom18, which has 11. “The classic question is do you make the market or does the market make you,” said Sudhanshu Vats, group CEO at Viacom18. “In terms of HD, it’s a better viewing experience for my consumer. And we have already exposed the audiences to HD in some of the genres, and their expectations are already high.”
As most programmes are made in HD anyway, there isn’t much of an added cost. “The quality is distinctly better compared to standard definition (SD). It’s just the question of incurring a little bit of additional cost on a pipe or spectrum,” Vats said. Zee Entertainment EnterprisesBSE 0.93 % (ZEE), which has eight HD channels, plans regional HD feeds in Marathi, Bengali and Telugu. “Currently, HD offers a premium in both advertising and subscription,” said Sunil Buch, chief business officer at ZEE. “However, in a few years, it will become more mainstream, eventually leading to the phasing out of SD. The launching of HD channels is one of the ways of capturing the premium segment of the market, who want high-quality content.”
Analysts put the HD subscriber base at 6-8 million. While growth has been slow, distribution platforms such as direct-to-home (DTH) and digital cable are trying to push HD adoption. In fact, for most DTH players, HD accounts for 20-25% of new subscriber additions. “Overall, the growth of HD subscribers has not been as strong as we expected it to be. Yet, it has reached a stage where it makes sense for us to offer all our contents in HD as well,” said NP Singh, CEO of Sony Pictures Networks India (SPN), which has six HD channels and is planning to launch Le Plex HD, SAB HD and Sony BBC Earth HD this year.
HD consumption has been growing across multiple genres. “Our objective, as a broadcaster, is to make sure that all our content is available to the viewers in the format that they would prefer to see it in,” Singh said. “Most of our channels are available in HD already. In a few weeks’ time, SAB too will be available in HD.” The ecosystem supports the growth of HD, said Ashish Pherwani, head, advisory, media and entertainment, at consulting firm EY. “The broadcasters’ move is ARPU (average revenue per user) driven,” he said. “Today, there is an opportunity. It is an aspirational product and there is support of infrastructure too. Look at the sale of HD TV sets, and the sale of HD set-top boxes.”
Vivek Srivastava, business head of the English entertainment cluster at Times Network, said: “This is industry investing for the future. Eventually, the market will move to HD to a great extent and we are already seeing the signs. There are many channels only in HD. We launched MN+, which is an HD-only channel, after realizing that there is a significant audience.” The industry feels that digitization will bring about greater addressability with subscribers willing to pay separately for HD content.
New TRAI rules to make HD channels cheaper by 70%
New rules on the pricing of television channels are likely to make the viewing of HD and sports channels in India cheaper and make charges such as ‘HD Access Fee’ totally illegal. The rules were issued very recently and will come into effect within six months of it being published in the gazette. The most important of the new rules is the imposition of a price cap of Rs 19 on all channels, HD or otherwise. The only way for any broadcaster to price its channel above Rs 19 will be to take it out of all packages and sell it only as an individual channel — something that is practically impossible given the market situation. As a result, the maximum price that any cable or DTH operator can charge for a single channel has, in effect, been capped at Rs 19 per month.
This is far below what cable and DTH operators are charging right now. For example, according to Airtel Digital’s tariff card, almost all the HD channels are priced between Rs 50 and Rs 60 per month per channel. Tata Sky’s pricing is more flexible, ranging from Rs 25 for regional channels to Rs 75 for sports channels. Videocon D2h, too charges between Rs 23 and Rs 60. In other words, if you were to subscribe individually to 50 HD channels, it would cost you around Rs 2,500 per month. Under the new system notified by TRAI, it would cost only a maximum of Rs 950, but the actual number is likely to be much lower as explained below.
At present, individual channels are priced very high so as to discourage subscribers from purchasing channels one-by-one and instead go for one of the operators’ ‘packs’ — such as Gold, Diamond or Platinum. When anyone subscribes to a ‘pack’, the DTH or cable operator is able to sell several extra channels as part of the pack in addition to the channel that the subscriber is looking for. In return for selling these ‘unwanted channels’, the DTH or cable operator gets money from the owners of those channels. As such, they are keen to sell their channels in packs and never in the form of individual channels.
The growth saga
In the last few years, HDTV has seen steady growth. The big global HDTV markets are the US, the UK, Japan, Korea and China. But now even Latin America is growing, according to Vivek Couto, executive director at Media Partners Asia Ltd, the Hong Kong-based advisory, research and consulting firm. Back home, there are 92 HD channels, as per Chrome Data Analytics and Media’s latest report on the HD market titled Now Playing: HD.
Although HD penetration in India is still quite low at six-seven million homes versus 80 million active digital pay TV homes, the pace of growth is promising. In the last two years, leading broadcasters have added more HD channels. “Most of these are national channels, although in recent times a similar trend is unfolding in the regional space. This should boost HD adoption outside urban centres, particularly in markets which have a strong affinity to consumer content in their local language,” said Mihir Shah, vice-president (India) at Media Partners Asia.
The growth in HD channels rides on the back of a much better audiovisual experience in the format, especially when consuming content in genres such as sports, infotainment or films. According to Chrome Data’s report, the DTH HD penetration in rural markets is the highest in the North-East (Assam and Sikkim), followed by Andhra Pradesh, Telangana, Bihar, Maharashtra and Goa. “The terrain of North-East has traditionally lent itself to DTH penetration. DTH itself contributes 79% to North-East’s rural market,” said Pankaj Krishna, founder and chief executive at Chrome Data Analytics and Media.
Currently, the penetration of HDTV is basically being led by DTH operators who are seeding their HD set-top boxes while cable networks are lagging. A cable network executive who spoke on condition of anonymity said that of the total set-top boxes being sold by his company, barely 10% are in HD. The price difference between HD and SD boxes is still high and volume requirement of HD boxes is low.
Yet, media industry experts cite the merits of HDTV and express belief in its future. For starters, the Telecom Regulatory Authority of India has allowed broadcasters to fix their own prices for HD channels. Ideally, this should result in more subscription revenue. That’s not all. According to SPN’s president (network sales and international business) Rohit Gupta, HD channels deliver top-rung audiences in the so-called socio-economic category A. “HD caters to a very high-end audience. So it expands the portfolio of brands for a channel. It attracts brands that were not on the mass entertainment channels earlier,” said Gupta.
Despite such optimism, HDTV is yet to iron out some glitches. For starters, it has to grapple with lower penetration of HD-enabled devices such as televisions and set-top boxes which make HD viewing possible. Secondly, even though, in principle, a broadcaster can charge as much as it wants for HD channels, the money doesn’t come easy. The large cable networks still beat down their prices especially because there isn’t much of a difference between SD and HD channel content.
Besides, even advertising revenue is limited since the penetration of HD channels is still low. These channels are usually bundled with their SD counterparts and sold to media agencies, said Krishna of Chrome Data. The investment in HD—from production to delivery of content—is also steep. An HD channel utilizes four times the bandwidth compared to a channel delivered in SD. So it will be a while before HD channels’ advertising and subscription yields go up and India turns into a full-blown HDTV market. However, its adoption could accelerate if both the broadcast and cable distribution industries resort to joint selling to increase the penetration of HD boxes in the country.