FICCI-KPMG-Report-13-FRAMES

The power of a billion: Realizing the Indian dream
15
Snapshot of the TV industry value chain
The TV industry value chain consists of content production, broadcasting and distribution.
Content production • In general, production costs continue to be linked to inflation; artist costs
however, have increased
• Cable digitisation is expected to create significant opportunities for content
providers, including:
--
Existing channels investing in content, and upgrading content quality
--
Narrower targeted offerings, to segments which are currently served by ‘one
size fits all’ offerings, which will require more localised content
--
Launch of new niche channels, which may see a viable business case on the
back of reduced carriage fees
• Broadcasters believe that content is under-invested and with the improving
economics on account of digitisation, investment in content is expected to grow
Broadcasting • 2012 continued to be a challenging year for the industry, with a lower-thanexpected
advertising revenue growth. However, the long-term outlook remains
positive and the industry expects advertising revenues to grow at a 14 percent
CAGR from 2012-17
• Subscription revenues increased in 2012, but this seems to be attributable to
better negotiation through consolidated entities (MediaPro, One Alliance, India
Cast etc.), rather than to digitisation in Phase 1
• The benefit of phase 1 and phase 2 digitisation in terms of growth in
subscription revenues is expected to be seen over 2013 and 2014
• In digitised areas, carriage costs appear to have declined. At the same time,
TAM’s increased coverage of Less than Class I (LC1) markets has resulted in
some of the carriage savings being redirected to increase reach in LC1 markets
• Growth is expected to be driven by a sharp increase in subscription revenues,
while carriage costs are expected to rationalize in metro markets
Distribution • Phase 1 of cable digitisation kick-started, and met with varying degrees of
success in the four metros. However, the consumer has warmed to the concept
of digitisation
• Industry discussions suggest that the digitisation in Phase 1 cities may not all be
addressable yet. MSOs are in the process of verifying their customer base, and
updating their systems before packages are deployed
• Completion of Phase 2 digitisation is likely to get delayed by 9 to 12 months. Out
of the 38 cities identified for phase 2 digitisation, approximately 40 percent of
C&S households are already digitised
• It is important to continue the momentum and ensure that digitisation of cable
gets completed; else there may be a risk that even Phase 1 cities may regress to
a mélange of analogue and digital cable
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