FICCI-KPMG-Report-13-FRAMES

The power of a billion: Realizing the Indian dream
19
While carriage fee may decline further over the next 2-3
years, part of this may claw back in the form of placement
fees, where broadcasters pay for placements in various
tiers of channel packages. However, we note that the
supply-demand situation to carry channels will improve
significantly post digitisation, and therefore on an overall
basis, the total payout towards carriage and placement fee
is expected to decline.
“
Carriage which till now has been a
significant revenue stream for MSOs is
set to come down in the future, although
currently there has not been a significant
decline because channels wanted to play
it safe in year one. Although in absolute
terms as well as a percentage to sales,
the carriage in the current year is lower by
approximately 10-15 percent. Placement
fee shall never be an equal replacement
for carriage, it will be a localised and a
relatively small revenue stream since
digital cable can easily carry 500 channels,
and the channels anyway need to be
grouped by genre which reduces the value
of placement charges.
“
- Atul Das
Chief Strategy Officer,
Zee Enterprises Entertainment Limited
In the near term, decline in carriage fees in digitised regions
may be offset by an increase in carriage fee paid for LC1
markets. TAM has extended its reach to include the LC1
markets and broadcasters may want to ensure visibility in
these markets.
“
“
In the near term, carriage will need to be
paid in LC1 markets, which will get digitised
later.
- N P Singh
COO,
Multi Screen Media Private Limited
Capital expenditure as per expectations
Discussions indicate that capital investments during Phase
I have been in line with industry expectations. Back-end
infrastructure for leading MSOs was estimated to be largely
in place for the first phase of digitisation. Unlike successive
phases where significant investments may be required for
upgrade of back-end infrastructure, funding requirements
during Phase I have been mostly on account of set-top-box
installation.
Learning from Phase 1
Better consumer
education
Addressability instep
with digitisation
Need for MSOs to
work together
• It was felt that consumer messaging appeared to be focussed on analogue cable blackout and the consequences
of not digitising, rather than on benefits that a digital delivery platform offered in terms of an enhanced viewer
experience
• For Phase 2, the industry may consider a soft and inclusive approach towards messaging, so that the consumer
does not feel that digitisation is being forced onto him by the industry
• Phase 1 cities have witnessed digitisation, while addressability is playing catch-up
• In Phase 2, MSOs may place greater emphasis on on-boarding end-consumers in tandem with seeding boxes
• Phase 1 witnessed MSOs working mostly in silos, and multiple boxes were sold to the same “subscriber” in some
instances. For example, industry discussions suggest that the number of boxes seeded in Delhi was 50 percent
higher than the total subscriber base
• In Phase 2, MSOs may increase knowledge sharing, and present a more united front to LCOs, thereby improving
negotiations
• Several industry participants have suggested that MSOs and broadcasters also need to work together better on
packaging of channels and change the existing adversarial relationship between the two stakeholders
“
“
MSOs and Broadcasters need to work
together and overcome their legacy of
mutual distrust and antagonism.
- Jagdish Kumar
CEO & MD,
Hathway Cable & Datacom Ltd.
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