Will MRP era force pay broadcasters to go free ????

By Dillip Bhuyan

It is for sure that the cable TV market is going to experience a drastically different way of working.

There are many assumptions by industry experts, multiple-system operators (MSOs), broadcasters, local cable operators (LCOs) and maybe Telecom Regulatory Authority of India (TRAI) itself. That is the very reason why MSOs must be peeping into each other’s websites just to take a reference from how the channels’ maximum retail price (MRP) packaging is being done by their competitors.

TRAI has prescribed everything about what to do, what not to do, what to write, what to read, and the list is so long. MSOs are tired of flipping the pages of prescriptions.

At the moment, even MSOs are privately talking to arch rivals about moves of each other. LCOs in many places have joined hands in raising their voice against implementation of the new tariff order.

The MRP tsunami in whatever shape is going to hit the market from January, if the authorities do not approve any more breathing time at the last moment.

While all the stakeholders at the ground seem to be confused and worried, there is another stakeholder who must be worried more. Some may feel that broadcasters must be happy about securing substantial ground revenue. But the crack in their happiness was first visible when three of the major national broadcast distribution houses have decreased their channel bouquet prices one by one. The objective must be to secure maximum possible number of eyeballs in the network of MSOs.

They must have apprehensions about not being carried in popular or economic packages of MSOs due to non-competitive pricing factor.

Till date, MSOs were indulged into cut throat price war with never ending aspirations of seeding more and more boxes. Now it seems, broadcasters will be the new warriors in the pricing battlefield. As understood, the promotional budgets were varying from 20 per cent to 35 per cent. Recently some broadcaster has openly declared a discount of 70 per cent. All these happened just before within a month of targeted date of MRP implementation.

It is very much possible that more packets will be unravelled in near future by the pay broadcasters.

Why? Here is the catch. As it is known, on an average only 20-25 per cent revenue of pay broadcasters comes from ground and the rest comes from advertisement. If they do not lessen their hunger for ground revenue, then many channels will not feature in economic and popular packages of the MSOs, which constitute major percentage of the viewers base in tier 2,3,4 locations. In such cases, many channels might not reach desired eyeballs, which will lead to lowered channel viewing ratings. Eventually, the advertisement revenue will suffer, which will be a blow to them below the belt.

If the current situation persists, then not-too-popular pay broadcasters will have to forgo the ground revenue to a large extent. If they keep on harping with a pure sales approach, then some channels might face extinction in the long run. It is also apprehended that some channels may come out from the pay tag and declare themselves as free. Not only that, they might also woo and request the MSOs to keep them in the basic packages.

Apart from discounting the bouquet prices by broadcasters, it is also heard that some broadcasters will directly approach the LCOs working under MSOs and shower promotional offers to them on the basis of number of activations of their channel in that particular network. If done so by offering gifts, trips or cash to the ground operators, then it would again create a wrong precedence in the industry. It has always been felt by many that LCOs probably spend more time in bargaining with their MSOs than focussing on providing quality service to their last mile viewers. Today majority of churn from cable TV to a costly DTH service happens due to service parameter. Approaching them with professional bribes with a hope of increasing subscription numbers might not work well. Appeasing an LCO will not result in increasing number of viewers.

Instead, if there is a budget for doing such activities, then they should be judiciously utilised, targeting the BARC sensitive patches. The activities might be in patches, but a viewer oriented approach would yield desired results in the long run.

Aggressive broadcasters might straightway come down to ground with marketing communication activities with help of event organisers. No wonder, we might come across a drawing competition at some school by a kids channel with something like “Chhota Bheem” or “Motu Patlu” logo on the drawing sheets.

Broadcasters hunger for revenue will definitely be more skewed from subscription to advertisement revenue.

(Bhuyan is COO of Eastern Media Digital)