- India-focused OTT production entity Golden Karavan launched
- Woman alleges gang rape by two men in SUV
- Film producer Karim Morani surrenders in rape case
- Ryan school murder case: CBI team reaches school, starts probe
- Karti closed many foreign accounts, shifted money: CBI
- Pakistan shells border posts, hamlets in J&K; BSF jawans among 7 injured
- Sushma Swaraj raises issue of terrorism, H1-B with US Secretary of State
Will Hindi GECs migrate to mid-tier packages?
MUMBAI: Leading broadcast networks have initiated talks with multi-system operators (MSOs) and direct-to-home (DTH) service providers to shift their flagship Hindi general entertainment channels (GECs) from base pay pack to a mid-tier package, a process that would end up raising subscription ARPU (average revenue per user).
By putting Hindi GECs on mid-tier packages, broadcasters, MSOs and DTH service providers hope to energise their business models and reap the fruits of digitisation. The ARPUs for MSOs and DTH operators remain dreadfully depressed as consumers are accustomed to paying monthly bills at legacy rates.
“The first round of discussions has taken place. We are looking at how ARPUs can go up and one idea that has been mooted is to shift Hindi GECs to mid-tier packages. But we are far from finalising something so radical that can have far-reaching consequences,” said the head of a television distribution company on condition of anonymity.
Despite knowing that consumers can put up a limp challenge if all three of the stakeholders unite, the industry is far away from working collectively on shifting the Hindi GECs to a more expensive package. In the existing form, popular channels such as Star Plus, Colors, Zee TV and Sony Entertainment Television (SET) are offered by the MSOs and DTH operators at the base pay pack.
There are two main apprehensions in starting an exercise that would make consumers pay more for watching their television channels—reduction in carriage fees and loss of viewership.
MSOs have been able to charge placement fees from the weaker channels in their base pay pack by bundling them with the popular GECs. The bundle becomes attractive for consumers to subscribe to and the less popular channels obtain reach to improve their viewership and advertising revenues.
“Broadcasters have approached us for exploring the possibility of moving the Hindi GECs up the pay package ladder. We are weighing the negative impact this will have on our carriage fees in the short run. But this is definitely in the roadmap and ARPUs will have to go up for the betterment of the industry,” said Hathway Cable & Datacom managing director and chief executive officer Jagdish Kumar.
MSOs, however, will need time to take such a step. “We are grappling with other issues. Our top priority is to come to a settlement on revenue share with the local cable operators (LCOs). We have not started discussing this [moving GECs away from the pay channel base pack] with the LCOs,” said Kumar.
The smaller towns will take even longer to absorb a higher pay pack containing the popular GECs. “It will be difficult for us to ask consumers to pay more. We have been loading the subscribers with first buying a set-top box (STB) and then increasing their monthly cable TV bills. Now we will have to sell packaging to them and then also ask for more monthly payouts. All this will take more time. Otherwise, we will lose subscribers to DTH,” said Universal Cable Network’s Shailesh Jain, a Kanpur-based operator affiliated with DEN Networks.
The implementation—if and when it happens—will first be possible in the metro and the bigger cities. “We will have to look at the consumer perspective in the Phase II, III and IV of DAS [digital addressable system] cities. The ground reality needs to be taken into account,” says Kumar.
DTH service providers will wait for the MSOs to lift ARPUs before they start seriously tinkering with theirs. “The industry has started thinking of raising ARPUs and placing the Hindi GECs in the second-tier package is one such idea mooted by some broadcasters. But this can only be possible when the MSOs start billing and packaging,” says Dish TV CEO RC Venkateish.
There is another challenge that the industry will need to overcome. The competition between MSOs and DTH operators on pricing will continue to stay. “We will never give up our price advantage over DTH. We will also be able to offer local-level pricing,” Kumar added.
With the Telecom Regulatory Authority of India (TRAI) preparing to come out with a set of regulations for content aggregators, the push to move the Hindi GECs to higher-priced packages will slow down. The sector regulator is looking at disallowing content aggregators from forming bouquets which have channels from more than one broadcaster.
“The situation will change once TRAI comes out with its regulation for content aggregators. The proposal to move leading GECs to a higher pay pack will take a backseat,” said the CEO of a television distribution company who did not wish to be named.