Robust growth seen in India's pay TV business

Tuesday, 29 April 2008, 05:57 Hrs
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New Delhi: India's pay television industry is projected to grow at 16 percent annually to log revenues of $11.3 billion by 2012 and emerge as a key driver of this business in Asia, says a new study.

"India will remain a leading pay TV market in Asia with superior growth prospect indicating a huge upside for the future," says the study by Honk Kong-based Media Partners Asia, a leading think tank on media and communications industry.

"Much of the region's digital growth will be driven by China and India, though India will have a more significant impact for pay TV distributors and content suppliers," adds the study on pay TV and broadband markets in Asia-Pacific.

The study says the total pay TV revenues in India will grow further to top $18.5 billion by 2017, with subscription revenues of $12.3 billion and advertising amounting to $6.2 billion.

In 2007, total pay TV revenues amounted to $5.25 billion, of which subscription revenue was $3.77 billion and advertising accounted for $1.48 billion, with a subscriber base of 81.67 million.

The study also projects the subscriber base to expand to 137 million by 2012 and 163.8 million by 2017, with an annual growth of 10.9 percent for the first five years and 7.2 percent for the remaining five.

Yet, the study also points out some policy anomalies, especially on the issue of foreign direct investment. "India has a fair share of regulatory anomalies and these appear to be becoming more marked," it says.

"Foreign investment norms in media is inconsistent," it says, pointing out that while it is capped at 20 percent for the direct-to-home business, the same is higher at 49 percent for cable and as much as 74 percent for telecom.

"The government is in favour of increasing the foreign direct investment cap to 74 percent in direct-to-home and headend-in-the-sky platforms, but has stated that the cap will remain at 49 percent in cable," it says.

Similarly, the study notes that the a-la-carte mode of content choice introduced by the regulator, where subscribers can pick the channels they want to see, along with a freeze on subscription fee, increases the barriers for niche channels.

This apart, the stipulation by the government that broadcasts of sporting events - like cricket, notably - must be shared with state-run Doordarshan has resulted in some channels not being able to make money their exclusive rights.

"India is fairly unique in this respect."

Given a choice between direct-to-home satellite broadcast and cable television, the study favours the former due to two major factors - direct connectivity and superior financial muscle of the players.

For example, players like Reliance Anil Dhirubhai Ambani Group, the Tatas and Bharti are billion dollar conglomerates, while STAR, Zee and Sun TV have key strategic investors waiting to pump in more money into the business.

"We expect a major ramp up from 2008 onwards with the launch of new direct-to-home services from Sun Direct, Reliance Communications and Bharti," it says, adding that competition, too, would intensity.

It also says that while India will have enough homes with incomes to sustain six direct-to-home operators, it still expects a market consolidation that will bring down the number of players to three, due mainly to long cash-flow cycles.
Source: IANS
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