MUMBAI: The penetration of paid Cable & Satellite (C&S) television households in India is expected to grow to 173 million by 2017 representing 91 per cent of TV households.

The Ficci KPMG report on the Indian television industry pegs the number of paid C&S households to be in the region of 121 million, which is 79 per cent of the total TV households in 2012. The report excludes DD?s free Direct-to-Home platform DD Direct.

The number of TV households in the same period is expected to increase from 154 million to 191 million aided by strong growth in sale of television sets. The number of C&S households in India increased by 11 million in 2012 to reach 130 million.

Approximately 14 million television sets were sold in India in 2012, the report said adding that a large proportion of these television sales represent replacement of old television sets, institutional TV sales, and a second or third TV set entering a household.

The television industry in India is expected to grow at a CAGR of 18 per cent over 2012-17, to reach Rs 848 billion in 2017 from an estimated Rs 370 billion in 2012 aided by digitisation and the consequent increase in Average Revenue Per User (ARPUs).

The share of subscription revenue to the total industry revenue is expected to increase to 72 per cent (Rs 607 billion) in 2017 from 66 per cent (Rs 245 billion) in 2012. The television ad revenue to the total industry revenue during the same period will decrease to Rs 240 billion (28 per cent) in 2017 from Rs 125 billion (34 per cent) in 2012.

Digitisation of cable, which is expected to usher in an era of transparency, will reduce carriage fees, building a case for the launch of niche channels and investment in content for existing channels.

Developments and refinements in viewership measurement systems may affect the way advertising is distributed among channels, the report stated.

As per Ficci KPMG Indian M&E report, most stakeholders had indicated a delay of 6-12 months for complete digitisation across metros, and that DAS is likely to be successful in comparison with the earlier CAS.

While there have been implementation challenges in Chennai, DAS rollout is estimated to be almost complete in Delhi and Mumbai. Kolkata is expected to be largely digitised by the end of March 2013.

?The digital ecosystem in India cannot remain where it is. It will either move forward to completion, or regress, like CAS did. If Phase 2 and 3 don?t go through, even the metros will relapse,? said Ficci Media & Entertainment Committee chairman and Star India CEO Uday Shankar.

The TV industry has witnessed a trend of broadcasters coming together to consolidate their distribution functions, to improve negotiating power. Mediapro and One Alliance are examples. This trend continued in 2012, with the formation of IndiaCast to distribute Viacom18, Disney and Eenadu Group channels.

Digitisation upside was not materially felt in 2012 since MSOs are still in the process of establishing subscriber management systems, except for sports and niche segments. The broadcaster-MSO agreements continue to be based on fixed fee arrangements for the most part.

MSM COO NP Singh said, ?Early benefits of cable digitisation were seen in the form of some increase in subscription revenue and some decrease in carriage in two major metros. However, real benefits will come in over the next 2-3 years as other towns get digitised.?

Industry experts pointed out that digitised markets of Mumbai and Delhi have witnessed a 15 to 20 per cent drop in carriage. In some cases, broadcasters have continued to pay the same carriage, but are able to carry a larger bouquet of channels at the same cost.

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.

?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,? feels Zeel chief strategy officer Atul Das.

In the process of digitisation, while STBs have been seeded by MSOs, and the consumer has started receiving digital signals, packages have not yet been deployed. The consumer is receiving the full portfolio of channels from their MSO. However, this has helped MSOs retain a large share of their analogue subscriber base.

While MSOs appear to be optimistic about deploying packages by April 2013, the larger industry believes that this process may get done sometime in the second half of 2013. Deployment of packages, being a way to differentiate the customer base, is a key driver to raise Arpu.

DTH and Digital cable to co-exist

The Indian market, the report noted, is large enough to provide significant growth opportunities for digital cable as well as DTH service providers.

Digital cable, which has 19 million subscribers out of a total of 130 million TV homes, will grow to 81 million subscribers in 2017.

DTH with 44 million subscribers is expected to touch 90 million subscribers by 2017, thereby becoming the biggest platform.

The ARPU for digital cable is expected to be on par with DTH by 2017. Arpu for digital cable is projected at Rs 289 per month from Rs 166 in 2012 while Arpu for DTH is projected to grow to Rs 293 in 2017 from Rs 170 in 2012.

Ad slowdown and impact on the TV industry

The television advertising industry continued to be under pressure due to the soft global and domestic economic condition. This resulted in muted growth, particularly in the first half of 2012.

On an overall basis, the total TV advertisement market is estimated to have grown around 8 per cent in 2012, lower than industry expectations. In comparison, growth in the TV advertisement market was estimated to be 12 per cent in 2011 and 17 per cent in 2010.

?2012 has been the toughest year in recent times; in many ways, it was even worse than when the subprime crisis hit in 2008. At least then, the sentiment was still bullish coming on the back of a few years of robust growth. This time, the mood is a lot more downbeat. Everyone is going into capital conservation mode. Having said that, in 2008, the perception of things to come was much worse than reality and ad spends were perhaps cut down a lot more than was warranted,? Shankar elaborated.

The total number of channels increased from 623 in 2011 to 845 in 2012, leading to an increase in advertising inventory. Most of the volume expansion is estimated to have come from other genres while GEC volumes remained stable. Existing GEC broadcasters may have seen a limited increase in free commercial time.

The top 10 sectors continued to account for approximately 60 per cent of the overall TV advertising volume share during 2012; similar to the past three years. The FMCG sector continued to dominate the advertising space with 9 out of Top 10 advertisers being FMCG players. Personal products (care and hygiene, accessories, hair care, healthcare) accounted for 26 per cent of advertising volumes in 2012, up from 25 per cent in 2011, and 23 per cent in 2009.

Bulk buying on account of large FMCG companies maintained the pressure on advertising rates. Hindustan Unilever with the largest portfolio of brands continued to maintain its position as the top advertiser on TV by a wide margin.

Continuing the trend observed in the past few years, advertisement revenue growth was largely attributable to volume growth. Rates continued to remain flat or even declined in some cases.

MUMBAI: For a $15 billion media and entertainment industry, the lack of reliable data is one of the major factors pulling down growth.

Star India CEO and chairman of the Ficci Media & Entertainment Committee Uday Shankar wondered how a fledgling industry could function without availability of acceptable data.

Urging stakeholders of M&E industry to set their house in order, Shankar said that there is lack of reliable data on audience measurement across verticals of the media and entertainment sector.

"How can this industry function without a shared and non-controversial view of the most basic facts? Numbers are supposed to be the foundations of rational business decisions. How can we make decisions when professionals in the business of numbers can?t get their numbers straight?," he questioned.

The lack of reliable data is not limited to TAM, Shankar elaborated. "As a TV executive, I am surprised sometimes how I am even able to function. I do not know enough about my viewers ? in fact, I don?t even know how many of them are there. There are 140 million cable and satellite homes but the measured universe is 62 million households."

Shankar also said that the country?s premier media agencies differ on a fact as basic as the size of the advertising market.

He also pointed out that it?s not just the television industry that suffers from lack of reliable data. In fact, the whole industry across verticals is functioning without proper data.

"The ambiguity in data for other sectors of the media and entertainment is no less. For instance, no film producer seems to know accurately how many people actually bought tickets to watch his film," Shankar averred.

Shankar also exhorted that there is a need for a change of mindset among stakeholders to take the industry to the next level.

The M&E industry is a real economic enterprise and not just a vehicle of glitz and glamour, one that has the potential to solve the problem of unemployment by creating new jobs.

"The time has come for all of us to make sure that it is not just industry status that we seek; it is a fundamental change in mindset," Shankar said, while delivering his keynote address today at Ficc-Frames 2013, an annual media and entertainment conclave held in Mumbai.

He also said that the M&E industry is capable of creating employment and wealth much faster than most other sectors and has the ability to be a force multiplier, like it is in most countries.

"It is particularly relevant in India because it can be an employment generator without massive public investments and without being hampered by the deficiencies of public infrastructure. Just to put things in perspective, as a $15 billion industry, we employ over 6 million people. This can be so much more significant and meaningful," he said.

He also bemoaned the fact that the industry despite the huge potential has not got the adequate support from government.

A case in point, Shankar said, was the government?s recent decision to increase customs duty on Set Top Boxes, notwithstanding the fact that the cost of STBs will go up at a time when the country is moving towards mandatory cable television digitisation and impose withholding taxes on content rights

"The lens often used to look at this industry is largely one of glamour and propaganda and the biggest debate is on how to control and contain it. As a result, the growth of M&E has not been supported by policy and regulatory initiatives," he added.

Emphasising that the industry is facing an imminent talent crunch, Shankar said: ?We hide under the pretense of creativity and have convinced ourselves that creativity gives us the license to be informal and chaotic. It is this informality and chaos that has seeped into our approach to spotting and grooming talent. This is dangerous. We must realise that discipline and formality are not antithetical to creativity and if anything they are necessary ingredients to fostering the creative process.?

Shankar said efforts to curb free speech in a robust democracy like India is one of the biggest challenges that can potentially derail the industry from its trajectory. ?When Satyamev Jayate points to weaknesses in the medical system, doctors are offended. When Jolly LLB creates a courtroom satire, lawyers are offended. Even when a precocious teenager posts a comment on Facebook, some people start baying for her blood,? he lamented.

?What is interesting to me is that we all agree that the role of media is to question the status quo. But with the right to question must come the right to provoke and the right to offend.?

Shankar also set out the ambitious Rs 10 billion target for Indian movies. "We should work hard and strive for such success. If the stakeholders can come together, a lot can be achieved. We have seen that in the case of digitisation," Shankar said.

NEW DELHI: The 14th edition of FICCI Frames, the annual conclave of the media and entertainment industry in Mumbai from tomorrow, comes against the backdrop of increasing digitisation in both television and cinema.

The three-day event on the theme ?A tryst with destiny ? Engaging a billion consumers? will begin with Information and Broadcasting Ministry Secretary Uday Kumar Varma presenting a vision statement for the information, media, and entertainment industry in the country.

Uday Shankar, Chairman of the FICCI Media and Entertainment Committee, will speak on the theme, while the keynote address will be delivered by Andy Bird, Chairman of Walt Disney International. Dr.Soon Tae Park, Deputy Minister for Culture, Sports and Tourism in South Korea which is the partner country this year, will be the Guest of Honour.

Like every year, the FICCI-KPMG Report on the outlook for the Media and Entertainment Industry will be released during the opening ceremony.

I&B Minister Manish Tewari will be the Chief Guest at the valedictory function on 14 March, which will also feature ?Karan Johar in conversation with Kajol? and panel discussion featuring Uday Shankar and Kamal Haasan, among others.

FICCI Frames 2013 aims to deliberate on the growth of the industry and find ways to maximise both its creative and economic potential. The range of topics to be covered includes digitisation, censorship, marketing, exhibition and distribution.

?Engaging A Billion Consumers in the Media and Entertainment Industry? session on day 1 will see how stakeholders from the world of media and entertainment and policy makers share their perspective and vision on meeting the challenge in the face of emergence of new technologies and media platforms which have given consumers a wide range of choice.
 
?The Second Phase of TV Digitisation? session will discuss the dynamics of digital content and the future roadmap. ?Perception and Portrayal of Women in TV and Film?, ?Re-inventing Regional Content in the Digital Era,? and ?Single Window Clearance: Making India easier for filmmakers,? are among the other important sessions.

Being the 100th year of Indian cinema, FICCI Frames is also launching a film tourism initiative called ?Shoot at Site?, which will attempt to give participants insider?s tips on location-scouting, production facilities and services, and navigating through state-specific production benefits across India.

This year, being the 4oth anniversary of diplomatic ties between India and South Korea, FICCI Frames will focus on culture, tourism, entertainment and business between the two nations. Various sessions will tackle challenges in co-production between India and Korea, as well as potential avenues of cooperation between the two countries. Korea has transformed itself into one of the world?s most outstanding visual technologies centres with CGI and 3D. A 40 member Korean delegation is participating in the event.