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Idiot box may turn smart next year

Idiot box may turn smart next year
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First Published: Fri, Dec 30 2011. 12 43 AM IST

Updated: Fri, Dec 30 2011. 12 43 AM IST
Mumbai: Get a fix on the local vegetable prices, watch a movie on the day of its theatrical release, keep an eye on weather updates, or play a video game online with multiple partners who could be sitting anywhere in the country, or overseas—all these on the television screen in the comfort of your home.
The advent of digital television in the new year will open up countless such possibilities to consumers in the metro cities, where the term “idiot box” may no longer be apt for the TV set.
After Parliament’s approval for the Cable Television Networks (Regulation) Amendment Act, 2011, on 19 December, the decks have been cleared for the phased digitization of cable TV content starting with the four metros—Delhi, Chennai, Mumbai and Kolkata—by next June.
The mandate for complete digitization of cable channels by December 2014 is seen as the biggest game changer in 2012 by experts tracking the media industry. Revenue from cable distribution is expected to leap from the current Rs20,000 crore a year to Rs50,000 crore as a result of the move, which will also bring transparency to the sector, according to Hong Kong-based consulting firm Media Partners Asia.
Multi-system operators (MSOs) are gearing up for the first phase of digitization by ensuring that their head ends—equipment that receive television signals for distribution—and analogue cable infrastructure are digital-ready. MSOs are large cable distribution companies that tie up with neighbourhood cable operators who connect the last mile to TV households.
For turning the metros from analogue to digital, 12-14 million set-top boxes will need to be deployed. In short, each MSO will need to provide at least 2-3 million such boxes. The cost of such deployment in the metros will be Rs5,000 crore to Rs7,000 crore, says Ashok Mansukhani, president of MSO Alliance, a trade association.
Some 400 new channels will be launched in the near future, many of them from foreign networks in niche genres, says Jagjit Singh Kohli, founder of Digicable Network (India) Pvt. Ltd. For the transition, Digicable has ordered premium set-top boxes manufactured by a technology company in Pune that will allow consumers to log in on social networking sites and play YouTube content on television, Kohli said.
“We will offer video-on-demand service, where the consumer can actually pause, fast-forward and rewind content,” Kohli said. “We will offer yellow pages and other such services as well.”
Some of these services are already being provided by Internet Protocol television companies, but digital cable that will eventually reach 14-15 million homes will expand their scope.
To offer such services, cable operators will either hire or set up their own servers. MSOs have also initiated talks with business process outsourcing companies to set up call centre services for customers. The new scale of operation will require significant capital investment and is expected to trigger mergers and acquisitions among MSOs, said Kohli.
According to the Media Partners Asia study, the government is expected to earn roughly Rs5,000 crore in the next three-four years in tax receipts thanks to digitization that will eliminate under-declaration of subscriber numbers by cable operators. Because television signals will not be piped into homes without set-top boxes, all cable homes will be accounted for in calculating tax.
Niche channels will benefit particularly from digitization, according to Sudeep Malhotra, publisher and managing director of Satellite and Cable TV magazine, published by SCaT Media and Consultancy Pvt. Ltd. Such channels currently pay Rs2-3 crore a year as carriage fees to get noticed on analogue cable.
“Since digital cable removes space constraints, carriage fee will decline. These channels can reach out to specific audience segments and be assured of subscriptions,” Malhotra says.
Sunil Lulla, chief executive of Times Global Broadcasting Co. Ltd, said the viewer now pays just Rs0.50 per hour of television viewing.
“The reason why TV is so profitable in many parts of the world is the force of subscription fees, which go a long way in getting good content, great brands and in making terrific businesses for all involved in it. However, the transition into digital systems will need greater trust among stakeholders,” he said.
Broadcasters would see sustained growth in subscription revenue over the next five years as digital progressively replaces analogue cable all over India, says Paritosh Joshi, chief executive officer of STAR CJ Network India Pvt. Ltd.
Digitization will shift the focus of MSOs to consumer billing from revenue generation from broadcasters. Getting a share of revenue that the local cable operator collects from the consumer is hard because the market is highly fragmented; charging broadcasters carriage fees has been easy and consolidated large sums of revenue in a small number of transactions.
“With the broader pipe, the revenue focus will have to shift back to consumer billing,” Joshi said.
The new digital ecosystem will also benefit television channels that can experiment more with break-free programming in order to gain viewership. Sanjay Jain, chief financial officer of Star India Pvt. Ltd, said broadcasters pay Rs.2,000 crore plus yearly in carriage fees to ensure good placements on analogue cable.
“With digitizing both frequency and clarity should not be an issue and we are hoping that the carriage fees will stop (altogether),” Jain said.
As subscription revenue grows, more broadcasters could reduce advertising inventory like Star India channels and offer uninterrupted viewing, Jain said.
Of course, there are sceptics. A lot of the talk around transparency, value-added services (VAS) and broadband may be just that—talk, says Ashish Pherwani, associate director, media and entertainment, at consulting firm Ernst and Young. For consumers, digitization will come at an additional cost even though the set-top boxes will be hugely subsidized.
“Essentially, there are three kinds of boxes—regular set-top box, high definition and VAS. The latter two are premium in pricing and will have few takers,” he said.
Left to market forces, there may not be much transparency in the billing systems even in a digital environment, he cautions.
“From our talks with the MSOs, we understand that local cable operators are free to charge whatever they want from subscribers. It is likely that the customers who are used to paying nominal sums may not be willing to pay more.” MSOs may have to go back to making up the deficit from the broadcaster, he says.
anushree.m@livemint.com
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First Published: Fri, Dec 30 2011. 12 43 AM IST