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A few figures that emerged recently point to the way India’s linear television story, especially pay TV, is shaping up. The signals are unmistakeable: growth of the mammoth TV industry is hitting a wall. Linear television is now a commonly used term for traditional television where audiences tune in to watch scheduled programmes that are delivered via cable or direct-to-home (DTH) technology. This is opposed to over-the-top (OTT) video streaming, that is delivered over the internet and can be watched at one’s convenience.

Paid users of linear TV have been falling. The decline in paid subscribers was accelerated during the covid pandemic as consumers went online in a big way both for shopping and entertainment. A March 2022 EY-Ficci report on the media and entertainment sector said that online video viewers increased to 497 million in 2021. Paid video subscriptions scaled up to 80 million across almost 40 million Indian households. In the same period, subscription revenue for TV fell by 6.2%, with the loss of six million pay TV homes. Though EY-Ficci said TV households will continue to grow at 1% till 2025, it will be on the back of connected TVs and free television which could cross 50 million, further stressing the core pay television market.

More recent numbers offered by the country’s top broadcasters highlight a deepening crisis. In its June quarter earnings announced last month, Zee Entertainment Enterprises Ltd (ZEEL) reported a 48.9% drop in consolidated net profit from a year earlier. Importantly, its subscription revenue year-on-year was down 5.1% and quarter-on-quarter, it fell 10%. The company argued that pricing embargo (TRAI’s tariff order had capped channel prices) continues to impact linear revenue growth. But a media industry expert said that with prices remaining constant, it is a loss in subscriber base that’s eroding subscription revenue.

The other worrying number was thrown up by K. Madhavan, country manager and president, Disney Star. In an interview to The Economic Times, he said India’s pay TV homes have declined from 120 million to 108 million in the last four years.

In May, this column had argued that low-income households gave up their cable connections possibly due to the financial strain during the pandemic, and moved to Doordarshan’s free-to-air direct-to-home platform FreeDish. Meanwhile, affluent viewers veered towards streaming options.

Media consultant Anuj Gandhi said cord-cutting in India is a reality, though numbers of streaming-only audiences are unverified at between 12 million and 18 million.

TV viewership measurement body Broadcast Audience Research Council (BARC) hasn’t updated its 2020 TV universe estimates of 210 million TV homes either. “If of 210 million households, 108 million are paid subscribers and, another, say, 40-50 million are on FreeDish, it’s not clear where the rest of the TV homes are. Are they watching analogue or pirated signals?" Gandhi said.

“We need to revise our TV homes universe. Not sure if the BARC numbers still hold," said another cable industry expert.

The linear TV universe is still enormous though. A recent global report by PwC said India’s pandemic-hit TV advertising market saw a 10.8% decline in 2020 over 2019. But it recovered and grew 16.9% in 2021 to touch 32,374 crore. PwC forecasts TV ad spends growth at 6.3% CAGR up until 2026.

With ad spend growth rates tapering off and pay TV subscriptions declining, “Linear TV is not a growth story anymore," said Gandhi.

Globally, TV industry is cutting back on employee costs. A recent Bloomberg report said Warner Bros. Discovery was laying off TV ad sales staff. Netflix had announced layoffs, too, it said. “Every business which declines needs a correction. While the TV story is well known, even streaming subscriptions have hit a wall in some markets as reflected in Netflix’ admission to losing subscribers earlier this year," Gandhi said. Streaming services will grow in India though, probably through the aggregator route as consumers find managing multiple apps cumbersome.

But who will be the winners in this churn?

FreeDish and YouTube, said media experts. At the end of 2021, YouTube had 500 million monthly active users in India. “It’s by far the number one channel, the biggest aggregator of content from music, films to children’s content," said Gandhi. And Doordarshan’s FreeDish is already at close to 50 million subscribers.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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