The sector has been working against the tide to keep locked down citizens well-informed and well-entertained during the pandemic. With payment collections down 84 percent and consumers turning more value-conscious, the industry is fighting a tough battle.
For more than 60 days, India’s cable TV industry has been doing some serious heavy-lifting. But excessive workouts without replenishment can have serious consequences for one’s fitness. Ditto for an industry that services 83 million connections even as collections fall more than 80 percent in the wake of the COVID-19 pandemic.
Under the Ministry of Home Affairs’ directive, India’s broadcasting and cable TV services industry has been operational round the clock to ensure citizens are kept abreast of latest developments on the COVID-19 outbreak and are well-entertained through reruns of old popular shows and movies as they stay indoors.
According to the latest report by business intelligence enterprise Intin titled ‘Cable TV Fitness Check’, 63 percent of cable operators surveyed claimed to have either maintained or increased their performance during the lockdown. The survey assessed the Multi-System Operators’ (MSOs) performance basis two parameters: an increase or decrease in complaints received from existing subscribers and the MSO’s self-assessment of their ability to service customers during the lockdown.
Coffers run dry
Even as cable operators keep their masts flying high, however, their coffers have been running dry. The report states collections are down 84 percent and the sale of new set-top boxes has fallen 75 percent. That’s hardly surprising.
With the country under lockdown, collections have suffered as housing societies ban outside members, including Local Cable Operator (LCO) agents, from entering their premises. Even with the introduction of digital modes of payment, only 50 percent payment is being received month on month, according to Arvind Prabhoo, President, Maharashtra Cable Operators Foundation (MCOF). The migrant crisis has also led to a mass movement of workers from the cities to their native villages, leaving payments hanging even as services continue uninterrupted.
With new content production on hold, broadcasters have resorted to playing repeat telecasts of old shows such as ‘Mahabharat’ and ‘Ramayan’. While this has certainly been a treat to watch on free-to-air channels, for pay-TV consumers rehashed content is a raw deal. As ‘value for money’ becomes more important during the lockdown, 41 percent operators reported that subscribers were downgrading by deleting channels from their packages.
While there has been an upside in viewership of news channels and movies, genres such as sports, General Entertainment Channels (GEC) and infotainment suffered heavily with 65 percent, 32 percent and 12 percent decline in viewership respectively. This is concurrent with the significant consumer shift to Over-The-Top (OTT) platforms such as Netflix, Amazon Prime and Zee5; 54 percent of cable operators anticipate OTTs to have a negative impact on their business in the near future.
Revenues expected to decline
With cash flows severely impacted and the cost of operations mounting, cable operators are sitting on the edge. The Intin study claims 77 percent of cable operators expect revenues to decline in 2020-21 as consumers continue to go in for cheaper packs, with 32 percent expecting a drop of more than 25 percent.
Given the difficult situation, cable operators have been clamouring for payment relief and discounts on pay channels. The survey, however, shows that the top five broadcasters including Star India, Sony Pictures, Zee, Colors and Sun TV have offered no discount on their channels. This could be an “opportunity for broadcasters” claims the report. But with broadcasters crying afoul at the lack of money to restart new production, how is this possible?
“When the economy goes into recession, the big ships will be hurt but smaller boats will sink. It is the responsibility of the big ships to save the small boats from sinking. Cable operators are a subset of the broadcasting industry and it is imperative broadcasters hold them up during this pandemic,” says Neeraj Sanan, CEO, Intin.
With the lockdown in its ninth week now, the TV industry’s currency – its viewership – is under threat of erosion. With ARPUs expected to decline significantly going ahead, the report outlines a number of actions to stem the damage and revive the industry. In line with broadcasters’ demands for digital payments to be made mandatory, the report recommends making cable collections 100 percent prepaid and online.
The days to come will see increased competitive pressure among broadcasters to net more subscribers. Broadcasters and cable operators should join hands or on a standalone basis launch “targeted consumer offers”, recommends the report. “Sale, sale, sale – that’s the mantra to stop the TV industry’s value from getting eroded by downgrading. Consumers will need a heavy dose of sops through discounts, incentives and freebies to halt the leakages in value creation. Targeted marketing offers are required in circles where ARPUs are declining,” says Sanan.
Prabhoo of MCOF concurs. “Broadcasters and cable operators should come together to launch joint marketing plans. This could include specific packages for senior citizens, students or other specific categories. They need to be enticed with discounted long-term packs. The marketing revenues that accrue thereof can be shared between all stakeholders,” he says.
An uphill task
MSOs don’t necessarily agree. A senior executive from a leading MSO says unless broadcasters find a way to reboot their content and make it relevant to consumers, no amount of marketing will do the trick. “Consumers are running out of patience. They can’t be expected to pay the same ARPU for content that is available at no cost on DD Free Dish. Broadcasters will need to go back to the drawing board and decide what content is desirable to consumers. That’s the only way to stop subscribers from downgrading or going out of the pay-TV ecosystem,” he said.
Foraying into the OTT space could be the big game-changer, recommends Intin. At present, only 24 percent of cable TV players have their own OTT platforms offering pure-play cable content. Large MSOs in pockets of Punjab, Gujarat and Maharashtra often have upwards of 80 local cable channels, which can be readily primed to their own OTT platforms. By offering loyalty programmes, cable operators could look to migrate their TV viewers to their OTT offerings.
Here’s the hiccup though. While cable operators universally accept that most customers do require broadband services, only 57 percent cable TV players offer cable internet/broadband services. The reasons are aplenty.
“Smaller cable operators are often pressured by larger MSOs to subscribe to their broadband services. In many cases, this is not value accretive to them. Others may not be technically qualified to offer broadband services, yet others have forayed into more attractive sectors such as ticketing, software development or even movie production,” says Prabhoo. The Intin report suggests that cable operators should look at offering a combo pack of internet and cable to allow for revenue maximisation and cross-subsidisation.The Intin report is based on a survey conducted on 92 MSOs, representing 25 states, and was conducted between May 10 and 15.