While coronavirus led to a drop in India's pay-TV revenues last year, it is expected that this year it will see a strong recovery on the back of fresh content and live sports with improvements in consumer and economic sentiment.
According to a Media Partners Asia (MPA) report, total pay-TV industry revenue including subscription and advertising declined 10 percent year-on-year in 2020 to USD 8.9 billion as the economic downturn post-COVID eroded advertising.
MPA is an independent provider of research, advisory and consulting services across media, telecoms, sports and entertainment industries.
As for pay-TV broadcasters, the report noted that last year they generated USD 4.4 billion in total revenue of which 62 percent came from advertising and 38 percent from subscription. Overall, revenue of pay-TV broadcasters was down 17 percent year-on-year.
Despite the losses last year, the report estimates a sharp recovery over the next two years.
“Robust backend systems, the ability to offer consumers flexibility in choosing channel packages under NTO (New Tariff Order) and the exit of leading private channels from DD Freedish helped the DTH pay-TV sector grow even after the new Telecom Regulatory Authority of India (TRAI) tariff regulations came into effect. Going forward, DTH will be the key driver of growth fulfilling the needs of the majority of new TV households entering into the pay-TV ecosystem,” said Mihir Shah, MPA India Vice President.
The report estimates that India’s pay-TV industry will grow at seven percent CAGR (Compound Annual Growth Rate) between 2020-25. And total industry revenues including subscription and advertising will reach USD 12.3 billion by 2025.
When it comes to advertising, it is expected that pay-TV advertising will grow at 12 percent CAGR over 2020-25, after a 25 percent contraction in 2020.
In addition to growth in revenues, the report expects that more than 96 percent of India’s pay-TV homes will be digitalized by 2025 with total pay-TV subscribers expanding from 127 million in 2020 to 134 million by 2025.
While Shah is expecting strong growth in the pay-TV sector, he pointed out the challenges the space is facing due to TRAI regulations.
“Trai’s heavy spate of regulations in recent years have depressed investment in pay-TV content and limited price elasticity for platforms. This could have detrimental impact on the quality of content available for the mass market. We expect that more consolidation will play out in the broadcasting industry as recent tariff amendments force incumbent broadcast networks to recalibrate existing channel portfolios. The economics of less popular channels and several niche channels are no longer viable."