TV.NXT 2014: E&Y unveils 10 trends that will drive the future of TV

E&Y's Ashish Pherwani and Devendra Parulekar unfolded Ernst & Young's predictions for the next five years of the Indian television industry.

In the fourth edition of afaqs! TV.NXT, Ernst & Young released the 10 trends that will drive the future of television in India.

Ashish Pherwani, advisory leader - India for media & entertainment, E&Y and Devendra Parulekar, head - information security & privacy practice, E&Y talked to the audience about the trends that will hit India. The first trend: 'Unbundling of Content will Drive New Revenue Models'.

According to the Report, in the last two years, video viewers online have grown by 20 per cent a year - from 42 million viewers in 2012 to 72 million today. The number is expected to rise to 250 million by 2017. "Given that TV's reach is 550-600 million, this will create a pretty large shift in viewing habits. We are going to see content getting unbundled and consumers will watch more and more content online. For a broadcaster, this means that the channel loyalty is reduced and programme loyalty is very high," Pherwani explained.

The implications here would be that there will be need for sachet pricing models - pricing by episode, series or day will be required. The question here was whether the online audience be aggregated with the TV audience and sold to advertisers or should they be sold to separate advertisers? Are today's sales teams empowered to actually sell different types of audiences? Also, the online audience will be perceived as more valuable - they have broadband connection and that's still a premium product. "That's the key challenge for broadcasters in terms of unbundling of the content," Pherwani mentions.

The second trend, 'Technology will Enable Omniplatform Consumption', will see two sub-trends. The first is smartphone penetration, which was 14 per cent last year and is expected to reach 66 per cent next year; the second is that overall internet subscribers will go up from 250 million today to 550 million subscribers in next three years. There would be two critical outcomes of these trends - as people start using multiple devices, there will arise a disproportionate amount of streaming. The study showed that a 4G customer is three times more likely to watch an online video than a 3G customer. He also watches four times more content than a 3G customer.

"The first thing that the broadcaster will have to do is go back and re-architect their existing technology to inject the content and eventually broadcast the content through multiple platforms. So, you have a common pipeline where the HD content is converted into digital format and that is streamed into tablet, mobile, to a TV screen or may be any other screen which we today do not know of," elaborated Parulekar.

The third trend is the 'On-tap Content will Lead to Time-shifted Bingeing'. As there is no need for immediate viewing (except in sports and breaking news), viewers will access most content at their ease, and indulge in bingeing (consuming many episodes at once). The implication of this trend would be that the digital asset management would need to be strengthened to enable subscription revenues, new pricing and packaging models would emerge and there will be growth of multi channels networks.

The fourth trend is 'Increased Materialism will Move TV Consumption from the Living Room to the Bedroom'. The share of niche channels is growing and well. Also, the GEC won't be a one-size-fits-all GEC. Pherwani says that sub-GECs will get created which will be more targeted towards various audiences. So many devices will enable broadcasters take bigger bets on new types of content, channels, that they can actually launch.

Trend five is titled, 'Increased Broadband will Result in Increased Piracy'. E&Y estimates that in 2014, with a 6 per cent broadband penetration in the country, there is about 15 per cent of the TV industry's revenue that is being lost to piracy. E&Y expects that as the broadband penetration grows to 15 per cent by 2017, piracy will grow further, especially when broadband rates fall and come on par with cable rates. There would be a need for industry-level initiatives to curb piracy and flexible and fair content pricing models.

The sixth trend predicts that 'Increased Content Cost will Shift Power to the Content Producer'. Pherwani adds that content acquisition cost has gone up by at least 20 per cent last year and an average film would cost Rs 30-50 crore - or even higher for a big Bollywood movie - to be brought on TV. Even for TV, KBC, Yudh, 24, Bigg Boss (season 8), Mahabharat, are all produced at a price which could not have even be imagined earlier. "I don't think any of these would be profitable individually but the overall channel perception these have created made sense. The point is how long can these investments be made at a loss? At some point the tide is going to turn and the IP which is currently owned by broadcasters will start to be co-owned, even on the fiction side. Therefore, the power will move away from broadcasters and a bit of it will come down to the content guys as well," Pherwani mentioned.

The seventh trend is: 'Digitisation will increase the importance of niche channels'. India will digitise its distribution across phase I to III, and increased collections from subscribers will trickle to broadcasters. Phase IV will remain a fragmented or HITS play, with LCOs retaining their last mile relationships. According to Parulekar, the biggest change that might happen is the change in the management in the cable industry. The DNA of the cable industry has to change.

The eighth trend pointed out that 'Transparency will Lead to Per-viewer Carriage Models'. Carriage is a distribution cost and will be recognised as such, till such time MSOs begin to collect a larger share of subscription revenues. The implication of this would be that the pre-viewer carriage models will come into being and there will be a split across 50 large and medium distributors.

The ninth trend showed that 'Unicasting Could Lead to Result-based Ad Models'. According to E&Y, the ad service will change to unicast models, targeting individual viewers, like the internet. The implications of this would be that advertisers will begin to pay per ad served and viewed, and increased measurement will be the norm. Also, the value of a served customer vs a mass customer will be determined. There will be the use of return path (where possible) to drive interactivity.

The last key trend is that 'Social Dynamics will Lead to More Real-time Feedback'. Apart from viewership measurement, trends from social media like Facebook and Twitter will provide inputs to marketing, pricing and story-telling. The implication of this would be the need to implement social media crawlers and big data analytics and a content supply chain that needs to be flexible.