TV.NXT 2014: FTA's Hopes and Challenges

A panel discussed FTA channels' future, hurdles and nuances on Day One of afaqs! TV.NXT 2014.

As the nation moves towards a digitised world, the free to air (FTA) market grows even more important. With the opportunity to reach over 18 million homes in India, no one can ignore the FTA segment. TV.NXT 2014 invited a panel of broadcasters, distributors and advertisers to explain and discuss their hopes and challenges in the FTA regime.

The speakers included LV Krishnan, CEO, TAM Media Research; Bharat Ranga, chief content & creative officer, Zee Entertainment Enterprises; Tarun Katial, CEO, RBNL; Ashok Venkatramani, CEO, MCCS (India) and K Satyanarayana, senior vice president, R K Swamy Media Group. Presiding over the session was Pankaj Krishna, founder & CEO, Chrome Data Analytics and Media.

Krishna started off the session by explaining the concept of FTA in layman's terms. But what got the ball rolling was Krishna's question whether broadcasters, who pay a hefty fee to be on the Doordarshan free dish, were actually monetising and making use of the opportunity.

Satyanarayana explained that from the advertiser's perspective the answer was yes, because in spite of very limited free channels available, media planners do not plan according to FTA or pay channels. What media planners look at instead is the reach that they will get. He added that a free dish also adds 10 per cent incremental reach to the cable channels, which is of advantage to the players.

Venkatramani did not hide the fact that given a choice everyone would have loved to go the 'pay way'. However, the ecosystem where the broadcasters cannot control their price, or the price at which they sell to the MSOs as well as not being able to invest in good quality content has held them back. "Fundamentally in my mind, any channel that is creating a business model based on advertising revenue is flawed. Revenue on the rebound is not sustainable in the long term. If we want to be sustainable and invest in good content, we will have to approach the pay model," explained Venkatramani.

Moreover, he felt that the free dish is expensive as it stands at Rs 30 per household, not to mention that consumers in certain markets want different content from what is being offered. Krishnan asked the players to recognise the consumer first. He wondered if the consumer is the one who cannot afford to graduate to a pay channel and if so, the value of this customer from the potential targeting point? Is it financially viable to create content exclusively for the customer after all? Krishnan explained that this customer is the one who suddenly has a lot of options and time to spend on TV viewing because he invariably doesn't get distracted by other media as much as those in the urban markets. He also touched upon the power problem, because of which many households can't watch television in spite of investing in a set.

Katial shared his experience of entering the market late and having to differentiate in many ways. He explained that RBNL decided to see which geography they wanted to target and then decide on the distribution platform and marketing. "We understood our geographies and created content for them. But we realised that we also needed a unique distribution platform and the DD free dish sat exactly well into that plan of ours. Most advertisers today are looking to penetrate rural India and look at larger media dark markets. But the content must be built on their consumer insights. You cannot build on metros and hope that it will work in rural areas."

According to Ranga, in 10 years, there will be an FTA market, a paid market and a premium paid market. "Pay," he said, "will have a dual revenue scheme - subscription and advertising. FTA would be advertising-led while premium pay could be subscription-led." Since FTA is the first television adopter, the rural go to either terrestrial or FTA. But Ranga expects that free dish will start offering pay packages, while all pay channels will start offering free to air in times to come. Ranga expects premium pay to reach Rs 1,500-2,000 in some years.

Ranga disclosed that though Zee's new channel Zindagi has done well, it has not lived up to the pre-launch expectation and excitement. However, he pointed out that the channel's viewership had doubled in the last eight months. Referring to Sevanti Ninan's presentation on digitisation and the rural poor, he said: "I disagree with Ms Ninan's presentation which said that the rural viewers need only information. I think the Krishi Darshan days are over. They work very hard and they need to be entertained as well. Maybe the kind of entertainment they need is different and we have to create that," he opined.

Coming to the topic of Geotagging, Katial explained that large MSOs in key markets can do geotagging. But he feels that the FTA channels will have a delta when the entire 10+2 debate gets over. He hopes that there will be a more elastic rule on advertising for the FTA channels.

Venkatramani explained that FTA is like a discount segment which has the lowest margins, thereby working only on scale. However, the challenge for FTA lies in the fact that it not owned by a large group, but rather by fragmented channel companies.