Ananya Saha
Jul 28, 2015

Double Standards: Subscription-funded premium English TV?

Ferzad Palia, EVP – Viacom18 and head – English entertainment, and Debraj Tripathy, MD, MediaCom India, on the sustainability of subscription-driven channels in the space

Double Standards: Subscription-funded premium English TV?
Can subscription drive premium English entertainment television?
Ferzad Palia (FP): Subscription is a very important part of revenue for broadcasters today. It will become increasingly more important.  There are two parts to it: pay TV subscription and premium pay subscription. The model for pay TV subscription has been prevalent for years, and seems to be evolving with digitisation and more addressability. On the premium pay subscription model, we are sometime away from realising its true potential. The fact of the matter is that it increases the scope of offering for many broadcasters if subscription were to become the lead revenue. The dependence on advertising, therefore, would reduce. It is very exciting times. We have a bullish outlook on the future for subscription.
Debraj Tripathy (DT):  No, I don’t think so subscription alone can drive premium English entertainment TV in India. In my opinion, it is not about viewers not being able to afford but more about viewers finding other ways to get the content free.
Is Indian audience ready to pay for premium English entertainment content on television?
FP: Yes, they are ready to pay for premium English entertainment content. The well-traveled audience know that the quality of television that we have today, would cost much more if they were subscribing to it in say, the United States. There is a lot of inertia in getting the money out of consumers’ wallets and that is the problem. It doesn’t hurt their wallets at all. They are interested in the latest content, and are happy to pay for it. We, as broadcasters, need to make it easier for them to be able to pay, and make it available to them where and when they desire.
DT: A very small set of consumers are probably willing.  I, however, think this set is quite small and might not be big enough to sustain a channel.
Can subscription become lead revenue source for channels for this genre? By when?
FP: We are nearing an inflection point, and if we can make it easier for consumers to pay and easier for broadcaster to receive what the consumer pays, it can happen in next five to seven years for this genre.
DT: Yes in the future, but not now. Can’t say by when, with any degree of precision.
Cost of such premium content is rising, say stakeholders. Do you agree? Will the content cost (production/acquisition) impact the move to subscription adversely?
FP: Yes, I do agree. Broadcasters cannot do standalone subscription model today. Advertising still forms the major chunk of the revenues. Broadcasters who are already part of pay TV, can branch out to different offerings. Then it could possibly become a viable standalone service. But not for a broadcaster who doesn’t already have a pay TV offering.
DT: Content cost, as a whole, is rising given the quality of production needed and I do not think it is any different for premium English content. With rise in content costs, a pure subscription play will be more difficult to sustain.
Could video on demand (VoD) options find more favour than TV channel subscription for premium content?
FP: If you look at this worldwide, it is not one or the other. TV subscription continues to stay. On demand may pick up, and will pick up, but will not replace television.
DT: Yes, VoD will probably work better, where the royalty costs are linked to the number of views.
Would free/pirated content be one of the big barriers to people paying for premium content? Is this a bigger issue in India than developed markets?
FP: I don’t think the consumer is downloading content because it is free. They are downloading because they are not getting what they want when they want to watch it. If this is corrected, I don’t see the consumer wanting to download illegally.
DT: Yes, it is a big barrier. I do believe it is a bigger issue in India than in developed markets.
What is the scope of new premium English entertainment channels in India? Is there room for more? Are there any particular genres or niches they should look to occupy?
FP: The genre is just about getting new wings and it is set to explode. Comedy Central occupies the happy space. There is scope to create such offerings. Having said that, when you do it, you are limited to one particular genre. If it is a GEC, you can air whatever is trending. For instance, super hero is the new big trend in the West with series like Arrow, Flash. It’s a great space to occupy, and clearly defined and differentiated. Moreover, it is a great space for a broader offering.
DT: I think there is room for more, particularly for channels that concentrate on specific genres.
(This article first appeared in the 24 July 2015 issue of Campaign India)
Campaign India

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