Indian Television Industry: Where supply outstrips demand

An article written by me that appeared on Business Standard on 21-12-2017
http://www.business-standard.com/article/opinion/tv-industry-where-supply-outstrips-demand-117122001360_1.html

TV Viewership and advertising demand is witnessing a de-growth, yet 70 new channels were launched in 2017

It is interesting to see how Indian broadcasting is evolving. Channels with only SD feeds are launching HD versions. From first to second line GECs… started with Hindi and now rolling to other languages. Similarly from first line movie channels to second rung ones. This year also saw quite a rush to launch FTA (Free to Air) channels. In most industries so many launches or re-launches would be a sign of high demand or some kind of a gap plugging. Let us check all indicators.

Do viewers need more choices, are they consuming more TV content?

BARC (Broadcast Audience Research Council, the agency that monitors and releases TV viewership numbers) analysis will show that on a like to like market and target group comparisons, quantum of TV viewing has actually gone down. If one were to extrapolate the BARC TV viewership data, the increase in the number of viewers watching TV is 10% while the quantum of TV viewing (GRPs- Gross Rating Points) has gone up by 8%. Therefore, relatively speaking, quantum of TV viewing has actually gone down by 2% compared to last year (Table A).

Do Advertisers want more channels?

Through personal interactions with many leading advertisers, I can tell you that no one wants new channels. Yes they want good content and good properties, but not new channels. If you look at the demand data (inventory sold, Table B), you will notice some startling facts. First, 61% of the available inventory went unsold until this October as inventory demand fell by 5% compared to last year. Secondly, most genres are selling less than 50% of their inventory. The table sufficiently argues that more channels are not required, at least from the demand perspective.

Does it help to have more channels for better subscription revenue?

A qualified yes. More channels mean television networks get better bargaining power with the distributors. But this is increasingly become theoretical. The idea is to make more money out of subscription revenue. However, if it were that simple, distributors would have themselves launched new channels. A recent case in point was a leading broadcaster’s foray into quality content with a Hindi Movie channel which in spite of good content fell flat as distributors did not agree to its la carte pricing. This year a lot of new channels either got launched or got converted to FTA with the intention of garnering mass viewership. Meanwhile, the government is not renewing the licenses of the FTA channels so where does it leave them?

Drift to whatever, whenever, wherever

A recent report by TRAI showcased how DTH active subscriber base growth has slowed down from 52% (Apr-June 16 over Apr-June 15) to 8% (Apr-Jun 17 over Apr-Jun 16). Compared to that the OTT user base had moved from 63million users in Aug’16 to 164 million users in Aug’17. As the drift moves to smart phones pre-embedded with OTT apps, low cost of data and the freedom to watch whatever, whenever, wherever, does it help the Indian broadcasting industry to launch new channels?

Laws of pure economics

It all boils down to demand for content and advertising. While both consumers and advertisers are welcoming good content (as we can see from the growth of time spent on Netflix as an example), question is whether it is via new channels? If not, then why are these channels being launched? Close to 70 new channels were launched this year (Table B), most of them in genres that saw no growth in viewership or inventory demand from advertisers. A few of these channels, mostly from the news genre, are more like mouth pieces of political parties, but what about the rest?

More channels means more supply. And supply not supported by demand, leads to price erosion in the long run. We can already see that in some genres. I won’t be surprised if the fire engulfs the whole forest sooner than we can imagine. 

Source: BARC. Available inventory worked out as per TRAI guidelines of 12minutes a clock hour for all genres except for News where it is taken at 20 minutes. We have assumed an 18 hour day, 6am to 12midnight as per industry standards.

Controlling Advertising Wastage - Null Spots

An article by me on Null Spots that appeared on E4M on 20-12-2017

http://www.exchange4media.com/marketing/guest-column-controlling-advertising-wastage-story-of-null-spots_87713.html

In a recent presentation with a large media spender, one of our slides took everyone by storm. A couple of weeks later, another client requested us to run a similar analysis on the same topic. We are talking “Null Spots” here. 

Null Spots are TV ads that no one sees (zero rating), and are common across all genres. In this article we will explore, what you should keep in mind while designing your media plan to avoid spots that you pay for but no one watches.

Typically, null spots are low in genres where viewership is high; high viewership for Hindi GECs means low null spots as compared to low viewership to say, English GECs where null spots could be high.

Also, this is because the sample representation of BARC (Broadcast Audience Research Council, the agency that monitors and releases TV viewership numbers) is low for niche languages and genres. The fact that low sample is an issue is evident from the fact that null spots have reduced in the range of 16% to 25 % across niche genres after BARC increased its sample in 2017. (Refer Table A)

Within the same language too, Movie genres have lower incidence compared to Music. But this statistic may swing depending on democratic indicators such as age, geography and socio economic strata you are targeting. For example, percentage of null spots is higher among the young people.  Chart B shows how the null spots fall with increasing age thus reinforcing our belief that young viewers are probably more fidgety with low attention span compared to their older counterparts.

Urbanisation and economic strata also show an interesting trend. For example, the more economically well-off you are, the lower is the incidence of null spots. SEC AB shows 22% null spots as opposed to CDE which shows 27% (Table C). Similarly, the more urbanised your place of stay, the lower is the incidence of null spots, lowest for larger cities and highest for rural India.

Monitoring and controlling Null Spots

Single most effective way to curtail this current trend of wastage is re-evaluation of the Advertisers stand on negotiations with the Media House.

One of the KPIs with the media agency should be to monitor null spots and keep it below acceptable benchmarks. Contrary to popular belief, some of the biggest advertisers in the country have high null spots in their campaign. More often than not, this is because the agencies have negotiated so hard on rates that media house does not have an option but to play the spots during seams (low viewership bands) compared to core prime-time.

Pay fairly, plan better, monitor well and get your advertising budget to go that extra few miles all the time!