Indian Television Market: Opportunities
There is a wonderful article in New York Times this week, In India, The Golden Age of Television is Now.
“Indian films, especially the flashy musicals and dramas of Bollywood, have grabbed plenty of attention in the West. But the country’s lesser-known television business is more than twice as big, with an estimated $3.4 billion in revenue in 2005, according to PricewaterhouseCoopers. It is also starting to exert greater cultural influence.
Television ownership is growing fast here, and it has plenty more room to expand. There are roughly 105 million homes with televisions in India, up from 88 million in 2000. The current number of television households is about the same as in the United States, though for India that amounts to only about half of the country’s households, compared with 98 percent in the United States.”
As generation Y moves away from Television and onto the Internet and Mobile Phones in the US, the Indian market is still largely Television centric, with both PC and Internet penetration still limited.
This implies, one of the most important content business opportunities for India is still TV Networks and Programming. The question is, where are the opportunities to find niches that are still open? The market is already quite crowded, especially with Zee, Star and others covering the Hindi market, and both local and international channels covering the English markets.
A while ago, I had looked into the animation market from the perspective of TV serials. However, the economics did not look compelling. [You can read the analysis, Indian Anime, here.]
I have also looked into vernacular network opportunities. The top Indian languages are:
Hindi (337M), Bengali (69.5M), Telugu (66M), Marathi (62.5M), Tamil (53M), Urdu (43.4M), Gujarati (40.6M), Kannada (32.7M), Malayalam (30.3M), Oriya (28M), Punjabi (23.3M), Assamese (13M). [English - 20M, btw.]
Notice, even the smallest of the above niches has a 13M target audience, so not too shabby.
My hypothesis is, there are opportunities in rolling up networks and building a large portfolio based on regional language assets. Similarly, there are opportunities of starting new and unique networks in regional languages, which would be good acquisition candidates in a few years, as the market consolidates.
As for regional languages, you should note that Zee Telefilms, Sun TV and the Eenadu group already boast of a very strong bouquet of channels. However, the profitability of these channels is a concern as the fixed cost for starting each channel would be substantially high if we take lower ad rates into account. In addition, the subscription revenue for these channels would be quite minimal considering that cable still reaches a low proportion of TV homes and there is a massive under-reporting of subscribers by cable operators. CAS and DTH are good schemes to begin with but their penetration is still limited to the four metros.
Also note that TRAI has mandated a fixed charge of Rs. 5 per channel per month (Zee had a bouquet of 11 channels for Rs. 66 earlier and ESPN-Star Sports commanded Rs. 27 for just two sports channel). I really wonder how are regional channels going to survive in this competitive market.
The only alternative to this is quality content in the general entertainment space. NDTV and Reliance Industries are looking to have their version of the same pretty soon. It’s gonna be a bumpy ride as they say.