INDIA'S MOST EXPENSIVE TV CHANNELS
It is widely believed that Indian TV viewers receive TV content at ridiculously low prices. The Average Revenue Per User (ARPU) for Indian DTH is approximately Rs. 170 per month (excluding taxes). Cable TV ARPUs are slightly lower at approximately Rs. 160 per month. The low ARPUs are even more significant given the fact that TV subscribers typically receive 'All Channels For One Price.'
Broadcasters and several other industry players have been lamenting that ARPUs need to rise substantially. This will increase the margins for each of the businesses in the value chain.
DTH platforms have experimented with various value added propositions.
Improved picture quality and user experience have failed to induce subscribers to pay more for the service.
Even Bollywood movies offered as Pay-Per-View (PPV) failed to attract any significant numbers. In fact, PPV revenues were so low that most Bollywood movie producers withdrew their content as PPV revenues were less than the administrative cost!
Even DVRs which have been extremely popular worldwide have not induced Indian TV viewers to loosen their purse strings.
Happily, some success for increased ARPUs has been achieved from High Definition (HD) TV content.
TRAI PRICE CAP
The TRAI requires broadcasters to declare their Maximum Retail Price (MRP) for each of their TV channels. Broadcasters are permitted a maximum annual price increase, which is linked to the inflation index.
Several broadcasters have found this price cap to be restrictive. As a strategy, broadcasters often jettison old pay TV channels, either shutting them down or running them with poor content. To raise ARPUs, broadcasters launch new TV channels from time to time.
INFLATED DECLARED PRICE
A new strategy adopted by TV broadcasters is to declare a hugely inflated (often completely unrealistic) Pay Channel price when their channel is first launched. In reality, their channel is sold at fraction of its declared price to DTH platforms and cable networks.
The inflated initial price ensures that even with the inflation based MRP price hike cap imposed by TRAI, the broadcaster can always significantly hike his actual channel price, at will.
An interesting case study is the TEN GOLF channel. When launched, its website indicated a declared MRP of Rs. 476 per month! Interestingly, the channel price has recently plummeted to a more reasonable Rs. 36 per month!
About a year ago, HBO launched 2 premium movie channels for Indian audiences. The company has been a genuine pioneer for premium niche channels and has continued its efforts to promote its 2 premium channels - HBO Hits and HBO Defined on cable TV and DTH platforms.
In an exclusive interview with SCaT, HBO's Monica Tata - Managing Director, South Asia for HBO India Pvt. Ltd. mentioned that the primary impediment was a missing system in which cable networks could collect enhanced pay TV rentals for premium channels that the consumer wants to view.
Digitisation does enable debiting customers' accounts for pay channel charges, but unfortunately, there is no implemented system for the pay channels' call centre to communicate the requirement to collect enhanced pay channel charges from the subscribers via the LMO, who retains his share and remits the balance to the MSO, who in turn shares it with the broadcaster.
It is not uncommon for early movers to face practical difficulties in any path breaking commercial venture. However, it is time for both LMOs and MSOs to work together so that they can collect additional revenues from subscribers that decide to make an impulsive premium purchase. Additional revenue are always welcome, and it's unfortunate if we do have a mechanism to collect money that the consumer wants to spend.