Indian broadcasters earn over Rs 10 billion every year from subscription and advertisement revenues and content sales from the International markets. This number has been steadily increasing over the last decade and should continue to grow.
Since this revenue source has started making substantial contributions to the bottom line of broadcasters, it is important for all to understand this opportunity and its related challenges in greater details.
The opportunity of taking Indian television content abroad can be simply explained with the 3 ‘E’s – Enormity of audiences, Emotional link and Economic value.
Enormity of audiences: The estimates for the NRI and PIO populations range between 25-30 million spread over 100 countries. There are more than 25 countries where the Indian overseas population crosses the hundred thousand (100,000) mark, and close to 60 countries where the population is above ten thousand (10,000) individuals. These numbers make for an attractive business opportunity for broadcasters to tap into this audience base. This becomes even more compelling since the Pareto principle applies here perfectly with the top 20 markets (of the 100+countries where Indians reside) accounting for over 80 per cent of the overseas Indian population, making it relatively easier to reach out to the larger audience pools.
Even regional content finds dedicated audiences with large linguistic pockets in countries like Malaysia and Singapore (Tamil), the Middle East (Malayalam), Canada and UK (Punjabi) for example.
Emotional links: Indian content is a very important tool for these communities to connect with their cultural roots. Thus the emotional involvement with Indian content is very high and Indian channels become a ‘must have’ for most of these families, thanks to shared cultural backgrounds.
Economic Value: The economic opportunity for broadcasters becomes significant as many of these large Diaspora markets have a fairly attractive ARPU (average revenue per user) – especially in the context of what the Indian broadcasters are used to back home. Given such high ARPUs, the license fee per channel (at least for the mainline GECs) in UK, US, Middle East etc can range from $1 per sub to as high as $ 7 per sub (especially on some a-la-carte options). This is a very different scenario from the domestic market (in India) where the consumer currently pays less than $4 for 80-100 channels to the cable operator and only a fraction of that gets passed back to the broadcasters.
The economics become even more attractive as the incremental costs to expand into overseas territories are largely limited to transport and marketing costs with content costs being minimal - largely because most Indian broadcasters own the content IP around the world for perpetuity (or at least multiple years in case of movies and events, etc)
However, this opportunity to get incremental revenues is not without its share of challenges. The big challenges impacting this business today are several.
Competition, clutter and bandwidth constraint: Given the attractiveness of the overseas market, most broadcasters after reaching some level of size, scale or maturity in the domestic market look at expanding operations. However, the platforms (DTH or cable) in most markets cannot dedicate enough bandwidth to distribute all of these services. In many cases the platforms don’t see the need to go beyond offering a few channels and covering only the most critical genres like GECs and Movies. Thus for several channels and especially the late entrants, this reticence is a major entry barrier. And in many markets, very often when platforms add more services to existing packages/bouquets, they are doing so at the same retail price forcing the channels to further divide the revenue pie to accommodate the new players
Advertising opportunity remains limited: For most Indian broadcasters operating in the international arena, subscription revenues tend to form the larger part of the revenues with the advertising sales revenues playing more of the support role. The key reason for this is the fact that the ‘desi’ channels target only the Diaspora audiences and not the mainstream viewers, thereby limiting the audience base. Given the small base, to keep cost per contact at manageable and affordable levels, the advertising-sales rates are extremely low.
Secondly as competition grows (and fragmentation increases), the same advertising dollar gets divided. And with the considerable slowdown in the global economy in the last few years and the recessionary trends in many of the large markets for Indian channels, that has also impacted the advertising revenues for the Indian broadcasters.
Piracy: This remains a huge and ever increasing threat to revenues for both the broadcasters as well as platforms. Internet streaming as well as the proliferation of many illegitimate OTT services poses a huge danger for pay TV revenues.
The above challenges, along with the growing cost of local operations in many overseas territories, make it a tough task for many broadcasters looking to expand their international operations.
At Viacom18, in the short span of two years, Colors content has reached audiences in approximately 120 countries using a combination of channel distribution and content sales. For the key markets like the US/Canada, UK, Middle East, South East Asia and Australia/New Zealand/Fiji with their sizeable Indian audiences, we have set up three international feeds and local ad sales operations.
Colors, as a channel, is now distributed in close to 50 countries. This is complimented by our content sales in those markets where our audiences are the local mainstream audiences and not necessarily the Indian Diaspora. With the popularity of Bollywood transcending language and cultural barriers, more audiences are sampling Indian content which is amply demonstrated by the fact that our content is syndicated in 20 foreign languages in over 100 countries and where one of our leading daily soaps will now be produced locally in one of the African countries for the local audiences there – a first for an Indian show. In addition we are also subtitling our feeds in English and other local languages to cater to these mainstream audiences and bolster our subscription and ad-sales revenues.
In the final analysis, the challenges notwithstanding, it is essential for mainline Indian broadcasters to have an international strategy in place, the careful execution of which will result in substantial revenues to compliment their domestic businesses.
