The report also stated that the growth in Pay TV, Free TV & Connected TV shows that overall TV connections will keep growing at a pace of over 5% per year to cross 67% of Indian households by 2025

The future of TV broadcasting is mass and premium as Prasar Bharati's free direct to home (DTH) platform DD Free Dish and Connected TVs are expected to comprise 90+ million subscriptions by 2025, according to the FICCI-EY report on the media & entertainment (M&E) sector titled 'Tuning into Consumer'.

The report stated that Pay TV will continue to grow as states like UP, Bihar, Rajasthan, and West Bengal will get electrified. However, Free TV market is going to expand as Free Dish channel count increases to around 200 by 2022 from 164 in 2021. DD Free Dish base is expected to cross 50 million homes by 2025.

The growth in the Free TV market will provide a low-cost advertising opportunity to marketers, despite the decision of large broadcasters to take their content off the platform in February 2022, the report added.

The FICCI-EY report also highlighted that the Connected TV base might reach over 40 million connected sets by 2025. A large chunk of the Connected TV consumers will come from 46 Indian cities which have a population of over a million each and a total population of 122 million. These markets can be wired up more easily for broadband as well as telcos partnering with LCOs to drive broadband services.

The growth in Pay TV, Free TV and Connected TV means that overall TV connections will keep growing at a healthy pace of over 5% per year to cross 67% of Indian households by 2025.

"Over time, as wired broadband is perceived as a utility and enters more Indian homes, the importance of the hybrid set-top box will increase significantly. Users will be able to get their television content in real-time linear mode through the television connection, while accessing more premium OTT content — and catchup TV content —using their broadband connections. This will prove to be network efficient, with live content viewed using television infrastructure, thereby reducing the load on broadband networks," the report said.

As per the report, packaging will also gain importance as linear + OTT packs become the norm; and this revolution will be led not just by the telcos and DPOs, but by ISPs, LCOs, and independent start-ups. Consequently, while a small portion of top-end households will cut the cord completely, the report expects the majority to continue with at least one TV and one broadband + OTT bundle for the large screen.

The television segment revenues are expected to grow at a CAGR of 4-5% to reach Rs 82,600 crore by 2024.

Television advertising to grow at a CAGR of 8% to reach Rs 39,400 crore by 2024, driven by new advertiser segments and brands exploring TV advertising to build brand awareness, upward correction in regional ad rates, the lineup of fresh sports content, which remains a bastion of television, continued growth of free television, including with original content, and TV continuing to be the most cost-efficient medium from a CPM perspective.

On the other hand, subscription income will see a marginal 2% CAGR growth to reach INR432 billion by 2024, on account of several conflicting factors. On the positive side, electrification of rural areas will increase the reach of TV households. Secondly, as work resumes post the COVID-19 pandemic, and people get back to the cities where they work, deactivated connections will come alive. Thirdly, entry-level television sets will increase the demand for second screens in middle class homes, some of which may extend to television.

On the cautionary side, the report states that the continued movement of the pay TV base to free TV (at the lower end) and OTT platforms at the upper end (for the 2nd TV in the home) could have a dampening effect on the pay TV base. The regulatory aspects around pricing and bundling could continue to impact ARPUs as subscribers learn to rationalize their channels and packages.

With the hybrid model, local cable operators (LCOs) will move to a 2x4 business model i.e., two parallel wires connecting a household for TV and broadband respectively, offering four key services to consumers, the report states. The service offerings of the LCO could include: Aggregated content services, Linear TV content, OTT content, Education/ learning content, Broadband connectivity, Home services e.g., security, smart home (heating/ cooling/ lighting etc.) management, etc, and Locality social media, news, online shopping and interactivity.

On the regulatory front, the report stated that the proposed ad cap rule could significantly impact revenues approached the Delhi High Court against seeking stricter implementation of the 12-minute ad cap rule, to bring about a level playing field and the matter is currently sub-judice.

Implementation of the ad cap will significantly affect ad volumes, especially for news channels and some entertainment channels for their key impact properties, that have been historically airing ads for more than the earlier prescribed limit of 12 minutes per hour. To compensate for the drop in revenue due to limited ad volume, ad rates would need to increase significantly, which we believe will be extremely difficult and lead to a 10-15% drop in ad revenues.

The report also predicted that the viewership of film channels will continue to decline as audiences move away from TV to OTT. As the habit of watching new films at home or on phones takes root (which has been helped by the pandemic and the direct-to-digital releases and shortening release windows), the TVOD film model will gain traction.

Furthermore, reduced uptake for infotainment and niche genres could also be on the cards as several of these businesses move on to multi-media communities and expand their scope to more than content — this may force broadcasters to shut less popular channels operating in these genres.

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