The year that went by was a year of mixed fortunes for the Indian media industry. The biggest news, of course, was the pioneer of India's broadcast industry, Subhash Chandra, losing majority control of his crowning glory, Zee Entertainment, in a bid to repay a Rs 11,000-crore debt. The year also saw the Walt Disney Company's merger with Star India. There have also been murmurs of mergers and acquisitions in the entertainment media. When Zee Entertainment was on the lookout for a strategic partner, the likes of Sony Pictures Network and Comcast were known to be in the race. While Zee didn't manage to find a strategic partner, the news now doing the rounds is that Sony Pictures Network is in the process of buying out Reliance Industries' stake in Viacom 18.
However, what has actually given sleepless nights to the broadcast industry is TRAI's new tariff order (NTO), which gives the consumer the right to only buy channels a la carte. This has been nightmarish for broadcasters, especially the ones who have niche channels, as their reach has got severely impacted. Advertisers have also shied away from advertising on several TV channels as they no longer give them the reach they want. The worst hit in the NTO regime are the English genre channels. Advertising revenues in the NTO regime are known to have dipped by over 20 per cent, and it's well known that almost 60 per cent of broadcasters' revenue comes from advertising.
A large part of the media industry action came from over-the-top (OTT) platforms such as Hotstar, Zee5, Netflix and Amazon Prime Video. OTT in 2019 can no longer be called nascent, as most of the major platforms witnessed a jump in subscription revenue. It took the broadcast industry years to reach the current level of subscription revenue, but OTT has done it within the first few years of launch. Experts say that almost 50 per cent of OTT revenue comes from subscription. Entertainment consumption is gradually moving from appointment viewing to on-demand. Not only are consumers watching OTT content on their mobile phones and tablets, they are also watching it on their television screens. Most of the new age smart TVs are embedded with Netflix, Hotstar or Zee5. But does that mean that these platforms are close to profitability? Not necessarily. Most of them are a good 3-5 years away from profitability. Creating content for OTT platforms is expensive and the next few years will see consolidation. It's only those with deep pockets that will survive in the long run.
The coming year will surely see more action from OTT platforms. But linear TV will very much thrive and grow. The action is likely to be more intense in regional broadcast.
The entire industry is awaiting the launch of Disney Plus in India. Last but not the least, it will be interesting to see how Reliance's fibre-to-the-home strategy plays out.