The Walt Disney Company in its annual investor meet earlier this year, apart from its $77 billion acquisition of 21st Century Fox, largely focussed on its digital assets such as Disney+ (to be launched on November 12 this year), Hulu (in which the company now owns majority stake post the Fox acquisition) and ESPN Plus. The Star India head honcho Uday Shankar - now designated as President, The Walt Disney Company Asia Pacific and Chairman, Star & Disney India - in his maiden address at the The Walt Disney Company's investor meet, only focussed on its digital offering Hotstar, which is India's largest over-the-top (OTT) service with over 300 million subscribers. Focus on its direct-to-consumer services is clearly going to be Disney's mantra going forward; television is surely no longer its priority.
Just last week rumours were abuzz that a consortium led by Comcast, which also included former Fox owner James Murdoch, would invest in the debt-ridden Essel Group's flagship company Zee Entertainment. The reason the consortium was interested in Zee, according to media industry experts, was not so much for its bouquet of television channels, but for its digital platform Zee5 and its repertoire of content. The analyst community had said if a strategic partner such as Comcast would come on board, it would only be for Zee5. "Comcast is known for its bets on futuristic technologies. One of the reasons the Murdochs came out of 21st Century Fox was because they wanted to focus on digital entertainment. James Murdoch's interest will be more on Zee 5, not the broadcast channels," explained a senior media industry specialist.
Even though Zee promoters have sold 11 per cent stake to financial investor Oppenheimer, the industry still believes that the investor's bet clearly will be on Zee5 despite Zee being one of the few profitable Indian media companies. "The new investor will gradually want to do away with the broadcast business altogether. The kind of operating expenditure a broadcast network has will never be acceptable. Also, television viewership is beginning to decline," points out former Zee executive Ashish Kaul.
Traditional broadcast business is increasingly becoming unviable. The trend is apparent going by the fact that the cable universe has seen a wipeout of over 15 per cent in the last few years. The viewership of the Hindi entertainment genre, according to industry experts, has dipped from 90 per cent to 65 per cent in the last one year. Similarly, the viewership of English entertainment channels has fallen from 30 per cent to less than 10 per cent. A large part of this dip in viewership, says Kaul, has happened mostly in urban markets due to factors such as easy access to data and advent of OTT platforms. English content viewers, for instance, comprise around 5 per cent of TV viewing universe, and this segment has largely moved consuming entertainment on OTT platforms such as Netflix or Hotstar. A couple of years ago, most broadcasters spent huge amounts of money promoting their TV shows, but today most of them are spending crores on promoting their original shows that are being streamed on their OTT platforms.
Most of big-ticket shows launch announcements that have come from large broadcast networks such as Zee or Star, have been for their OTT platforms and not their channels. Ask an urban youth about his/her entertainment consumption habits, the most expected response would be that he/she watches content on a tablet or mobile phone and not television. Rural youths are also adopting similar habits. "I only watch cricket matches on TV; most of my entertainment consumption happens on my mobile," says Ganesh Prajapati, a 19-year-old college student who lives in the village of Lasangaon near Nashik. This explains the reason why the likes of Netflix have started a Rs-199 per month offering for consumers who watch their content only on mobile.
"It is clearly the beginning of the end of TV entertainment," says the industry expert.
The recent TRAI regulation, which enables consumers to pay for only those channels, which they want to watch, has also added to the woes of broadcasters. It has adversely impacted the reach of channels and consequently advertising revenue. "Advertisers are holding on to their spends as the reach of even channels such as Star Plus and Zee TV has got impacted post the TRAI regulation," points out a senior media professional. He added that ad revenues for TV channels that grew at a compounded rate of 14-15 per cent year-on-year have reduced to 12 per cent in the last one year.
India continues to be an under-penetrated television market, but industry experts believe that all single TV households instead of becoming multi-TV homes will increasingly switch to digital gadgets in the next four-five years. It will enable them to consume content on OTT platforms. "Right now OTT platforms are complementing television. Very soon, they will start substituting TV," says a senior media professional.