TV industry may see slow growth

Intense competition among cable operators and direct-to-home (DTH) service providers coupled with price regulations and rise in content and distribution cost may put brakes on the rapid growth of the television industry over the next five years.

According to international media research company Media Partners Asia (MPA), the television sector will grow about 16 per cent between 2008 and 2012 as opposed to 22 per cent predicted by the FICCI-PricewaterhouseCoopers (PwC) report that is scheduled to be released on March 25 in Mumbai.

The MPA report on Asia's cable and broadband market will be released in April.

According to MPA report on India, the average revenue per user (ARPU) for both cable and DTH services will be about Rs 200 and Rs 180, respectively, between 2008 and 2012 while the collection of subscription revenue for the television industry may see a decline of 12.5 per cent to reach about Rs 32,000 crore by 2012 against an earlier estimate of Rs 36,000 crore by 2012.

Also, MPA predicts that there will be consolidation in the DTH market as out of the six DTH players only three will survive by 2012 when DTH subscriber base will touch 25 million as opposed to 3.2 million in 2007.

"We have downgraded our estimates on subscription revenues for TV channels in India by about $1 billion because of the effects of price regulation in the medium-term as well as the increasing emphasis on lowering content spend by DTH and cable platforms due to aggressive price competition," Vivek Couto, executive director, MPA, told Business Standard.

However, India will see a big time market growth coupled with significant escalation of costs in human talent, content creation, production, distribution, marketing and technology.

Therefore, deep pockets and big balance sheets will be needed by the players, Couto added.

However, both MPA and FICCI-PwC annual reports say that despite key issues affecting the sector, the television industry will witness growth in the next five years.

According to the FICCI-PwC latest report, the television industry will see a compounded annual growth rate (CAGR) of 22 per cent during 2008-12 to reach Rs 60,000 crore from its current size of Rs 22,300 crore. Overall, the FICCI-PwC report says that the media and entertainment industry will touch Rs 1,15,700 crore by 2012 from Rs 51,300 crore in 2007.

The MPA report on India's television sector states that the pay television market will grow from 82 million homes at the end of 2007 to reach 137 million by 2012.