To pay or not to pay

As against pay channels, free to air channels hold better equation with the cable operators as well as the audience. Better numbers, innovative
programming and good ratings are aimed at achieving effective ways to make money and also to stay in the rat race. This attitude also generates good and interesting programs for the viewers. But again, the advertisement
revenue has its limitations

The invasion of satellite channels also brought distinction of attributes between analogue/digital channels and free to air/pay channels. In India, free to air satellite channels have always lured the viewers, and therefore the cable operators, simply because Indians do not like to shell out money for home entertainment.
A rise in monthly subscriptions, however minuscule, always creates uproar and protests from the viewers as well as the cable operators for the simple reason that it is the cable operator who has to face the wrath of his subscribers directly, not the pay channel. In any case, presently, the amount charged by the pay channels in India is peanuts and does not contribute to generating major revenue as compared to the size of the market.

Also, the amount charged by the channels is very minimal, especially if compared to the charges overseas. In USA, viewers have to shell out $35 for three Indian channels and for two additional ones, it is another $20. This translates to roughly Rs. 2,500. Whereas in India, viewers cry foul even if they have to pay Rs. 10 more for one extra channel. Take the case of STAR TV increasing its subscription rates. They did win to a certain extent, but cable operators banned STAR for quite some time.

A compromise was reached eventually, but STAR is still losing a substantial amount due to incomplete declaration of the number of subscribers. To top it, the charges by STAR are still not substantial enough. Resistance to pay channels by cable operators became more vocal and strong when they banned the telecast of DD Sports inspite of strong protests from the viewers and pressure of Government agencies.

However, more and more channels are going pay. The lure is a bouquet, but most of the time this structure is accepted only if the channel has made strong inroads into the viewer’s homes and the audience is already hooked to them. Still, the charges have to be kept affordable.

The objective is to reach a subscriber mass with tight budgets and controlled costs, still, in the end, forcing a channel to depend on its ad revenue to form the support of its financial structure. HBO, the channel which prefers to telecast back to back movies all over the world, is using commercials to substantiate its revenue, simply because subscription rates were not significant.

Interestingly, just last week, the Andhra Pradesh High Court has delivered a short injunction restraining all the pay channels from charging subscription fees for the channels that consumers do not want. This, once again, stresses the fact that the failure of the technological application to achieve addressibility at the consumer’s end is most essential for smooth and accurate revenue generation of pay channels.

As against pay channels, free to air channels hold better equation with the cable operators as well as the audience. Better numbers, innovative programming and good ratings are aimed at achieving effective ways to make money and also to stay in the rat race. This attitude also generates good and interesting programs for the viewers. But again, the advertisement revenue has its limitations.

In the end, it is the numbers that are churned out by various agencies like TAM and INTAM that become one of the major deciding factors in capturing the maximum ad share from the market - whether it is a pay channel or a free to air one. So the bottom line is: Stay on your toes and be the first one to come out with innovative ideas to create programmes with mass appeal. Only then, one can end up with better results and full pockets. Finally, however, it is viewer who continues to be the king.

Pradeep Dixit, CEO, ETC Channel