Ronnie05's Blog

Will 4G TV be the end of the Cable bundle?

Posted in TV and Digital Entertainment by Manas Ganguly on July 16, 2012

Its economics stupid!

As of 2010, India has over 515 channels of which 150 are pay channels. According to Pioneer Investcorp, the Indian cable industry is worth 270 billion (US$5.39 billion) and is the third largest in the world after China and US. The number of TV homes in India grew from 120 million in 2007 to 148 million in 2011. Cable reaches 94 million homes with 88 million analog connections and 6 million digital ones, while DTH has commanded 41 million subscribers.

Every year, 100 million Indian homes pay for a bundle of cable channels. Like any bundle, it’s hard to see exactly what they are paying for. That in effect is somewhat the point of bundling — to disguise the true cost of the constituent items. Most of the users end up paying more money than the total worth of TV time they are watching. Imagine the working couples in Mumbai or Delhi who watch 4/5 (at max 10 channels) for an hour or two in the evening after they get back home from work. They pay the same money to the cable provider/DTH provider even for value packs just because their total cost of entertainment consumed is less. They are effectively cross subsidizing entertainment value consumed by a large family where the TV runs through the day for the people at home.

With advent of 4G and higher broadband access, content providers and TV providers have a unique opportunity to break down on the economics of TV viewership, make it more meaningful and interactive, focus on the right target segment of consumers (more band for the buck) and make users pay less (or pay more meaningfully) for the content they consumer. After all why should I pay for a Bollywood movie pack if all I am interested is in sports. In effect they can cut out content not required and cure the content consumed for much higher levels of viewership through many other personal devices such as Tablets or smartphones etc. Video streaming will eat away into TRPs as people would want to watch only their kind of programmes at their kind of times with mobility featured in.

The Internet is ruthlessly efficient at stripping cross-subsidies and allowing content to shine on its own. The Internet gutted the music industry. Print journalism has been forced to innovate or die — or, sometimes, both simultaneously — in response to the Web. The question isn’t really if the 4G data and the economic of unbundling will visit the television industry but when.

It does look like a fertile ground for TV service providers and Content providers. A melting pot for mergers and acquisitions.

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