Indian TV industry to cross $11.5 billion by 2012: MPA

A new survey featuring updated forecasts from Hong Kong-based Media Partners Asia (MPA) predicts that the Indian television industry will grow at an average annual rate of 16 per cent to generate more than $11.5 billion in annual revenues by 2012 versus $5.5 billion presently.

MPA predicts that the total TV industry revenues could ultimately reach close to $19 billion by 2017.

Subscription revenues could climb from $3.8 billion at the end of 2007 to reach $7.8 billion by 2012 and $12.3 billion by 2017. Key drivers include the increasing deployment of new digitised pay-TV distribution systems through direct-to-home (DTH) platforms and also through cable networks, as well as the continued expansion of analogue cable television distribution.

Digital pay-TV subscribers, including cable, DTH and IPTV could grow to 38 million by 2012 and 57 million by 2017.

Because of price regulation as well as intense competition on price, MPA models slow growth in average monthly revenue per subscriber with fees climbing from $4.1 in 2007 to $4.9 by 2012 and $6.3 by 2017.

MPA says TV advertising will be fuelled by economic growth and increased cable TV penetration but predicts TV’s share of the overall ad pie to come under threat in the long-term through the growth of out-of-home media, online and radio.

TV had a 42 per share of the advertising pie in 2007 with advertising growing by 19 per cent to reach $1.48 billion. MPA sees TV advertising growing at an average annual rate of 19 per cent between 2007–12 to reach $3.5 billion by 2012. TV advertising could ultimately reach $6.3 billion in net terms by 2017.

MPA has downgraded estimates on subscription revenues for TV channels by around $1 billion due to the effects of price regulation and the emphasis on lower content spend by emerging digital pay-TV platforms.

Currently, close to 15 per cent of the TV industry distribution pie is fed through to TV channels. The MPA sees this growing to more than 20 per cent by 2012 and 21 per cent by 2017, which still represents a robust revenue stream in the longer-term with channel fees growing from $0.5 billion in 2007 to reach $1.6 billion by 2012 and $2.6 billion by 2017.

At the same time, MPA has upgraded its estimates on advertising growth due to a robust economy and the long-term effects of an expanding subscriber base for cable & satellite television.

Advertising to still dominate broadcasters revenue: Broadcasters generated $2 billion in aggregate revenues in 2007, a big pie but one’s that fragmenting rapidly with the launch of hundreds of new TV channels including new offerings in key ad spend categories. Distribution costs are increasing along with marketing and content expense, lowering margins and earnings visibility not only for new entrants but also certain incumbents.

Nonetheless the MPA sees the broadcaster revenue pie growing rapidly to top $5 billion by 2012 and reach close to $ 9 billion by 2017. This will make India still the leading Asian market for pay-TV content suppliers and pay-TV channels. Around 70 per cent of channel revenues will still come from advertising in the long-term.

TV Distribution Market: MPA sees the market for pay-TV growing from 82 million homes at the end of 2007 to 137 million by 2012 and approx. 164 million by 2017. This means that household penetration could climb from 64 per cent in 2007 to 82 per cent by 2012 and 85 per cent by 2017.

Cable will have 67 per cent of TV homes by 2017; DTH pay-TV, excluding DD Direct, 17 per cent; and IPTV, 1 per cent.

MPA has recalculated its digital pay-TV distribution forecasts, based on net subscribers as opposed to gross numbers, which are currently being used by DTH operators. This calculation incorporates analysis of subscriber churn on both digital DTH and cable networks.

With this methodology, MPA estimates the total market for digital pay-TV (DTH, mandated Cas and voluntary Cas) at approximately four million subscriber homes (DTH, 3.2 million; cable, 0.8 million). MPA sees this digital base growing to 38.2 million by 2012 and 57 million by 2017.

This means that 30 per cent of television homes in India will have digital TV by 2017 with 55 per cent still on analogue. By 2017, 32.3 million homes will get digital pay-TV through DTH; 22 million through cable; and less than three million through IPTV.

China, MPA forecasts, will have 185 million digital subscribers by 2015. But the vast majority of Chinese digital homes will be subscribers to free-to-air TV channels through utility cable networks. China is expected to have only 43 million digital pay-TV subs by 2017, which means that India, with 57 million addressable digital subscribers, will remain the largest accessible pay-TV market for media owners, distributors and investors.

Cable: The long-awaited consolidation and digitisation of India’s analogue cable infrastructure is facing a challenging environment as financing for green-field distribution projects is becoming harder to source and the per subscriber valuations for last mile local cable operators remain high. Additionally, multi-system cable operators competing for acquisitions and subscribers in key overlapping areas, increase the price of valuations.

MPA further forecasts show digital cable subscribers growing to 12.5 million by 2012 and 22 million by 2017.

According to MPA, cable TV ARPUs (total) will be $5 by 2012 and $6.2 by 2017.

DTH : MPA believes that the DTH market will consolidate from six would be operators in 2008/9 to three platforms in the long-term. We expect aggressive subsidies and customer acquisition to drive the DTH proposition and see limits to ARPU growth in the short-term but no limits to losses. As a result, those comfortable with long-term balance sheets are likely to prosper: these include Reliance, Bharti and Tata Sky.

The company sees DTH growing from a net installed paying user base of 3.2 million at CYE December 2007 to reach 25 million by 2012 and more than 32 million by 2017.

MPA forecasts monthly DTH Arpus climbing only from $4 in 2007 to $4.3 by 2012 but thereafter model more significant price growth with ARPUs growing to $6.7 by 2012.

DTH operators will be generating $2.8 billion in annual revenues by 2017.

Source: indiantelevision.com