By Archna Shukla
Two recent developments in the Indian television broadcasting industry point to the beginning of a seismic shift that has long been suspected. First, The Walt Disney Company CEO Bob Iger recently announced that the multinational media and entertainment conglomerate planned to sell its linear television assets such as ABC Network and Disney, and explore the sale or possibility of a joint venture for Star India, the country’s largest broadcast network. Second, the proposed merger between Japan’s Sony Corporation’s India business and home-grown Zee Entertainment Enterprises was cleared by the National Company Law Tribunal last week. Linear television refers to conventional broadcasting where content flows in a linear direction from the broadcaster to the distributor and the consumer in a pre-determined schedule. Iger said it’s “clearly a business that is going to continue to struggle”.
TV broadcasting continues to hog the lion’s share in the overall media and entertainment (M&E) pie in India. A whopping 205 million households continue to watch television the old-fashioned way even as cord-cutting and streaming have become a larger phenomenon in developed markets such as the US. According to Nielsen, streaming services such as Netflix, Amazon and Hulu beat traditional television networks in terms of viewership in July last year in the US.
Rapid Rise of Digital
Likewise, at Rs 709 billion, linear TV had the largest share of the revenue pie in 2022 beating all its rivals including digital platforms. But a closer look at digital media’s stride in the past few years paints a scenario that’s not too bright for this segment. Linear TV is bigger but it’s declining and digital is smaller but expanding at a very fast pace. At Rs 571 billion, digital media is the second largest segment in the industry and its share in the total M&E pie has increased from 16 percent in 2019 to 27 percent in 2022.
More telling is the data on advertising and subscription trends. The same report says that TV subscriptions continued to fall for the third year in a row — from Rs 468 billion in 2019 to Rs 392 billion in 2022 whereas digital subscriptions grew from Rs 29 billion to Rs 72 billion in the same period. TV advertising grew only 2 percent while digital advertising grew 30 percent to account for 48 percent of the total M&E ad pie.
Against this backdrop, there’s nothing amiss in Disney’s desire to shed its legacy baggage, or at least, lighten it. The desire, however, has been expressed too late, and at a time when the sentiment towards the media industry, especially legacy television business, is tepid, globally. Media observers feel that the probability of finding a buyer for Disney’s assets is pretty dim and it’s even tougher in India, thanks to the ZEE-Sony merger which shrinks the opportunity to create a strong and sturdy enterprise and more importantly, the avowed ambition of Jio Cinema to relegate traditional television to irrelevance. Jio Cinema is the over-the-top (OTT) platform owned by Reliance Industries’ media and entertainment network Viacom18, which, also owns Moneycontrol.
Self-inflicted Injury
The challenge that Disney is faced with is one that awaits all traditional television operators across markets globally. Their failure to gauge the future and to adapt to the changing technological landscape has led them to a point where their assets and business built with blood and sweat have turned into an incumbrance that holds no promise for the future.
In his interviews, Disney CEO Iger has said that the linear TV business model is broken. This especially holds true for India. When cable television took off in India, a large part of the country was still media dark. The Indian middle class was extremely price-conscious. The distribution business was built from scratch by a bunch of local entrepreneurs, and broadcasters were at their mercy to have their content reach the consumers’ living rooms. Distributors siphoned off a large chunk of the subscription revenue they gathered from consumers and the broadcasters ignored it for a long time as lack of transparency on viewership numbers was convenient for them. They chose to sell their content almost for free for a long time to build a strong audience base that was used as bait for advertisers. This led to a wonky business model in which they remained overly reliant on advertising for their growth. Now, with ad budgets moving to digital platforms, they have nowhere to turn to.
Indian broadcasters never made a sincere effort to engage with their audience. They started out by catering to the lowest denominator, and more than two decades later, the script continues to be the same. A majority of content on popular television channels even today is a rip-off of the K-serials that Ekta Kapoor’s content factory Balaji Telefilms churned out in the early 2000s.
To be sure, the Indian market was not mature then and the upper middle class audience segment that could appreciate or pay for differentiated content wasn’t large enough to justify investments. It was a lacuna that new-age streaming platforms such as Netflix and Amazon plugged successfully. The economic cycle and timing, indeed, have had a role to play in this saga but traditional networks’ inability to gauge the shift and be ready for it has come to haunt them now.
If the future seems blurred today, it’s because they didn’t read the writing that had been on the screen for long.