India's pay-television industry is facing a shake-out amid intense competition during the recession according to a report by Media Partners Asia (MPA). "All of the players have to rationalise their costs because advertising sales and subscriptions are falling," said Vivek Couto, executive director at MPA.
India has been a standout market in Asia for pay-TV channels and distributors because of its large audiences and relatively liberal foreign ownership and content laws â€“ particularly compared with China. Foreign-owned or affiliated companies in India's pay-TV industry last year generated about $1.2 billion in sales compared with about $500 million in China, according to MPA.
India's pay-TV market is one of the world's largest, with more than 94 million customers generating $5.89 billion in revenue a year, about 29 per cent from adverts and the remainder from subscriptions. Large foreign investors have rushed to market, including Viacom, Warner, Disney and Singapore government investment company Temasek.
However, the industry has become overcrowded. MPA estimates there are 350 channels in India competing for space on distribution systems capable of carrying only about 150 each. This has sharply increased the cost of carriage. The firm estimates channels paid nearly half their revenues from subscriptions to distributors last year just to carry their content.
Another problem is much of the industry is controlled by the "unorganised" sector â€“ small operators who misreport earnings from customers to broadcasters and pocket the difference. Subscribers to digital pay-TV, controlled by larger conglomerates, often with foreign investors, number only about 13.4 million.