Zee and Jain are banking on their head start to give them the winning edge, while foreign channels like STAR and BBC are relying on their cost economies to pull off the coup. Others like Discovery Channel, TNT, ESPN and Prime Sports are hoping to carve niches in the overcrowded market. Sony seems to be sacrificing immediate gains for long-term benefits by investing in software. On the other hand, ATN's survival plan hinges on barter arrangements with software developers.
The art of war in satellite TV is highly complicated since the cost structure is a mix of highly variable components: the cost of household penetration via the cable network, the cost of software development, the cost of infrastructure such as salaries, rentals and equipment, and the cost of a satellite licence fee. The revenue, in contrast, is dependent solely on advertising revenue as most channels are free-on-air. Pay channels, feel analysts, are unlikely to pick up steam in the Indian scenario. "Only one or two highly segmented pay channels on sex or the specialised world of financial markets may, therefore, emerge. The war will continue to be fought from the twin platforms of cost-efficiencies on the one hand and advertisers' support and viewers' backing on the other," says Vibha Desai, manager, Ogilvy & Mather.
The battle strategies, however, change constantly as the technology-driven field of satellite TV is in a permanent state of flux. About four years ago, there was one Rim Sat-owned satellite beaming channels into India. Today, there are Asia Sat, PanAmSat 4, Intel Sat along with the In sat series beaming more than 42 channels into the country. Earlier, the challenge before channel owners was to get the cable operator to turn the dish towards his satellite and telecast his channel. Today, channel owners are forming a consortium to uplink on one satellite as an incentive to the cable operator to beam the package of channels. "The focus of the war has shifted from the skies to the earth as the Indian cable operator reigns supreme as the breaker or maker of destinies," says M.R. Arun, general manager, media research, R.K. Swamy/BBDO. "Unlike in the West where cable operators have to pay channels for the right to carry their programming, in India the trend is for cable operators to ask the channels for carriage fees," points out Neeraj Verma, media director at Rediffusion DY&R. For instance, the Hindujas, who have set up a cable operator network, are reported to have demanded carriage fees from Sony. The cable operator then continues to rule the roost and any successful strategy for channel owners would have to necessarily contend with his clout.
The peculiar power wielded by the Indian operator, points out Arun, stems from two factors. First, the average Indian cable operator is a property dealer-turned-video library owner-turned-cable operator. He knows no legal barriers or he would not be in existence, considering that the law against laying cables without Government permission has been consistently flouted. "As a breed, the cable operator is a difficult animal to control," says Arun. Secondly, the average cable operator is a local player beaming to not more than 300 to 400 households. This fragmented market structure makes it difficult for channel owners to monitor his activity. Third, most satellite TV households have the limitation of eight to12 channels which leaves channel owners at the mercy of the cable operator unless there is pressure on him from viewers.
Given these peculiarities of the Indian satellite TV market, most satellite channels are looking for viability through a three-pronged strategy: increasing their penetration by making it easy and economical for cable operators to beam their channel; creating a loyal base of customers by improving programme quality, telecast clarity and niche programming; and pricing rationally to give advertisers cost efficiency.
In terms of market penetration, there is clearly no matching Doordarshan. DD1 reaches all TV households, and viewership rates are high since 48 per cent of all DD watchers have access to only that one channel. DD Metro has extended its reach to 39 cities. "Doordarshan has also taken pre-emptive action to offset any major threat from satellite rivals through niche channels like Movie Club and DD3, promoting live events, privatising production work, promoting sponsorships and the like," points out Sajal Mukerjee, media director, R.K. Swamy/BBDO. "Another smart move by Doordarshan is that it has been able to plough back some of its popular Metro programmes like the serial Junoon to DD1, thereby carrying over a loyal base of programme-led viewers," adds Verma. Clearly then, the dark clouds looming large over satellite TV channels are unlikely to cast even a shadow on the status of Doordarshan as the frontrunner. In the near future, at least.
Satellite channels like Zee have an edge over others because of its earlier start, though this may be neutralised in two to three year's time, points out Sushil Pandit, associate vice-president, Contract Advertising. "Zee not only had the advantage of being the first Hindi channel, but also set the precedent for a good product-mix by introducing new concepts like game shows, horror shows, antakshari and chat shows which new entrants have to match. The difference was there for everybody's reckoning," says Raju Bhakta, media account director, Initiative Media. The channel has also kept its pricing steady over the last year.
Channels like Sony and ESPN are focussing their strategy on the cable route and have formed a consortium on the PanAmSat 4 to make it easier for the cable operators to tune in to the dish and get a whole set of channels to beam. Sony reportedly is also investing Rs 200 crore in software development. Programmes with religious leanings like Jai Veer Hanuman , developed by the channel, are targeted to give the channel an ethnic flavour.
Latching on to the ethnic bandwagon or at least giving programmes a local flavour seems to be a sound strategy for most players ranging from regional channels like Sun TV or foreign channels like V and STAR. Regional channels like Sun are likely to survive on the political clout they wield, besides the good quality software. STAR has split its northern and southern beams to cater to different audience tastes. Channel V has successfully adapted itself to the Indian milieu by creating popular veejays like Sophiya, Ruby and Nonie, while creating a strong brand identity. "The stronger the brand identity, the greater the viewers' loyalty," says Desai of O&M.
Niche channels like Discovery, TNT Cartoon Network and STAR Movies are likely to sail through, riding on select quality programming for select viewership. While there is no authentic data on the viewership yet, dip-stick tests show that the programmes are being watched and they can be leveraged for the rates are low.
What foreign channels have in their favour is their ability to attain cost-efficiencies by, first, procuring software cheap in the international market and second, their access to the latest technology. STAR Sports, for instance, has been giving World Cup viewers the option of listening to commentary in Hindi or English. Imagine then, The Bold & the Beautiful or Baywatch being beamed in India in Tamil, Malayalam or Punjabi. The battle for viewership would then be half-won by foreign channels if the success of dubbed programmes like I Love Jeannie or the Hindi version of Jurassic Park is anything to go by. What will further tip the balance in the favour of foreign channels is their financial strength.
Clearly then, the shakeout would take place in the me-too general category channels. The first casualty will be channels with poor software, followed by those with average software but no price efficiency and brand identity, and then would fall the channels with good software but hefty price tags, points out Desai. The future will also depend on variables like the number of channels a TV set can receive through convertors, the number of TV sets in a home, the extent of remote TV sets and the evolving nature of TV audiences. "After all, if 200 magazines can exist, why not 200 channels with concepts of direct-to-home broadcasting and interactive programming knocking at the doorsteps," says Arun. But, as Verma puts it: "In the satellite TV war, there are no prisoners."