DTH could be the next big driver of film revenues but players will have to find the right formula to make the paradigm a success
New technologies, especially digital platforms, are completely revolutionising the face of the entertainment industry and Hindi films are no exception.
Time was when the box office was the only benchmark. Now, revenue streams such as direct-to-home (DTH) TV are being exploited by film-makers as extended revenue sources. So, while theatrical revenue still accounts for the largest chunk of profits, home entertainment options are playing catch-up.
Thanks to digitisation, which is taking place at almost 40 per cent annually, players like Tata Sky, Dish TV, Sun TV Direct, BIG TV and Bharti Airtel DTH, have jumped onto the bandwagon. DTH operators offer a bouquet of pay-per-view channels that air films across various languages and genres, most of them contemporary titles.
At present, only a miniscule 1 per cent to 1.5 per cent of a film’s revenue comes from the DTH platform. But, if a film premieres on DTH as well as on the big screen, it could boost revenues for both the producer as well as DTH player.
The Indian film industry churns out the largest number of films produced annually for any movie industry the world over, and it is estimated to have grown at a compounded annual growth rate (CAGR) of 17.7 per cent over the last three years.
In 2008 alone it registered revenues of around Rs 109.3 billion, a growth rate of 13.4 per cent over 2007. With the growth rate pegged at a CAGR of 9.1 per cent over the next five years, it is expected to account for Rs 168.6 billion in revenues by 2013.
Piracy, on the other hand, punches a Rs 600-crore hole in revenues every year, something that can be curbed to some extent by releasing a film simultaneously on DTH and on the big screen.
UTV released Oye Lucky! Lucky Oye! on DTH pay-per-view within 17 days of the film’s theatrical release. The production house also released the Mithun Chakraborty-Dimple Kapadia starrer Phir Kabhi directly on home video and pay-per-view DTH, simultaneously.
UTV Motion Pictures Vice-President, International Distribution and Syndication, Amrita Pandey says, “It is a little speculative to predict the kind of monies production houses would make if there was a simultaneous release of a film on DTH and in theatres as it has never been done in India.
“While, today, the contribution of DTH to a film’s revenue may be as little as 1 per cent, it may grow to almost 10 per cent within a year. The model has been successful in other countries. It also boosts the film’s marketing and promotion,” says Pandey.
While Oye Lucky was priced at Rs 99, other films such as Kaminey, Agyaat and Aage Se Right, which worked well on DTH, were priced at Rs 75 and Rs 50, respectively.
There’s another sunny side to DTH. Due to the multiplex-producers strike, Eros International’s Aa Dekhen Zara suffered losses at the box office. The producers had spent close to Rs 3.5 crore on marketing the film but the strike put paid to their efforts.
They then released the film on DTH platforms like Dish TV within two weeks of the film’s release. Salil Kapoor, Chief Operating Officer, Dish TV, had said at the time, “We are delighted by the subscribers’ response to new and recent films released on our movie on-demand channel and this could form a growing revenue stream for us going forward.”
And it doesn’t cost much for a DTH player much to promote a new title. Amrita Pandey of UTV says, “Most DTH players try to acquire contemporary titles so the marketing is undertaken mainly by the production houses.” While DTH players like Dish TV use SMS as a medium of publicity, BIG TV uses the print media and leaflets extensively.
India has 135 million television households. Of these, 97 million are connected with cable and satellite (C&S), growing at 25-30 per cent annually. In contrast, the DTH market currently boasts around 15 million subscribers, and is expected to be pegged at 35-40 million by 2012. In fact, industry experts see the DTH segment capturing 40 per cent of the C&S market by 2015.
According to a study by Hong Kong-based Media Partners Asia, released earlier this year, India’s pay-per-view segment is estimated to grow at 16 per cent annually and to log revenues of $11.3 billion by 2012. It is expected to emerge as a key driver of this business in Asia.
Smita Jha, Associate Director, Media and Entertainment Practice, PriceWaterhouse Coopers, says, “The DTH market is yet to mature in India. DTH came in at a time when CAS implementation had not succeeded and as a second entrant to the television market. When cable had already witnessed its bloodbath, DTH players had a tough time sustaining themselves. Their profits are bleeding still with high taxes on set-top boxes.”
Jha feels there are both pros and cons to releasing a film simultaneously on DTH and in multiplexes. “This trend may have a negative impact on a film’s box office collections. This trend is popular in the US, where the box office is not the main driver of revenues.”
Globally, the number of pay-per-view customers is over 20 million, up from 6 million in 1989. Combined pay-per-view sales total approximately 20 per cent of theatrical revenues.
At present, markets like Korea and China are leaders in the pay-per-view segment. But India has a massive emerging middle-class and is poised to be a driver of the pay-per-view market in the not-so-distant future.
Experts point out that factors such as price points, target audience, economic backgrounds determine the impact of value-added and interactive services like video-on-demand and pay-per-view.
Though B and C cities account for almost three-quarters of DTH consumers, it’s the metro cities like Mumbai, Delhi, Hyderabad, Pune and Bangalore that patronize interactive features.
Sugato Banerji, Chief Marketing Officer, DTH, Bharti Airtel TV, remarks, “Services like pay-per-view have found great appeal among the affluent. But DTH players also believe that regional TV viewers will be the biggest growth drivers of the market as almost 70 per cent of DTH sales take place in smaller towns and cities.”
Sun Direct has a subscriber base of four million and is yet to make a foray into the pay-per-view segment. Tony D Silva, Chief Operating Officer, Sun Direct, says, “We will soon be offering movie-on-demand as we have the largest South Indian movie library.”
Choice of titles is another key factor. Jha points out, “For every 1,000 films released a year, only 250 arein Hindi. So the potential of regional films on DTH is much higher.”
DTH players also feel that Hindi films are in greater demand than Hollywood movies on the DTH platform. Tata Sky had aired Slumdog Millionaire for as little as Rs 25 in February this year. Tata Sky and Bharti Airtel had also aired films like Hannah Montana and The Curious Case
of Benjamin Button but they found few takers.
Here’s another view. “DTH players across the country are making losses mainly on set-top boxes. So the money spent on pay-per-view and marketing isn’t much,” says another DTH player.
He explains that taxes shave off huge margins on monthly packs. In fact, some states levy a whopping 25 per cent in entertainment tax on the monthly tariff, plus a 10 per cent licence fee and an additional 10 per cent on service tax. All this eats into a DTH player’s profits.
Strategy-wise, what is the future of DTH? Technology, good content and services, say DTH players. Banerji says, “Strategic tie-ups with production houses to air a film only by a given DTH player will amplify profits.”
It’s early days yet and DTH players are still feeling their way through the multitude of factors that could make DTH the next big thing in the film entertainment industry.
