Given these concerns, analysts at HSBC say the worst is not fully factored into the share prices of listed cable players. With Hathway the most vulnerable, given its urban-centric broadband subscriber base. Hathway, Den Networks and Siti Cable are the largest cable operators in the country; that apart, the broadband subscribers of Hathway at over 800,000 are double those of the other two put together. While pricing pressure will impact all, those such as Dish TV will be impacted less, given their larger presence in tier-II and tier-III markets, where rollout of Jio’s broadband network is some time away.
Analysts say there would be consolidation in the cable TV space but at a gradual pace, given the last-mile challenge for most new entrants. Unlike the wireless space, where R-Jio had the advantage of scale from Day One.
With broadband data subscribers, both fixed line and wireless, expected to double over the next three years to over 500 million and prices at Rs 49 a gigabyte (GB), analysts expect consumption levels to rise to 10 GB a month from the current eight GB a month. This, with the proliferation of OTT applications, is expected to affect the revenue streams of exhibitors such as PVR and Inox, as well as broadcasters such as Zee and Sun TV.
With consumers spending more time on digital devices, advertising revenues of broadcasters could come under pressure. While Netflix’s success in America is attributed to high fixed broadband penetration and it might not have a similar impact or sharp shift on Indian TV viewership (where broadband penetration is under 10 per cent), analysts at Emkay believe it would impact the time spent on TV, impacting quality of viewership and incremental ad revenue.
Experts add that broadcasters such as Zee Entertainment and Sun TV have diversified their revenue stream and are better prepared to face the OTT onslaught than others in the media space. Zee Entertainment, for example, launched Zee5 with 80 new shows and has both free and paid content. The company believes the OTT platform is an incremental revenue generator and will not eat into its core revenue. Further, by tying up with telecom companies
such as Airtel, it will open new streams of revenue.
Its content library, both in Hindi and regional languages, and film production unit will limit the impact on its revenue. For Sun, a profitable Indian Premier League franchise and digitisation of the Tamil market are triggers in addition to the core broadcast revenues.
Exhibitors such as PVR believe media consumption would help rather than hinder viewership habits. Says Nitin Sood, chief financial officer of PVR: “The trend has been that when in-home consumption of media increases, the tendency to go to movie halls also increases. In general, there is an increase in the appetite to consume media, across platforms.”
More, exclusive exhibition rights for a period of eight weeks before these are made available on alternate platforms should also help the sector. What has been impacting the sector more in recent months has been a worry that allowing consumers to carry their own food into theatres (as a court wanted) would dent revenue from the highly profitable food and beverage segment of the companies.
Given the rally in their stock prices, analysts believe concerns on this front are overdone.