A bitter fight between cable operators and some of the biggest TV channels reveals the diminishing clout of cable. But it may be way too soon to write off television in India.
Researched by: Rachel John and Priyanka Gulati
The great battle over the cable bill
Where it all began: The Telecom Regulatory Authority of India (TRAI) sparked the phadda by issuing an order that allows broadcasters to hike the price of their channels. A channel that is part of a “bouquet”—a package offered by a company—now has a price cap of Rs 19 instead of Rs 12. The new rule was announced in November, and went into effect on February 1.
The broadcasting companies: celebrated this bonanza by upping the prices of their channels by 10-15%—or so they claim. It seemed only fair since there has been no price hike for the past four years.
The cable operators: refused to play ball. The reason: low-income customers in rural India may cancel their subscription—rather than pay the higher price. The operators also say that the actual price hikes will be much higher—at least 25-30% and as high as 60% for some popular channels. Customers will end up shelling out between Rs 50 billion (5,000 crore) to Rs 80 billion (8,000 crore) to broadcasters. The industry group All India Digital Cable Federation (AIDCF) moved the Kerala High Court to block these “unreasonable” increases. The case is likely to be heard this week.
The blowback: In response to this rebellion, major television channels like Disney Star, Sony Pictures and Zee networks have cut off access to 45 million homes with cable TV—that’s about a third of the national customer base. The broadcasting industry group also issued this irate statement:
The AIDCF’s claim that broadcasters are driving up TV channel prices and that 45 million households have been impacted by channel disruption is completely false. Having not been granted any interim relief in multiple High Courts, the AIDCF is seeking to invoke public sympathy through a false narrative. AIDCF is not only in defiance of the law but is also holding less than 25 million subscribers hostage, solely for its own commercial reasons and circulating misleading information.
The potential fallout: Cable operators are worried that unhappy subscribers will move to direct-to-home services—or zero-cost alternatives like Doordarshan FreeDish. But any interruption also diminishes the reach of TV broadcasters at a time when online streaming is soaring in popularity. As for customers, there seems no immediate end to the impasse—which may well require the intervention of the courts.
Point to note: DTH providers have agreed to the price hike—since they plan to pass on a 5-9% of the increase to customers—while absorbing the rest. But their customer base is more affluent than that of cable.
The fall of cable television
The dismal numbers: Cable television has been sinking in popularity for over a decade—ever since the arrival of DTH services:
- Between 2016 and 2020, the number of households with cable fell from 115 million to 100 million (though others put the number at 70 million).
- And cable’s share of subscription revenues has plummeted from Rs 270 billion (27,000 crore) in 2010 to Rs 130 billion (13,000 crore) in 2021.
- In just three months—from June to September 2021—the number of cable households dropped by 500,000.
- Cable TV’s share of total television subscribers has steadily declined from 63% in FY15 to 30% in FY22.
A good example: of an unhappy cable operator is someone like Vishal Vijayrao Khodke:
The 38-year-old owner of RCN Digital in Amravati, Maharashtra, had 14,000 homes on his cable TV network in 2015. That is when the region began digitising. People who did not want to spend on set-top boxes dropped out, leaving him with 11,500 homes. In 2019 came the New Tariff Order that complicated channel choices and increased prices, pushing him down to 8,000 homes. Khodke’s average revenue per user, or ARPU, from cable is now Rs 118 a month, down from Rs 150. He has had to reduce his staff from 130 to 60.
There is no one reason for his sinking fortunes. Cable has been dealt a succession of blows—that may soon prove fatal.
One: It all started in 2011—when parliament passed a law ordering cable companies to go digital within three years. This made it mandatory for every cable household to get a set-top box. Worse, they now had to get a set-top box for each TV screen in the household. Cable operators lost about 10% of their user base. Many moved to a satellite provider since the inconvenience—of getting a set-top box—seemed about the same. DTH also offered better video quality and choices—and a call centre to handle complaints.
Two: In 2019, TRAI decided to make signing up for cable packages as confusing and difficult as possible. The aim of the 2019 order was to allow customers to pay for the channels they watch—rather than be forced to rely on pre-fab packs offered by DTH companies or their local cable operators. In practice, each customer had to individually pick among 100+ basic channels—and add paid channels that they want. The maths involved was guaranteed to trigger an instant headache.
Another unintended consequence: the most popular channels increased their individual price—making the price of a cable subscription about the same as DTH:
The cable TV customers were happy with their local cable operators (LCOs) as they were getting all the popular channels at an average monthly bill of Rs 200 without any hassle of channel selection and making the payment as per their convenience… But after the prices of cable TV and DTH services were at par, subscribers shifted to DTH platforms for better quality and lower service-related complaints resulting in loss of business… The pricing parity led to a 50-60% increase in cable TV tariffs, which eroded the price advantage it enjoyed over DTH.
At the end of 2020, India had about 70 million DTH customers, almost double of wired cable TV subscribers.
Three: In 2004, the government rolled out its free DTH service: DD FreeDish. Besides all the DD channels, FreeDish offered 76 private entertainment and news channels—at zero cost. During the pandemic, FreeDish became an attractive choice for lower income Indians struggling to make ends meet—even as those with higher incomes migrated to streaming platforms like Netflix. Ten million households cancelled their paid TV connections during that time. As of March 2022, 43 million households had FreeDish. That it now offers 166 free channels doesn’t help the cause of cable.
Point to note: Paid television companies—cable and DTH—scored a temporary victory by forcing popular channels to pull their content from DD FreeDish. After all, it made no sense to offer Star Utsav, Zee Anmol, Sony Pal and Colors Rishtey for free—and then charge for the same on cable or DTH. But there is every indication that these channels are planning a reunion. The reason: Broadcasters claim that they lost Rs 2.5 billion (250 crore) in ad revenue per channel by yanking their content from FreeDish—which has not been offset by subscription revenue from paid TV.
Four: The rise of streaming poses a formidable threat to any kind of linear TV—aka ‘appointment viewing’ where you tune in at a specific time to watch a programme—delivered via cable or DTH. The numbers here are grim as well:
- Viewers of online video increased to 497 million in 2021—while paid streaming subs jumped to 80 million.
- During the same time, TV subscription revenue fell by 6.2%—marking the loss of six million pay TV homes.
- While the number of TV households is expected to grow at the annual rate of 1% until 2025, it will be fueled by smart TVs and free television—not cable or DTH.
- And the number of paid TV homes has declined from 120 million to 108 million between 2018 and 2022.
The main takeaway: Cable TV has been haemorrhaging viewers first to DTH—and now to FreeDish TV and YouTube—which is hugely popular among its base of lower income, rural viewers. While DishTV is expected to hit 50 million viewers, YouTube is soaring—with 500 million monthly active users at the end of 2021. In India, “[i]t’s by far the number one channel, the biggest aggregator of content from music, films to children’s content." The only consolation: cable’s misery is now shared by its old nemesis, DTH—which is in the same leaky boat.
The big Q: Is TV dead in India?
Nope. While old distribution models like cable or DTH may fall by the wayside, TV remains king in India. What will change is the hard distinction between screens—computer, phone or television. Here’s what the future of TV may look like in India:
Rise of the connected TV: Thanks to Reliance’s cheap phone and broadband services—and expansion of 5G into rural markets—online content is set to explode across income segments. Most industry experts predict TVs connected to the internet will soon become the norm. Be it via smart TVs or external devices such as Apple TV, Amazon Fire TV Sticks etc.
Point to note: Connected TVs are a premium product right now—limited to Indians who own smartphones that cost Rs 40K or more. So they’re not a replacement for cable.
From cable to internet: While cable companies may seem passé, they could reinvent themselves by bundling internet services—much like Comcast in the US. Data point to remember: in 2020, 210 million households in India owned a television set—and cable homes accounted for 100 million. That number isn’t easily dismissed.
TV will always be king: For all the fuss over OTT, it only has 50 million subscribers. Television has the largest audience share and accounts for 45% of all media revenue. The number of Indians watching television rose from 836 million in 2018 to 892 million in 2020. Of these, over 508 million viewers are rural against 384 million in the city.
But Netflix, Amazon Prime etc won’t be able to tap into these viewers. The biggest winners at the mass end—who are currently cable subscribers—will be free services like DD FreeDish or online platforms like MX Player and Youtube.
Also this: While people may be online in increasing numbers, TV content still rules the roost. Most online video viewing is driven by people catching up on TV content. As one industry exec explains: “The biggest shows on Star Plus will be the biggest shows on Hotstar. Ditto for Zee5 or Colors. How strong your content is on TV is the defining factor on OTT.” Being able to offer TV content also offers a big advantage in the OTT race. That’s why broadcast companies—like Zee5, Disney+Hotstar and Voot—are among the biggest players in the streaming segment.
The bottomline: Some industry experts predict that “five years from now cable will metamorphosize. Its biggest advantage is that it has wire into homes.” But the question that still remains to be answered: who will own this wire? Individual cable operators or the big broadcasting or tech companies?
Much of the best writing on the future of television is by Vanita Kohli-Khandekar—and is behind a paywall over at Business Standard—here and here. Mint and Hindu Business Line have more on the battle between cable and broadcast channels. This column in the trade publication Indian Broadcasting World does a good job of summing up the fall of cable TV. Mint has two very good pieces on the threat to linear TV and of DD FreeDish. Bloomberg News looks at why media and entertainment companies in the US are having an awful year.