In-depth: Is the premium justified on the HD universe?

Remember the Dabba Hai Dabba, Uncle Ka TV Dabba campaign by Star India to promote the ‘mindset’ of viewing HD channels on an HD TV set. Yes! Mindset is the word that works the most in increasing the HD subscriber base in India.

MK Anand

MK Anand, MD and CEO, Times Network, explained, “An HD viewer has passed three filters to reach that status. First is to have an HD TV set – an HD TV set costs at least 3,000-4,000 more than a normal one. Opting for an HD TV makes you a quality conscious person. Secondly, a cable operator/ DTH that has HD capacity is a sophisticated operator. Third is to have a ‘mindset’ of buying an HD pack, which is about Rs 175-200 costlier.”

Among the 170 million television households in India, merely 10 million watch television in high definition quality.

In February 2010, National Geographic was the first channel to be launched in the HD version. Today there are 69 HD channels in the country. In that year, Discovery and Movies Now launched their HD feed. Within the Hindi Entertainment space, Star India was the first one to go full force with the launch of the HD variants of its channels Star Plus, Star Gold, Star Movies, Star World and few others.

Advertising on television is based on the viewership numbers measured by BARC India. For an HD base of 10 million, the viewership numbers too are small, which means that the kind of monies that advertisers might be spending/ wanting to spend on HD channels would obviously be low. So are the HD channels actually making enough money? Are these profitable propositions for the broadcasters?

Also, are advertisers who have to pay a premium for the HD channels (since the audience is affluent) getting the kind of traction or opportunity to see from its audiences? Premium on a channel means the cost per viewer increases on the HD channel, vis-a-vis the SD channels.

From the consumers’ point of view, they pay close to 80-100 per cent extra for an HD package over a standard definition one and still they have to bear ads, almost as many as the SD variants. Also, almost all HD channels have mirror feeds of their SD versions. So why exactly should a consumer pay extra?

BestMediaInfo.com spoke to broadcasters, advertisers, media agency representatives and experts to understand the HD ecosystem and how dynamics are changing.

Broadcasters’ take

In a single line, broadcasters consider HD to be a successful technological innovation, which is an equally good business spot. Boasting about the affluent audience of the HD universe, Anand said, “Though smaller in number, the HD audience is a rarefied set of decision-makers. These are our creme de la creme television audience, which cannot be evaluated on the basis of the other matrix.”

Ruchir Tiwari

All the broadcasters we spoke to approved of this theory, justifying why HD is ought to be costlier and more sharpened. Ruchir Tiwari, Business Head, Zee Hindi Movies Cluster, says, “If one looks at the 8-10 million number, it is a small chunk but it’s growing rapidly. Also, HD sharpens the TG for the advertiser. The number of HD channels has more than doubled in last two to three years, which is a testimony of the demand.”

But the content served by most HD channels mirrors their SD variant. So why pay extra then? Tiwari gives full marks to technology. “It is a technical upgrade to the viewing and hearing experience. Majorly, English premium content and sports drive a lot of premium audience. While people believe that the Hindi audiences are not HD ready, that’s not true. HD gives 5.1 dolby sound and high quality visuals. Once you start watching on HD, you would not want to watch it in SD.”

This is something everybody agrees. Once you have the HD habit, settling for the SD feed is rather uncomfortable for the viewer. However, HD has an additional baggage of production costs. For the GECs and news, they have to produce all the content in HD format, with rather expensive equipment and infrastructure. For the movies and English entertainment, which work on the acquired content, the infrastructure costs remain. Also, the older movies need to upgrade to HD quality, which is an additional expenditure.

A broadcaster said on condition of anonymity, “It does increase production cost yes, but it is still making complete business sense. When we started about five years ago, it was a big call to take back then.”

The Times Network has as many as five HD channels across English news, Business news and English entertainment space. Anand agrees about the extra cost of production. “The equipment is easier, but the trick is with the basic satellite communication, which requires more bandwidth. This is similar to 30 years back, when only few people had colour television, but slowly, everybody started getting it. HD is going to be the norm, so we have to anyway get ready for the technology.”

Summarising if HD makes business sense to the broadcaster, Anand added, “The advertisers and the consumers are paying for it. It is costlier but this is an area where consumers and advertisers want to pay for it.”

Advertisers’ point of view

Advertisers feel that they are paying too much premium for too little audiences, albeit the affluence of the audience. An advertiser said that the HD channels ask for about 5-10 times premium than the SD ones.

Anand strongly feels that it is unfair to look at everything from the prism of numbers. “It is a myth that everyone is equal, some of us have more decision-making powers than others. So it is not about the number but the quality of audience. Numbers can never capture the qualitative differences. HD is creating a demographic filter by signalling that I (a viewer) am not equal to so many others and advertisers are valuing that.”

A lot of people believe that barring a couple of networks, HD and SD are sold in the same bottle which is not right.

Pawan Jailkhani

Pawan Jailkhani, Chief Revenue Officer, 9X Media said, “There are two major problems with the HD ecosystem. One is about the lack of exact viewership data and the second is that almost all broadcasters sell SD and HD in a package. HD should get its due and should be sold alone, despite the small base.” The ten-year-old network 9X doesn’t have any HD channel, though they are in the process of launching one soon.

At Zee, however, it is only for big properties like movie premieres, award functions, sports events and IPL that the two channels are sold as one entity to the advertiser. Otherwise, the sales for the two channels, albeit with the same content, are done separately.

Ashish Sehgal

Ashish Sehgal, Chief Operating Officer, Zee Unimedia, rejected the notion that HD is a small universe. “10 million is not a small group and the growth is rapid. SD and HD are sold separately on the run of daypart (RODP) deals. Advertisers are very much interested in the HD channels and that’s what makes it a profitable proposition for the broadcasters.”

Sehgal said though a lot of channels in the regional space have gone ahead with their HD variants, advertising on that front is yet to flourish.

K Srinivas Rao

A leading advertiser pointed out that while HD is an upgrade from SD, it is a fact that the number of viewers in the SD pie is decreasing. K Srinivas Rao, National Director, Buying, MediaCom, agrees that this is evident in some genres like English entertainment, though not in Hindi yet. “Though some of the HD channels have been performing well, it has been at the expense of their SD versions. Also, an advertiser doesn’t buy English channels for numbers, they buy them for quality.”

Then, why not decrease the cost of SD, while increasing the same for HD advertising? Denying the theory of eating into each other’s space, Tiwari answered, “Right now the universe of HD is too small to really eat up the SD space. But since the content is same with different feeds on different screens, SD, HD or mobiles will eventually be a collective measurement. The advertiser will then have an option to streamline his viewers. Everybody will coexist for a long time; it’s a long way for India to become an HD-only industry. We are seeing a lot of luxury and premium category using the HD ecosystem to launch their national campaigns. A lot of advertisers who were otherwise not on TV have evolved and are now advertising on HD channels.”

Anand supports Tiwari on this, saying, “Advertisers would not still be putting money had they not perceived value in it. They know that these audiences have a much higher chance of conversion.”

However, advertisers have a different take. A brand representative said HD was a con-game of the broadcasters. “Suddenly one day, the broadcasters started asking us to pay a 20 per cent extra for another channel with the same content. Citing the reasons of quality and unduplicated audience, we had to pay since we don’t want to lose out on the viewers, especially for the mass genres, if you leave out even a small chunk, it is not mass. So, now, we have to deal with three different people for SD, HD and OTT platforms for the same content feed. I feel cheated since I am paying close to eight times extra for the 1-2 per cent audience that I get on HD.”

BK Rao from Parle feels that the HD ecosystem is more beneficial for the premium and luxury brands that want to reach the discerning audience. “If you see HD as a whole is not more expensive than the SD. Even for IPL, Set Max HD was cheaper than Set Max SD and even Sony Six. For the premium brands it is important that they don’t spill over. With HD a lot of premium brands like say a luxury car would be sure that most of the rural India will be irrelevant. However the chances of an HD viewer coming into the brand fold of such a product is easier. HD viewers are the ones evolving from SD and are better off.”

Neelima Burra

Naming it as a controversial discussion that has been around for some time now, Neelima Burra, Chief Marketing Officer, Cargill Foods India, too considers HD media planning to be complicated. “There is no doubt that HD has premium audience and it is further segmenting the TV viewership. However, the bigger question is that while TV sets are HD enabled, what percentage of people are using HD-enabled cable connections/ DTH? There are multiple levels of complications around this. There is an extreme lack of measurability to decide the return on your spend. So, that will be a bone of contention till the time that all TV boxes are actually measured on HD.”

Then why do the advertisers still go for buying the HD lot? Burra answered, “HD just enables us for better segmentation of media planning. Sometimes it’s a repeat content, sometimes not, but if some consumer is watching programmes in HD then it helps me reach that person. Otherwise there is duplicity in media planning.”

Navin Khemka

Navin Khemka, Managing Partner, Maxus India, divides the advertisers on the need of HD channels. He said, “HD channels offer a great proposition for brands who want to target a very segmented discerning audience, which was otherwise very difficult to address.”

Justifying the premium on the pricing, Khemka goes on to add, “The audience is premium. The premium pricing is also due to limited inventory and better production and viewership experience.”

Rao explained that while English channels have a similar audience set for SD and HD, Hindi entertainment is a different ball-game altogether. “HD channels only work well on English channels, not that well on Hindi channels because obviously when you buy a GEC, you buy it for numbers. But somewhere down the line when you look at the HD base, the numbers don’t work out. So in the advertisers’ priority list, Hindi HD channels come below English ones.”

While BARC started measuring viewership data for HD channels right from day one, some advertisers are still unaware if HD viewership is measured at all. The media head of one of the large advertisers said on the condition of anonymity that nobody communicated this to him ever. Many other said it was incumbent upon the media planners to keep their clients informed.

What’s in for the consumers?

I, as a consumer, pay at least Rs 200 extra per month to get access to the HD channels. But I don’t get anything extra. I watch ads and I watch the same content as on the SD channels, barring some of the movie channels. A senior broadcast personnel said, “HD was never launched with a promise of ad-free content. The viewers will have to bear with the ads, though lesser ads with better quality content.”

Rao says viewing habit is an important driver here. He said, “At the end of the day, it is about habit. Take this example, if you start viewing cricket in HD, you get used to it. Then you won’t go back to SD. Also, HD is a more metro phenomenon because those are the guys who actually mark the difference between HD and SD. Currently the HD subscriber base is about nine million, but it should increase with digitisation and more so in small towns, people find it easier to digitise a cable connection than go for DTH.”

Anand too agrees that ad-free was never promised. Since the advertising on HD was limited in the initial years of its launch, people misunderstood it as ad-free. “But people (brands) also needed to produce HD ads, which wasn’t there in the past. It is not possible in India to get an ad-free medium because people don’t pay enough for a media product.”

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