Advertisers worried as NTO 2.0 may affect reach of select TV channels

Some advertisers say they may go slow on their TV ad spend and wait for NTO 2.0's impact on the subscriber base of flagship and niche channels to be more visible

Nisha Qureshi
New Update
Advertisers worried as NTO 2.0 may affect reach of select TV channels

The overall reach of broadcasters is likely to be impacted as a fallout of the new tariff order (NTO) 2.0, which has led to an increase of up to 50% in the maximum retail prices (MRP) of most flagship channels.

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Experts believe this is likely to impact the advertising revenues of select channels, especially niche channels, as the price-conscious consumer may rationalise her TV package, leading to a reduced reach for some channels.

Also read: Commentary: Why PMO must intervene and rescue India's broadcasting sector from the clutches of TRAI

According to a report by the Telecom Regulatory Authority of India (TRAI), the active subscriber base went down by 25% after the implementation of the first tariff order in 2019.

The broadcasting industry has been struggling ever since to gain reach with some broadcasters even shutting down their niche offerings, especially English GECs and movie channels, which have been affected the most.

Krishnarao Buddha, Senior Category Head, Marketing, Parle Products, said more advertisers are wary about the fact that total TV households are going down and more and more consumers are shifting to automated digital platforms.

"The pie that used to be majorly covered by television is getting split between digital. This has been happening for a couple of years. We are going to further tilt our spending towards digital," he said.

"If a cable or DTH costs me Rs 700-800, I can get options such as Amazon Prime and Disney+Hotstar and connect them to my smart TV for the entire family to watch. The price increase is going to lead to many disconnections. As it is, in January, we can expect the exam season. Schools are also opening up, which may lead to many disconnections," he explained.

Some advertisers may go slow on their TV ad spend and wait for NTO 2.0's impact on the subscriber base of flagship and niche channels to be more visible.

Even before NTO 2.0, people were looking at ways to cut down mediums such as DTH and cable, he added.

Another top advertiser, who did not want to be named, said, “When subscription prices go up, people start cutting channels from their package. This becomes a challenge for the broadcaster. It does concern us as an advertiser because some key paid channels will end up getting dropped from the bouquets. Viewers may end up choosing between offerings.”

"Most houses operate with a certain budget for television. If you look at the past two years, many people have been affected because of Covid. The spending power is going to be a challenge. The commodity prices of vital things such as petrol, onions and vegetables are also increasing. Considering these factors, people will feel the pinch for sure. Maybe in the short term, you will see people willing to drop a few channels from their total payout of cable," he added.

Explaining the challenges with such policies, he said the options with the English genre are very limited in the country of late. "If Star is exiting the English entertainment genre, you are left with limited options such as Zee and Sony. HBO, WB vanished long back."

"English has completely gone to OTT. If you look at certain households or youth-controlled households, most of them have already shifted to OTT. TV is there in houses where there are certainly older people, or where there are kids who do not kind of understand the technology and are not comfortable with operating multiple remotes,” he said.

Though broadcasters may lose some reach and a marginal part of ad revenues, the gains from increased MRPs of select channels (December onwards) are going to be higher in the short term. 

The NTO 2.0 has put a cap on the MRPs of channels that wish to be a part of bouquets. Hence, broadcasters are pricing their flagship channels above Rs 12 as they cannot be a part of any bouquet. The demand for flagship channels across the country will thus increase the monthly cable bills of the end consumer. This is indirectly encouraging a-la-carte channels.

Flagship channels such as Zee TV and Star Plus are priced at Rs 22 and 23, respectively. Some regional channels such as Star Jalsha have been priced at similar rates.

Considering the economic effects of the pandemic on the audiences as well as rising prices of essential items such as petrol, people might be compelled to cut their connections. Experts say this may result in a shift towards digital at a faster pace.

TRAI Advertisers worried as NTO 2.0 may affect reach of select TV channels