313Blog - Pay TV homes on the decline: Will CTV run the show?

Pay TV homes on the decline: Will CTV run the show?

Posted on 18th Mar 2024

 

 

television

 

India is witnessing a decine in Pay TV subscriptions with more households migrating to either digital through Connected TV or free-to-air (FTA), the silent player that is increasingly luring viewers.

The constantly changing dynamics of television consumption in India, with clear segmenting of the market into Pay TV, Free TV and Connected TV, has raised questions like what is the future of television considering the decline in Pay TV? Will free television sway consumers or will Connected TV take away most of the subscription pie?

 

The answer is not as simple as the questions as each segment is sizable in itself.

 

According to the FICCI-EY report, out of around 182 million television households in 2023, 19 million were Connected TVs, 45 million were FTA screens and 118 million Pay TV homes.

Pay TV homes declined by 20 lakh, from 120 million in 2022 to 118 million in 2023, and saw a 9.2% drop since 2020 when the number stood at 130 million.

 

The downward trend in Pay TV segment signals that the consumers are drifting to Connected TV and Free TV.

The fall in Pay television homes has been attributed to cord-cutting and movement to Connected TV at the top end of the market, growth of alternate entertainment options & digital platforms, as well as availability of a sizeable content bouquet for Hindi-speaking markets on free television (DD FreeDish), which remained stable in 2023 and provided a competitive offering to the base pack on Pay TV, the report said.

According to the report, Pay TV will see a downfall, and by 2026, the number of its subscriptions is likely to fall by 5 million. However, Free TV or DD FreeDish will gain audiences with estimated 50 million free TV connections by 2026 and 57 million by 2030 from the current 45 million.

As per the statistics, while DD FreeDish, the only FTA service in the country, is seeing a stable market with 45 million subscribers in 2023, the television mix is changing significantly in favour of Connected TV with 19 million CTV homes in 2023, up from 15 million in 2022.

As per the latest India’s M&E report, CTV connections are projected to witness double the growth by 2026 when it is expected to have 40 million subscriptions compared to the current 19 million. The CTV subscriptions have grown over threefold since 2020, when it was just 5 million.

It said that the situation post-2026 could be quite different, once wired broadband crosses 60 million to 70 million homes and 5G connections scale significantly. At this point, we expect Connected TV to start scaling more quickly, and reach 100 million by 2030, while linear TV homes drop to 140 million, of which 57 million would be free TV homes.

Some industry experts, however, feel that Pay TV may decline each year but will not go away completely and while FTA is growing at a decent rate, Connected TV will take over in a big way.

“I don’t foresee a free fall in Pay TV numbers, but as per my assessment, a consistent 3% decline each year can happen. It is a shift happening from linear TV to Connected TV,” said Karan Taurani, Senior Vice President, Elara Capital.

He said that Pay TV and FTA will co-exist as the difference in their sizes is huge.

“In terms of FTA, I would not say it is the future but it will be a complimentary system with Pay TV. It cannot scale up as much as Pay TV is today. Pay TV households are about 120 million. Even if they decline by 3-4%, they won’t go below 100 million in a big manner. FTA is a small number today at around 35-40 million households. Even if they grow at about 10% every year, they won’t reach above 50 million households (anytime soon). Both Pay and FTA will co-exist. There is no proper way to measure FTA homes as these are mere unencrypted set-top boxes. It is growing because it is free and offers close to 200 channels,” he said.

According to another senior industry expert, linear TV is going down and Connected TV is gaining more households and while FTA is getting popular it is not the future of television.

“The linear TV is going down and the Connected TV is going up. The overall ecosystem around FTA is also growing but it is not the future as it is not a proper model. It is meant to cater only to the lower section of the society. People can come back from FTA to Connected TV as well. Anyway, there is no proper mechanism to measure the free TV service,” said the industry veteran.

According to experts, innovation is required in Pay TV content to ensure the fall in audience is not higher, an area where many broadcasters have reduced focus in recent years, as they focussed on gaining OTT audiences with differently created content.

There is a need to create custom viewing products for connected television consumers who need more than just linear feeds, particularly in genres like news and infotainment, said the FICCI-EY report.

“The decline (in Pay TV) should not be articulated to the viewership for shows because that is moving from TV to digital so a lot of Pay TV companies need to build a strong model on digital in terms of advertising and monetising the content. That is how things will shape up,” Taurani said.

Experts also feel that Pay TV subscription is likely to see a big decline in 2024 due to the absence of price hike, the positive impact of which was seen in 2023.

Free television, on the other hand, continued at an estimated 45 million subscribers on the back of less expensive television sets, economic issues, and as an add-on connection to pay TV.

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