Mobile entertainment: popularity soaring
“Earlier, I used to do the rounds of TV channels asking them to reach consumers via SMS. Now even channel advertisers want to use this medium to add value to programmes.” said Mr. Balu
Nayar, Orange associate VP value-added services and new applications while taking part in the FICCI session on 'Mobile entertainment-Whenever, Wherever'.Mr. Nayar was narrating his experiences since SMS first came to India five years ago.
TOM Group Ltd CEO & ED Sing Wang presented some amazing data which showed India in the driving seat in Asia in the mobile segment. "In Asia, India has the fastest Compound Annual Growth Rate-CAGR-in mobile growth-36.4 per cent," said Wang.
The session discussed how mobile entertainment evolved as a big revenue driver for mobile operators, device manufacturers and media and content owners. Mauj.com COO Arun Gupta and Turner Broadcasting System International VP Wireless & Emerging technology Mitch Lazar also spoke in the session, which was moderated by Indiagames founder & director Vishal Gondal.
Opening the session, Lazar threw light on how the content has been driving the mobile technology. He cited the Sony example of Indian Idol where SMS was used to decide the winner. Speaking on the technological advances, he said even journalists were making use of innovations like camera phones to report news.
Lazar said media companies, including TV channels, should keep mobiles also in mind while conceptualising and producing programmes. Sing Wang shared some important numbers with the audiences on mobile growth: the global mobile population will touch 1.5 billion by 2007.
In Asia, the mobile population is currently 330 million and is growing at a rate of 5 million users per month. In India, the mobile population is 48 million, growing at a rate of 1.5 million to 2 million users per month.
Speaking on the wireless product strategy, Wang said the content is mainly driven by music, sports and entertainment. He emphasised the need to combine the integrated use of content application and presentation. On piracy, he said, one must adhere to royalty and copyrights laws.
Nayar said mobiles could be used as a perfect sampling device by filmmakers and TV channels. "Mobile is a perfect sampling device through which trailers, video clips and ringtones can reach the potential audiences. This can create a buzz," he said.
Nayar warned against stereotyping while identifying the consumer segments. "It is not just the upwardly mobile areas that bring in the consumers, but even some of the rural areas have got mobile penetration now. So we should be prepared to target even those consumers," he said.
Mr. Gupta pointed out that mobile phones are fast evolving as the third big screen after TV and computer. "The number of mobile handsets already outnumber the number of TVs in a number of countries. In Japan, more people browse Internet on mobile phones than PCs," he pointed out adding, "In the next two years it will be the same in India."
Zee for adult content on TV
Zee Telefilms made a strong pitch for allowing adult content on television, which should be regulated. Reason: it would help bring about more transparency in the system.
Making a case for the move, Zee telefilms vice-president Ashish Kaul said, "This will bring about transparency in the business as, like it or not, adult content is a part of our lives. It is there on the Internet and on MMS on mobile phones.
Speaking at a session on content regulation at the Ficci Frames, Kaul said, "Covers of magazines, sometimes, have provocative pictures. Newspapers too, are no less bold."
"If a consumer pays for DTH, and he wants adult content why should he be restricted when he has paid for it?" Kaul asked, adding to the debate whether adult content should be allowed on Indian television or the country continues to wear the moral fig leaf, closing its eyes to developments happening all over the world.
Universal McCann India president Chintamani Rao said it was undesirable for a proposed Communications Commission of India to be appointed as a super regulator. "It goes against our cultural ethos. Instead, we should have a structured and formalised self-regulatory body like ASCI is for advertising, he opined.
Information and broadcasting minister joint secretary R Parasuram, offered the government perspective saying the ministry is looking into various aspects of content regulation, including setting up a semi-governmental autonomous body for this purpose. Another provision that is being considered is imposing a ban on a channel that shows offensive material. This is being discussed with the law ministry, Parasuram said.
Star India VP Karan Kuljeet Singh said broadcasters have internal control rooms for monitoring purposes, but a central regulatory body is needed. According to her, Star has designed a universal rating system and it is important for broadcasters to respect viewers' sensibilities.
Legal firm TSG Associates' Tamali Sengupta gave delegates an overview of content regulation in different countries. "Most countries have self-regulation, although a fine or a penalty can be imposed," she pointed out.
The main reason for regulation is that broadcasters must meet acceptable community standards.
Should content owners be liable for retransmitted content? Should there be pre-censorship in TV as there is in films? These are some of the issues, according to her, haunting regulators worldwide.
Sengupta added that the US position is that a cable company is not Subject to government interference as the investment is entirely private. For terrestrial TV, however, the government insists on controlling some spectrum. Industry self-regulation has worked in the US.
In the UK, Ofcom is the regulatory body, which has proposed a new draft code for content. Section One states that content that will impair a child's psychological and emotional development can only be screened in the watershed hours of 9 pm-5.30 am. Violence, sex, unjustified nudity are not allowed outside the watershed period.
"As far as India is concerned we need to look at whether content codes are compatible with acceptable community standards", Sengupta concluded.
Distribution: miles to go and many challenges en route
The good news first: mushrooming cable television channels in India, at present 300, is a matter of pride for the industry. The bad news: inconsistent pricing, low quality of signals in the non-prime band and severe bandwidth constraints hamper distribution activities.
No wonder, therefore, speaking at the Ficci-Frames 2005 convention at a session on `Distribution: Miles to go…' One Alliance president Shantonu Aditya said distribution of cable TV channels was the biggest challenge for broadcasters.
Lack of adequate infrastructure like bandwidth availability hasn't helped much. Most of the networks possess a carrying capacity of up to 550 MHz only, which is suitable for about 67 channels.
Without mincing words, which bordered on the unsaid, Aditya admitted that the deluge of launches had created a huge market for "carriage and band placement fees" in favour of MSOs and operators.
He agreed that broadcasters paying "unheard of figures" for carriage and placement in a competitive market are justified as at the end of it the channel has to be viewed.
Speaking on the scenario for the year 2005-06, Aditya adds that the broadcast industry would witness emergence of another 15 to 20 channels even as the bandwidth logjam in cable is not likely to change in the near future. "Broadcasters who have already made an entry and entrenched themselves with good distribution will become valuable broadcast assets in the interim period," he added.
Analog still rules over 90 per cent of the market, and digitalization of cable networks is necessary as more channels can be accommodated only if the cable networks are digitally enhanced. Except the major metros, most of the other cities still operate in the analog mode.
As digitalization is expensive, funding requirement by networks should be increased by changing foreign investment norms, Aditya opined, adding that those broadcasters who adopt the time frame for digitalization, should be encouraged by being given tax sops for being the early adopters.
According to Aditya, cable will continue to be the most popular method of distribution, and in the absence of legislation on licensing or territorial demarcation, the current stranglehold of cable operators will continue.
MSO Alliance president Ashok Mansukhani said, "The objective of the regulation would be to 'promote and facilitate competition' amongst channels, operators and platforms. Also, consumers should have the 'freedom' to choose their content and operator/platform."
The panel of speakers agreed that there should be a smooth transition from analog to digital mode, but the former will continue to survive along with the latter. The speakers also advocated that any policy that is adopted should promote competition at all levels.
In the same vein, the panelists also agreed that the digitalization policy should provide guidance to broadcasters, MSOs, cable operators and consumers concerning the adoption of new technology.
The panel included SK Arora, additional secretary, ministry of information and broadcasting and Rakesh Kacker, an advisor with the Telecom Regulatory Authority of India.
Towards rapid transition from analogue to digital
The California based Zoran Corporation has announced that it is demonstrating its new SupraHD 640 high definition television processor in Beijing at CCBN 2005.
The company has noted that the US television market is rapidly transitioning from analog to digital. The change is being driven by the Federal Communications Commission mandate that all new televisions with screen sizes greater than 13 inches must contain a built-in digital receiver by July 2007.
The company has stated that its SupraHD product line has been developed to enable customers to accelerate the transition to FCC-compliant televisions and ATSC-compliant set top boxes
within the prescribed timeframes and at the lowest possible system costs.
The company expects to see a whole new class of very affordable high definition television compatible receivers, terrestrial set top boxes and TV recorder products come to market as a result of the integrated solutions delivered by the SupraHD product line.
The new SupraHD 640 high definition television processor integrates all the necessary capabilities required to support the decoding and display of ATSC content into a single chip and provides the lowest possible system cost for manufacturers of CRT televisions and set top box products. Other equipment manufacturers can integrate the SupraHD solution into existing analogue TV products converting them into FCC-compliant products.
The SupraHD 640 solution includes a transport processor, high definition MPEG video decoder, MIPS CPU, and Zoran's HDXtreme video processing and picture enhancement technology. The IC supports a variety of system interfaces including an infra-red receiver, flash memory, and a
highly optimised DDR SDRam interface.
Designed to use minimum external components, the SupraHD 640 requires only memory, an ATSC demodulator and tuner, and a small number of passive components to build a complete digital TV receiver.
And now iced tea in bottles
Last year, two giants Pepsi and Hindustan Lever got hitched to each other in order to exploit their respective strengths to market, sell and distribute a humble product such as tea in India. More specifically, the Lipton ready-to-drink (RTD) range of teas and tea-based beverages.
Since then, select markets in India have been seeded with Lipton Ice tea in cans, tetrapaks. Today, the duo announced that the Pepsi Lipton Alliance would be rolling out the cooling beverage in 500 ml PET bottles and 250 ml glasses. The roll out will cover 17 cities in the next few weeks.
The target audience initially would be the 500 million strong urban and later semi-urban Indian youth followed by the rural areas. At the press conference to announce the launch, Pepsi India Holdings chairman Rajeev Bakshi defined three categories of space for the Iced teas product – the fun product, the good for you product and the better for you product. He pointed out that "Litpon Iced tea is being positioned in the ‘better for you’ space model for the youth and not as another variant of tea or ‘chai’."
Time to anchor broadcast rights
With new technologies like broadband emerging, the Geneva-based World Intellectual Property Organisation (WIPO) is developing a treaty, which will update the rights of broadcasters in a digital scenario.
WIPO has noted that broadcasters are facing an increase in costs for acquiring properties. An example is the rights for sporting events like cricket and the Olympics. TV advertising has slowed down in many markets. However, this phenomenon is yet to hit India.
Speaking at Frames, WIPO Deputy DG Rita Hayes said, "A competitive broadcasting marketplace increasingly relies on diversified delivery modes and the ability to sub-licence owned programmes. Broadcast signals need to be traded on different platforms, be it cable or DTH.
"However very often broadcasters are not in a position to control how their signals are being distributed. A CASBAA study shows that signal theft is growing at the rate of 11 per cent a year. The acquired rights lose all value when signals of premium content like sports events are intercepted without payment and authorisation.”
Hayes added that WIPO recognises that the time has come to anchor broadcast rights in an international regulatory framework. She said all the creative industries would benefit from a level playing field. "Controlling signal piracy will legalise the content distribution market," she explained.
With new technologies comes the threat of piracy. WIPO is assisting member states in strengthening their enforcement mechanisms through training activities for legal authorities and police. "However, many countries are not doing enough to improve enforcement," said Hayes, adding, "It's not surprising then that you find counterfeiting and piracy are big businesses in many countries."
WIPO is working to convince policymakers in these countries that their economies and citizens will benefit in many ways if piracy is arrested. "We explain to countries that tolerating piracy will get them no respect from the world," she said.
Hayes concluded by urging India to make the most of its experience with other countries. "Come to Geneva. Use the WIPO secretariat as a forum for dialogue where nations can meet the challenges we all face. India is a leader in the creative industries space," she said.
'The Amazing Race' in India
Buena Vista International Television Asia Pacific, which is the distribution arm of Walt Disney Television International, has plans up its sleeve for India that go beyond distributing Disney branded blocks.
The company is looking to sell the rights to the formats of the reality TV shows The Amazing Race and Extreme Makeover to Indian broadcasters.
It is also banking on its hot television properties Desperate Housewives and Lost to leave a mark on Indian viewers.
Speaking to Indiantelevision.com at Frames, Buena Vista International Television Asia Pacific senior VP and MD Steve Macallister said, "We are looking at creating local versions of The Amazing Race in certain Asian markets. India is certainly a possibility. Another show is Extreme Makeover."
The format rights were recently acquired by the UK cable and satellite channel, LivingTV. Local versions are in the pipeline in Belgium and Scandinavia.
"We are also sitting on two of the hottest shows in the world. These are Desperate Housewives and Lost. They have generated a huge buzz. Desperate Housewives is completely original which is why Indian broadcasters are talking to us about bringing the show here," he said.
According to Macallister, these are the two biggest shows acquired in Australia for Seven Network in recent years.
In India, the US version of The Amazing Race airs on AXN. It sees couples racing the world in a bid to win $ 1 million. Lost is an action-packed adventure show that will bring out the very best and the very worst in the people who are lost.
A plane tears apart in midair and crashes on a Pacific island. The 48 survivors scavenge what they can from the plane for their survival. Some panic. Some pin their hopes on rescue. The band of friends, family, enemies and strangers must work together against the cruel weather and harsh terrain if they want to stay alive. But the island holds many secrets, including the intense howls of the mysterious creatures stalking the jungle, which fill them all with fear.
In Extreme Makeover people are chosen to receive the makeover of a lifetime which includes: plastic surgery, lasik surgery, cosmetic dentistry, hair, makeup and fitness.
As far as the different markets are concerned, Macallister said, "Australia is a mature economy. It is a western culture. In that respect it is important and is our biggest market in the Asia Pacific. India and China have huge growth potential." Macallister also said the company has evolved its business strategy from becoming very Hong Kong-centric to one where localisation would be given importance. " We want to become closer to our clients which is why we opened an office in Mumbai six months ago," he added.
Just how promising India is can be gauged from the fact that in six months the two Disney channels are the biggest in the Disney portfolio internationally in terms of viewership.
Talking about Frames Macallister said, "Frames is a great way to meet many market players. It offers a strong networking platform. It is good to find out from people their thoughts on issues."
Significant role of multiplexes
It's a new 'revelation'. Multiplexes, digital cinema and electronic cinema are going to play a crucial role in the future of film entertainment business in India. And with the multiplex already proving its worth, digital and electronic cinema is just a tad behind in reaching that 'revelation' level too. The FICCI Frames session on 'Cine-matrix-The modern multiplex in India' saw experts analysing various patterns of the film entertainment business in India.
While IMAX theatre Systems VP John Schreiner offered his views on IMAX theatres differentiating multiplexes and development Adlabs Films Ltd MD Manmohan Shetty discussed digital cinema in India. Prana Consultancy's Tim O'Brien spoke on the dynamics of digital cinema and E-City Entertainment India CEO Atul Goel explained the important factors in the future multiplex.
Speaking on the IMAX business, Schreiner pointed out that Russia and India were developing at a record pace in that segment. He said in India the infrastructure boom was the driving force behind the 'multiplex madness'.
Opening the session, Shetty pointed out the significance of the multiplex business in India saying 2005 will see an investment of Rs 150 crore in the multiplex business alone. Elaborating on the digital cinema business model, Shetty stressed the significance of the satellite delivery method. Attracting investments from theatre owners was a major issue. Citing the various technologies prevailing in the segment, he said a compatible technological platform is important for making digital cinema universally acceptable.
Atul Goel discussed a study E-City had done in association with AC Nielsen in to analyse the entertainment consumption pattern. The study showed that multiplexes are clearly SEC A hub. Another key finding of the study was the high student patronage. Also, 60 per cent of the visitors owned plastic money like credit card or debit cards. Eighty-one per cent visited the multiplexes to watch movies.
He listed the potential marketing tools that would drive the multiplex business in India as interactivity, more promos during weekends, formulation of combo products and building loyalty programmes around immediate redemption.
O'Brien in his speech summarised global digital cinema trends and developments. He explained the advantages for directors, distributors, exhibitors and audience while dealing with digital cinema. Speaking about the need for a single technological standard for digital cinema, he said a US organisation called Digital Cinema Initiatives (DCI) was working on this front. "This means a lot for studios and theatre owners," O'Brien said. He said a low RoI due to low ticket rates would be one main challenge in the progress of digital cinema in India.
O'Brien identified the increase in urban development and a growing middle class segment as two major factors that would contribute to the development of multiplexes and digital cinema in India. He cited a struggling broadband scenario in India as one major factor that would contribute to the multiplex business here. "Because of a not very encouraging broadband scenario, multiplexes will continue to be an ideal platform for entertainment," he said.
Indian entertainment industry poised for huge growth
The entertainment industry, which is currently valued at Rs 222 billion, is expected to grow to more than Rs 588 billion by 2010, says the recent CII-KPMG report. While releasing the report on the Indian entertainment industry titled, ‘Focus 2010: Dreams to Reality’, Subhash Ghai, Chairman, CII National Entertain-ment Committee (CIIN-EC), said, “The report, an initiative under the CII’s ‘India — The Big Picture’ focus is an effort to present a critical analysis of the sectoral constraints faced by the industry; impediments to its growth; the need for concerted action; and hence, archive its true potential. One of the key imperatives that can realise this potential is the need for focus and effective collaboration between the key stakeholders.”
The analyses presented in the report entailed a combination of KPMG’s in-house knowledge base of the Indian entertainment industry; extensive discussions with key members of the CIINEC and other experts. Rajesh Jain, National Industry Director, Information Communication, Entertainment, KPMG India, explained that while films in India represented the evolution in culture, television represented the economic revolution. Television is expected to grow from advertising revenues and subscription revenues.
Jain said, “From an asymmetrical push model, we are moving to symmetrical model. We are poised for a second wave of growth. The contribution of TV would be as much as 60 per cent.” Other segments of the industry are also set to see growth with films tripling in size, radio growing four times and the music company expected to recover. Jain listed a ten-point action plan that the industry players should follow: which included matters on governance, revenue diversification, technology and organisational effectiveness. Jain ended his presentation by saying, “Importantly, we should remember that Government is merely a facilitator. Action has to be taken by the industry.
The Indian entertainment industry is on the verge of a take-off, powered by new delivery platforms and technological breakthroughs; increasing content variety and favourable regulatory initiatives. This is expected to transform the entertainment landscape with more players entering and traditional players being forced to adapt or perish.
India has been the fastest growing economy in the world in 2004 (8.2 per cent). In terms of purchasing power parity, it is already the fourth largest economy in the world. The 300 million strong middle class allocates a larger share of its monthly expenditure on entertainment. The industry is at an inflection point and is geared up to enter the second stage of growth powered by the twin engines of technology (availability of quality infrastructure and accelerated penetration of digital connectivity) and an enabling regulatory environment.
Hindi film industry in for key structural changes
'The Hindi film industry -- Business trends and Structural perspectives,' a report authored by Sunil Khetarpal, Country Manager, Entertainment and Media Banking, Yes Bank, is to be released by the end of this month. The report gives an interesting insight into upcoming trends in the Hindi film industry.
The report includes key trends in production aspects, film financing, collection trends as also emerging revenue streams through home entertainment and in film placements.
Since 2001, there has been an increase of 8 per cent and 48 per cent in number of releases per week for all Hindi films and high-grade films respectively. High-grade films (with budgets greater than Rs 20 m) constitute the most relevant Hindi film group as it contributes more than 90 per cent of total business generated by the industry.
Film financing has seen interesting trends, with Non-Traditional Financing Sources (NTFS) gaining ground. Within high-grade films, proportion of films financed from NTFS has increased from 8 per cent in 2001 to 42 per cent in 2004. Also, several investors contributing NTFS for film production are new entrants, which explain their higher propensity to fund films with smaller budgets or smaller capital outlays. Co-productions have seen a rise from 3 in 2001 to 15 in 2004.
With regard to collection trends, films today, are often released on a large number of prints to extract maximum revenue possible in the first few days of release. There has been an appreciable increase in collections from foreign films dubbed in Indian languages and it is estimated that almost 35-40 per cent of total box office collections of foreign films was contributed by dubbed films in 2004 as compared to approximately 25 per cent in 2001.
In the home entertainment arena, average realization to producers for home video rights has increased by almost 100 per cent in the last two years from about Rs 2 m to Rs 4 m for Top 50 Hindi films.
The report expects revenue proportion to increase from overseas rights, TV Rights and home video. Proportion of revenues coming from domestic theatrical distribution may decrease though absolute realizations are expected to grow due to effective marketing and growth of multiplexes. The key driver for structuring Pay Per View (PPV) release window in India will be flexibility of distributors for other media platforms in view of potential cannibalization of home video and Pay TV revenues and number of potential viewers, which will be a function of subscriber base of the DTH service provider.As far as film marketing goes, the table below shows media specific marketing spends for Hindi Films in 2001 and 2004.
Spends on print media are expected to rise due to increase in local newspapers, which facilitate regional & city-specific targeting. Ad-spend share of C&S TV will come down by almost 10 per cent over the next 18 to 24 months due to proliferation of other media and realization of sub-optimal effectiveness of C&S TV platform.
Over the next 18 to 24 months, use of Product Placement and Brand Promotions (PPBP) in Hindi films is expected to grow further towards Rs 1000 million, from it's current share.