Now, it’s the ‘D’ Company in India

Akey lesson hammered into us during graduate studies was that distribution is the key to marketing success. We were asked to pore over copious case studies where companies with strong distribution networks lorded it over the market place. The more I interact with people in the media industry, particularly electronic, the more I am getting convinced about the importance of distribution. Quite simply, if you do not have the D-muscle, you will simply not survive the brutal competition, no matter how slick and smart your content, packaging and anchors are. TV industry in India is littered with examples of great projects dying unsung because distribution became a weakness than strength.

There are at least 500+ channels competing for eyeballs in India. If you really want to be ‘seen’ and not be invisible, you will have to be in at least the priority list of the top 100 channels of cable operators who still control more than 80% of access to households with TV sets. In a majority of Indian households, the most number of channels that can be seen on the set rarely exceeds. That gives a lot of clout to the cable operators and even the DTH operators who can show much more than 100 channels. Since this is simple demand and supply economics, owners and promoters of TV channels have to pay more and more money to cable and DTH operators. This is known as carriage fees, which has become the most worrisome cost element for TV channels. The absolute minimum that you need to spend a year to stay visible is upwards of Rs 20 crore. Many channels that want a genuine pan Indian footprint often have to set aside about Rs 50 crore a year. This has completely unhinged the economics of the TV industry in India. Firstly, you have to have very deep pockets without any guarantee of returns. Secondly, you have to have a ‘bouquet’ of channels so that you have at least some bargaining power with MSOs, cable and DTH operators. Not many can do that and hence,  you have a peculiar situation in India where the number of channels keep mushrooming even as the industry moves towards consolidation, mergers, takeovers and failures. At a recent Zee Turner-Star Den JV announcement, Puneet Goenka stated that the Zee-Star distribution fight cost the industry more than $10 billion! For a stand-alone TV channel, it is extremely difficult to solve the distribution dilemma. The other problem then is that TV channels – both in the entertainment and news genre – have much less money to invest in better programmes and quality content. In fact, many seniors in the business with whom I interact say that news channels simply do not have the money to invest in great current affairs programmes because most of it has been sucked away as carriage fees.

Will the arrival of convergence make a drastic change to this unhappy and unsustainable scenario? I am afraid, not in the immediate future!.

Media Convergence in current times

It has been talked about as the ultimate threat as well as ultimate opportunity for media houses. For more than a decade, we have heard about its disruptive and transformative powers. But for most media houses in India, Convergence had remained just an esoteric word till recently because of low Internet penetration and a lack of understanding of what Convergence can do. That has decisively changed now.

Convergence has finally arrived in India with a bang, and how! In just about a year or so, Internet penetration will touch 100 million. And as prices start falling, the number of regular Internet users will zoom upwards just as the number of mobile phone users zoomed upwards after reaching an inflexion point. Don’t be surprised if the number of Internet users crosses 300 million by 2015. In any case, even 100 million Internet users along with 600 million mobile phone users must be something that media houses can no longer ignore. If they do, they will soon be extinct.

What can smart media houses do in this age of Convergence in India? Well, there are a few lessons media companies can learn from the experience of corporate players in other Indian markets. The first lesson is that the Indian consumer is extremely fond of the value for money proposition. No fancy gadget, or application or Facebook hits will lure the Indian media consumer if she thinks that the content is not worth the price. Very soon, more than 50 million upwardly mobile Indians will be accessing news mostly on their mobile phones. And most of it will come free. A smart media house would develop a strategy that can use the mobile handset as a tool to lure the consumer to its more traditional forms of content-print or television. The second crucial lesson that a smart media house must learn is that localisation is the key to success in the Indian market. There is no doubt that English language media is still considered by the elite to be the ‘in-thing’ in the country. But the last two decades have shown that success lies in local markets. Look at the relentless growth of media houses like Sun, Ananda Bazar Patrika, Malayalam Manorama, Dainik Bhaskar and Dainik Jagran to name just a few and you will realise the importance of going-and staying local. In fact, analysts say that one of the key reasons behind the success of so many editions of The Times of India is the manner in which the newspaper has successfully localised its various editions. And of course, you have the Hindi language behemoths who have more than 60 editions!

The third thing that smart media houses will do is to make their content younger. More than two thirds of India’s population is already below 35 years of age and the next generation of media consumers will be incredibly young. Almost all of them will be using mobile phones, Facebook, Twitter and other new technologies aggressively. This young cohort will also be different in the sense that they would want content that is in your face yet no-nonsense. This generation – contrary to what many Pundits say – is also very engaged with important social and political issues. So a smart media house would address these issues and not talk down to the reader and the viewer. Sure, gossip, sex surveys et al attract young media consumers. But they do not shy away from the rot in the judicial system, poverty, corruption and mismanagement. The last lesson would be one about interactivity. Social media has already demonstrated that media consumers no longer want to be passive recipients of content. They want to engage the media house that provides the content in a conversation. The more interactive you are, the more successful you will be.

News of the News

Friends, when we look at the consumption of media, it comes to mind as the most addictive product there ever was, and ever will be! It is packaged and sold at times better than a film with a much higher impact quotient. And the content can change the nation, definitely the government, at times overnight! The Indian news industry is the news, and here we are.

Our foremost gratitude to our mentor – Prof. Arindam Chaudhuri. His sharp understanding and inherent respect for media is the motivation behind this exclusive supplement on the industry. The attempt is to fill the gap that has been in existence for long; the gap between how news is seen and how it is made. More than anything else, this magazine is about people like you and me who consume news and media to strengthen, empower and enlighten our lives.

 Media is a topic whose sensitivity can neither be underestimated or overestimated. While most institutions of the Indian democracy are under suspicion, our media, despite being criticised for its nuisance value or low quality content at times, is regarded by many as the most potent force to create positive change.

 When we sat down to shape the Media Watch, we all agreed that there’s more to Indian media than meets the eye. We decided to bring out a platform which will not just celebrate the diversity and range of voices and views that emanate from within the Indian media, but also highlight success stories that can be an inspiration for youngsters to emulate. Besides, we also vowed to bring lapses and sins of omission and commission that are occasionally witnessed in the media, to the limelight. In short, Media Watch is aimed at keeping a 360 degree watch on every aspect of media – from its business to most importantly, its social responsibilities. 

Media Watch will also pay particular attention to the latest trends in the vibrant and rapidly growing regional media that is often ignored by the so-called ‘establishment’ media based in Delhi and Mumbai. It thus hopes to bring to its readers great work done by media in this country, in various remote areas, which often gets lost because the media house may not be big enough to get noticed. Our media house is in a unique position to get ‘all’ happenings from ‘all’ parts of the country – thanks to our news weekly The Sunday Indian, that we bring out in 14 languages from every corner of the country.

Our media industry is following a very different growth path as compared to the West. As of today, the Indian media and entertainment industry is pegged at Rs.652 billion and is expected to grow at a CAGR of 14% to reach Rs.1.3 trillion by 2015. What is noteworthy however, is the fact that print media will continue to remain a key driver of this growth saga. The print media is growing in India at a CAGR of 10% and is expected to reach a value of Rs.310 billion by 2015. Furthermore, the regional print is expected to grow at a higher rate of 12%.  With more than 70,000 newspapers, India witnesses a circulation of more than 107 million copies every day. News is big, really big. 

 This is the first issue of the monthly supplement. I humbly invite the editors, CEOs and opinion leaders to write to us with your feedback. Let us together make this platform bigger and better with a vision of creating an India where news not just informs, but also empowers.