Bills of cable TV and Direct-To-Home (DTH) services are likely to increase for most subscribers, a Crisil report said in Delhi on Monday.
The report said that the new norms, which came into force on February 1, would benefit Over-the-Top (OTT) platforms.
“The network capacity fee (NCF) and channel prices announced by broadcasters and distributors as per the Telecom Regulatory Authority of India (TRAI)’s new guidelines could increase the monthly bill of most subscribers of television channels,” the research report said.
It said that the rules “will be a mixed bag for viewers and distributors”.
Commenting on the report, Sachin Gupta, Senior Director, Ratings at Crisil said: “Our analysis of the impact of the regulations indicates a varied impact on monthly TV bills. Based on current pricing, the monthly TV bill can go up by 25 percent from Rs. 230-240 to Rs.300 per month for viewers who opt for the top 10 channels, but will come down for those who opt up to top five channels.”
Subscription revenues of broadcasters would rise by 40 percent to Rs. 94 per subscriber per month compared to Rs. 60-70 now, it said, adding that with viewers likely to opt for popular channels, large broadcasters would have greater pricing power.
“Conversely, broadcasters with less-popular channels will find it tough to piggyback on packages, and the least popular ones will hardly have a business case and could go off the air,” said the report.
For distributors (DTH and cable operators), the report observed that the new regulations are a mixed bag. While content cost would become a pass-through, protecting them from fluctuations, they may lose out on the benefits of value-added services such as bundling content across broadcasters, customization and placement revenue, it said.
Currently, most distributors are charging NCF at the cap rate of Rs. 130 per month. Similarly, broadcasters have priced subscription for the most popular pay channels at the cap rate of Rs. 19 per month.
“In all this, OTT platforms could emerge as the big beneficiary because many viewers could shift because of rising subscription bills. And low data tariffs also encourages viewership on OTT platforms,” said Nitesh Jain, Director, Ratings at Crisil.
However, these are early days and the situation may evolve with prices charged by broadcasters and distributors declining depending on market forces, viewership, and competitive intensity, the report added.