TV audience is growing in complexity as idiot box turns smart

TV audience is growing in complexity as idiot box turns smart
Source: Pixabay
  • With OTT aggregation and 5G service availability, homes that watch TV only via the internet might grow.
  • There is another growing segment of ‘laptop audience’ that is moving away from TV sets.
  • There are 150 million dark homes that are neither connected to TV nor OTTs.
Television is now at war — with the many many screens that are cheap if not free, and somehow even more entertaining than their older cousin. The many challengers to the old-style TVs are dark homes, a growing laptop audience and last but not the least – India’s largest sporting property, IPL, going free on digital.

From the pandemic-induced highs of 2020, there has been a 16% drop in overall TV viewership in 2022, according to a recent FICCI-EY report on media and entertainment.

“As digital media creates new ways to engage, and direct-to-consumer relationships are getting built, consumers are more than willing to try new media options and this is increasing cross-media consumption like never before,” the report said.

Top-end connected homes

The FICCI-EY report defines TV audiences under four different categories — those who watch only connected TV; digital-first homes that watch pay TV as well as have OTT or over-the-top subscriptions; the pay TV homes that also watch content online; the free TV homes and dark TV homes.

Almost all these categories are seeing some sort of digital disruption, which is changing the patterns of viewership.

At the top end is the smallest group of 2 million digital-only top-end homes with connected TV-only consumption. They do not have any linear TV connections via cable or direct-to-home (DTH), and watch OTTs and consume subscription-based content.

In spite of its small size, this section is drawing new forms of advertisers. “Several platforms and manufacturers have started providing advertising services on their smart TV platforms to the extremely desirable ‘top of pyramid’ audience,” EY said.

This is followed by 43 million digital-first homes with payTV as well as one or more subscription-video-on-demand (SVOD) services via OTTs. Time spent on linear television fell 7% in 2022 due to a fall in both Hindi and regional language viewership – indicating that a chunk of this segment might upgrade to the top end.

As OTT aggregation increases, many TV channels stream live on TV and with the proliferation of 5G, this universe is all set to grow.

Broadcaster monopoly is ending

There is a large chunk of the audience at the cusp of linear TV and online-only viewing. The report says that there are 77 million pay TV homes which also consume advertising-video-on-demand (AVOD) services – basically YouTube kind of consumption and OTTs that offer free options without subscriptions.

In the last few years, the pay TV universe has been shrinking, as more consumers shift from linear TV to bi-directional, which is broadband TV. Pay TV households are expected to decline by two million in 2023, before falling slowly to 116 million households by 2025.

Its biggest competitors – smart TV sets – are growing. As many as 8-10 million TVs are being connected to the internet daily. Added to that, digital subscriptions grew 27% in 2022.

In 2022, as many as 99 million paid video subscriptions across almost 45 million Indian households generated ₹6,800 crore. This is over 60% of broadcasters’ share of TV subscription revenues.

“Smart connected TVs will exceed 40 million (daily active users) by 2025, thereby ending the monopoly of broadcasters on the large screen and leading to around 30% of content consumed on large screens to be social, gaming, digital, etc,” the report said.

However, this form of digital subscription viewing also has a new set of competitors. “In addition, increased acceptance of permanent and temporary work-from-home culture has created a large ‘laptop audience’ – possibly a reason why second TV sets are not getting reconnected, and a good case for parity-pricing between linear feeds on TV and on OTT,” the report said.

Movie channels lose their sheen, sports to follow

The pandemic has changed the way Indians watch movies. Most of them released directly on OTTs that also had fresh, new and even exclusive movies, and film channels that heavily advertise ‘newly released’ movies lost ratings.

The report says that movie-loving audiences have shifted from TV to OTT, for the sake of convenience.

“As the habit of watching new films at home takes root for upper SEC audiences (which has been helped by the pandemic with direct-to-digital releases and shortening digital release windows), the TVOD film model can gain traction and can be a new window of opportunity,” the report says. TVOD stands for transactional video on demand that allows users to buy content on pay-per-view basis. SEC stands for socioeconomic classification.

Another disruption is afoot in the sports viewership modes as we. As of now 44% of Indian sports fans watch live sports only on TV. A sizable 36% are using both traditional and digital media to watch live sports, and 20% watch exclusively on digital. As free digital streaming of high-end sports properties might change the trend as well.

“With the announcement of IPL being provided free on digital streaming, we expect this viewership to increase significantly, and this could make it difficult to grow ad revenues on TV as viewership will split across platforms,” the report said.

Free and dark TV homes

The number of free TV homes – which consume free-to-air channels and no AVOD services – form the lower end of the market and total 45 million. Such homes are bogged down by costs and the lower socio-economic classes classified as NCCS CDE, saw the largest drop of 28% in TV viewership in 2022 from the pandemic-induced highs seen in 2020.

“The fall in pay television homes has been attributed to both cord-cutting at the top end as well as movement to free television (DD FreeDish) at the bottom end of the customer pyramid,” the report said.

The market also has 150 million dark homes which have no access to TV or OTT. While this segment is most likely to upgrade to free TV, high entry points might keep a few away. They might also move from a feature phone to a smartphone leapfrogging to a smaller but cheaper screen, leaving television behind.