Broadcasting Industry: Going Beyond the Dependence on Ratings
Television audience measuring (TAM) is a technologically supported process; it always evolves as new technologies are implemented. The broadcasting services share similar technologically-induced advances in creating, storing, transmitting, and distributing content via the medium. These quick changes generated new difficulties as well as new options to study and update in order to enhance the TAM system's trustworthiness.
Stakeholders in the broadcasting industry have raised concerns about the structure, neutrality, and reliability of the existing rating system, necessitating a review of the existing Television Audience Measurement and Rating system in India. There are also concerns regarding panel expansion and panel tampering, which require prompt attention owing to the damage they may make to the TAM and television channel ratings. In light of the impact, television audience measurement can have on advertising revenue in the broadcasting industry, there is a critical necessity to improve the accuracy of the television audience measurement system in India and resolve all emerging issues regarding the TAM data.
One of the ways to decrease the impact of the rating system on the television industry revenue is by reducing the dependence on the rating system. The television market size in 2020 stood at Rs 68,500 crore ($9.71 billion) and is estimated to reach Rs 84,700 crore ($ 12.01 billion) by 2023. In the same year, TV penetration in India stood at 69 per cent, driven by the DTH market. With such high television penetration and viewership, advertisement revenue has become an important aspect of the broadcasting industry.
Advertisements are an essential component of the television news industry. With the recent expansion of the nationwide media industry, attracting more expensive advertisements has been the sector's top priority. According to TAM AdEX, the news genre dominated ad volumes in 2020 with a 31 per cent share, followed by the General Entertainment Channels (GEC) genre with a 27 per cent share. Hindi news remained the second-best language genre for advertising volumes and increased its share of advertising volumes to six per cent.
When purchasing commercial time on news channels, media agencies and advertisers seek viewing data and broad patterns, making high viewership crucial for attracting more commercials. However, it has been suggested that viewing data is not the determining element in ad revenue and that pricing depends on other criteria such as channel brand, quality, distributor demand, and reputation created over the years. However, viewing metrics continue to be a crucial factor in deciding the advertisement.
Significantly, advertisement is among the most important sources of revenue for the broadcasting industry. The television sector in India is expected to expand from Rs 720 billion in 2019 to Rs 826 billion in 2024, with 60 per cent of revenue coming from distribution and 40 per cent from advertising. According to industry estimates, broadcasters' revenues climbed from Rs 41,300 crore to Rs 45,000 crore in 2019, with advertising income accounting for approximately 70 per cent and subscription revenue accounting for approximately 30 per cent.
Television audience data is used to answer many questions from broadcasters and advertisers in their daily work. Broadcasters need to know the audience in order to offer the best content in the most appropriate schedule to reach the most valuable audiences. Advertisers need to know the television audience and how to communicate with their actual and potential consumers.
To answer all these questions, broadcasters and advertisers need a quantitative measurement of television audiences. This kind of audience research is also known as ‘ratings research’ and ‘audience information systems.’ Although this audience data can help in many media decisions, its main benefit is that it facilitates the buying and selling of advertising in commercial media markets. It sets prices, so it serves as currency for the advertising market. Therefore, offering reliable audience data is fundamental for the commercial television market.
However, recent issues have been raised by multiple conjunctures regarding the accuracy and efficiency of the television rating system. Issues such as inaccurate samples, panel tampering, biased ratings, landing page and non-transparency have been raised against the television rating system. In lieu of the increasing scepticism regarding the television rating system, it has been argued that its impact on advertisement revenue can be devastating for the broadcasting industry in the longer run. Henceforth, there is an urgent need to find alternatives to the interrelation between advertisements and the rating system.
One of the already existing alternative revenue models is the ‘subscription-based revenue model’ in the television industry. Simply, a subscription-based pricing model is a payment structure that allows a customer or organisation to purchase or subscribe to a vendor's services for a specific period of time for a set price. In the year 2021, video subscription revenues grew 27 per cent to Rs 54 billion, an amount that is over 50 per cent of the broadcasters’ share of TV subscription revenues.
Moreover, paid video subscriptions scaled up to 80 million in 2021 across almost 40 million Indian households. News subscriptions – mainly for exclusive and premium content ‒generated Rs 0.9 billion in 2021. Furthermore, with the increasing digital consumption of content and the proliferation of individual consumption of television content, the subscription model can provide more accurate opportunities for the broadcasting industry in the coming years.
Besides, promoting the subscription model also provides an opportunity for broadcasters to serve directly to consumers and understand consumers in a better way, taking away the dependence on the rating agencies to understand the audience. However, it is difficult to completely shift to the subscription model. Therefore, it becomes important for the broadcasting industry to reduce its dependency on the television rating agency and advertisement revenue by concretising alternative revenue models.
(Amit Kapoor is Chair, Institute for Competitiveness, India and Lecturer, Stanford University. Akshay Bhambri is Research Manager, Institute for Competitiveness, India and Doctoral Fellow at Harvard-Yenching Institute).
