The Impact of TRAI's Tariff Order on the Indian Television Industry: An Exploratory Analysis

By Nadar, Diwahar Sunder | IUP Journal of Business Strategy, December 2019 | Go to article overview

The Impact of TRAI's Tariff Order on the Indian Television Industry: An Exploratory Analysis


Nadar, Diwahar Sunder, IUP Journal of Business Strategy


The broadcasting sector of India, which has been dubbed as the sunrise sector, is the second largest in the world after China (Ministry of Economy & Industry, 2017; and TRAI, 2018). The Indian Television (TV) Broadcasting industry has been highly dominant by the TV segment due to its effective reach and relatively reduced cost of service which has turned the slow growth paced industry in the early 1970s to become a goliath industry (Vijayasarthy and Illangovan, 2016). The TV broadcasting sector currently consists of 358 broadcasters, more than 875 private satellite TV channels and is expected to grow at a rate of 15-18% (Deloitte, 2018; and KPMG, 2017). TV penetration in India increased from 32% in 2001, 54% in 2013, 64% in 2016 to 68% in 2018. Five states have a penetration rate of more than 90%. In 2018, approximately 836 million individuals and 197 million households were in possession and deriving utility from a TV. The average time spent by an Indian watching TV has grown by 3% and currently stands at 3 h and 44 min (BARC, 2018). India's TV industry revenue grew by ^58,800 er in 2016-17 to ^66,000 cr in 2017-18. Subscription revenue which constitutes approximately 60% of the industry revenue rose from ^638,700 in 2016-17 to ^39,300 cr in 2017-18 and the advertising revenue grew from ^20,100 in 16-17 to ^26,700 in 2017-18 (TRAI, 2018).

The TV industry has made substantial direct and indirect contributions to the Indian economy. These contributions, measured by gross output, gross value addition, net indirect taxes and employment generated as represented in Table 1, represents the direct economic impact of the industry (Deloitte and MPA, 2018).

The industry also has a monumental indirect impact which adds value to the economy. The sector works as the driving force for other sectors by performing activities such as production equipment purchase, transportation and hotel accommodation among many others. The industry promotes various ancillary units such as books, music, gaming and merchandise amongst others. The music industry, in particular, depends on films for over 80% of its revenue (Deloitte and MPA, 2018). The boost in the penetration has been due to the tremendous impetus in the growth of the media and entertainment sector which is currently worth $2.47 bn (Indian Brand Equity Foundation, 2019). Even the licensing and merchandising industry in India which is at a nascent stage has been growing due to the growth in the TV industry. For example, the series Motu Patlu has inspired the launch of merchandise; the success of the movie Baahubali allowed Amazon to stream an exclusive animated series Baahubali:The Lost Legends for subscribers of Amazon prime; products and figurines based on the series were also listed for sale (Deloitte and MPA, 2018).

Technological advancements and innovations have changed the viewing experience of consumers. After the introduction of Direct To Home (DTH) and digital cable connections, there have been favorable changes in the areas of the picture and sound quality (Kathuria et al., 2019). Especially, the entry of direct satellite services into the market has given the consumers a quality alternative at affordable price. This entry has forced the cable channels to alter their prices to keep up with the competition (Chu, 2010).

Due to its pervasive and widespread impact, there has been considerable public interest in regulating the TV market. For example, in the US, there has been vocal advocacy by consumer organizations who are dissatisfied with the prices of TV channels because the cable TV rates had increased by 40%, whereas the inflation was 12% during the same period (Rennhoff and Serfes, 2009).

Bundling has been a customary feature of products such as mobile telephone services, investment services and medical services (Crawford, 2008). Bundling happens when individual goods or service components that could be sold separately are sold as a package (Kathuria et al. …

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