Star India’s new distribution approach has been the talking point for the industry. And now highlighting the same is Media Partners Asia (MPA) in its new report.
Post the announcement of Reference Interconnect Offer (RIO) deals by Star, most multi system operators (MSOs)in order to keep both content cost and churn under check, opted to carry Star’s key Hindi channels on the base pack, along with free-to-air channels and lower RIO rate channels such as Nat Geo. In certain markets, 1-2 relevant regional channels have been bundled in the base pack.
Not only this, many of the niche channels (English cluster) have been moved to higher or expanded basic tiers or available on a-la-carte basis.
“This will adversely impact channel reach and viewership. However, the revenue losses on these channels will be partially compensated by reduction in carriage fee costs,” says MPA in its report.
MPA, however sees a bigger risk, potentially to Star’s sports channels, as sizeable investments have already been made to creating non-cricket sports leagues leveraging Indian soccer and badminton.
“These leagues are still in their infancy and require maximum distribution reach,” points out MPA.
It further goes on to say that in cricket too, Star will broadcast the ICC World Cup in February 2015. However, according to MPA, with all India matches, semis and finals also available to viewers on public broadcaster Doordarshan, Star may have to rethink its incentive schemes in order to maximise its distribution of sports channels.
MPA estimates that the commercial rollout of package could take at least two to three months (completing in the early half of Q1 2015) and in the meantime, the delay will put pressure on the distribution of Star’s niche channels.
“New channel launches for Star could also become equally challenging as it loses the luxury of having 100 per cent sampling on the cable platform,” it reports.
In conclusion, Star’s new distribution strategy, will be a true acid test of consumer demand for its portfolio of channels. Viewership trends over the coming weeks will reflect such demand.
“On a positive note, the outcome will help Star to prioritise and rationalise its content budgets, which have swelled across multiple genres, in recent years,” opines MPA.