The industry, even after the digitisation in phase I and phase II areas has not yet moved to complete addressability. Channels today are still being offered as a single bundle and negotiations have happened on one aspect only, and that is price. There is differential treatment of small and big operators. The concept of packaging has not been implemented yet and as a result of which the true benefits of digitisation have remained unlocked.
In this scenario now, Star India has come up with a plan which has got everyone thinking. The new Star RIO promises flexibility to the operator to choose channels, and enables them to showcase channels as per consumer demand. The offer for the distribution fraternity nationwide, is a single, transparent, non-discriminatory one – a standard offer that is open to all cable operators.
The new RIO allows tiering of customers through a structure that does not push all channels in the base pack. Instead, it encourages operators to create packaging tiers based on consumer profile
The network in order to align both the operators’ goal and its own aim has now come up with incentives, which allows discounts on all Star channels. The multi system operator (MSO), if agrees to take the incentives can get extremely high discounts on the base price of the channel.
The incentive could also give benefits to the end-consumers. While currently, a consumer has to pay for all the channels, Star’s modified RIO enables the cable operator to offer his subscribers as per the customer profile / demand. This places the power in the hands of the consumers – they choose their required channel packages and pay only for those channel packages.
The incentives, which vary for each channel, are non-discriminatory, pre-stated and available to all DAS cable operators. Operators are free to opt for incentives as per their discretion.
The scenario now is that many MSOs have said they want to go with the old RIO and on an a la carte basis only.
Indiantelevision.com speaks to Star India EVP distribution Krishnan Kutty on the whole Star RIO deal, the incentives and the reaction from the MSOs and distribution community on the new RIO deal.
What are the salient points of the TDSAT order for your new RIO and MSOs? Are you happy with the order? Will you disconnect any MSO if it does not sign the new RIO?
We are taking an unequivocal stand before the industry that we will behave in a completely transparent manner, which is why we filed the affidavit.
Going forward, we will sign only the new RIO with all MSOs.
We are attempting to create a structure which will lead to better choice for consumers, healthier overall industry economics and this a positive step towards the same.
We believe the true value of digitisation will get unlocked for stakeholders including consumers, with this structure.
In line with the TDSAT order, MSOs will have to sign the new RIO before 10 November, failing which we will be left with no choice but to switch them off.
Why do you think MSOs are saying they will go with the old RIO?
With anything new there will be a time of adjustment. A lot of the issues that have been raised is I think driven by a worry about the change. The change will need all stakeholders to make adjustments and readjust their business models moving forward. That will have some short term costs. But we genuinely believe that this will lead to a far healthier digital ecosystem over a medium term.
What are the issues Star India is facing in making the MSOs understand the incentive scheme? Why do you think they are facing issues with implementing the RIO?
We have had positive discussions with a lot of operators and have been signing contracts at a steady pace. I think the discussions that we have had in the context of this model have been the richest ones we have had for the longest time. It has been a genuine discussion about what is the best consumer offering to be created, what do consumers value and what should be the business design moving forward. There are of course concerns about the transition. Which we should all work towards solving.
During a recent meeting of the MSOs, three crucial points were raised, that the incentives are unachievable and that there are technical challenges in meeting the RIO deal. What’s your reaction to all this?
The scheme has been modelled on basis of the consumer demand for various Star channels; consumer profiling for each of the channels and the current economics of the cable industry. We believe the scheme is extremely realistic and achievable.
As for the technical issues, one of the mandatory conditions of DAS implementation is that each individual consumer should be addressable – in essence, every MSO should be capable of administering changes in consumer account, including package/ channel addition or removal as required.
DAS has been implemented two years ago, and we see no reason why there should be technical problems in implementing something which was to be done at the on-set of DAS itself.
MSOs are saying that the viewer’s cable bill will go up as now the MSOs will have to pay 100 per cent more to the broadcaster. Is this correct?
Let us study some background information –
• TDSAT has ordered Hathway to pay Rs 27 per subscriber, towards the Star channels.
• Past DAS deals of most MSOs have been in the similar range or higher.
Now on back of this background, if we were to study the new RIO offering of Star, the pricing for MSOs works out to numbers in the similar range of their past deals or lower in many cases. Then, why would the MSOs have to pay 100 per cent more to Star? Why would the cable viewer’s cable bill go up?
Can you elaborate ways of creating packages, how your new RIO is platform-friendly, and how it will help MSOs to create viewer-needs-based offerings?
It all depends upon the kind of packaging that the operator chooses to do. If implemented in its true spirit, the overall cost for the operator should be in the range of Rs 25 to Rs32 for all the channels.
Typical Consumer Packaging Pyramid:
Also in all this, how does a LCO benefit from the incentives that are being given to the MSO? Will there be talks between the broadcaster, MSO and LCO to ensure that the discounts are being passed at the LCO level as well?
Star, as a broadcaster, has no direct role in the margin: 0px auto; padding: 8px 0px; list-style: none; font-size: 14px; color: rgb(51, 51, 51); line-height: 18px; clear: right; text-align: justify; background-color: rgb(255, 255, 255);">As a key stakeholder of the industry, we would be more than happy to help partner with both for truly unlocking the value of digitisation for all the stakeholders, including the end consumer.
Do you think that if MSOs do not implement your new RIO fairly and do not inform their subscribers of the possibilities, it will cause viewers to move to DTH?
We truly believe that ‘Consumer is the Queen.’ If not offered an appropriate value proposition (content & relevant pricing in this case) the consumer will opt for other service providers (DTH in this case).
We also feel that our new RIO will benefit all stakeholders, if implemented fairly and in the true spirit of the offering.
Why do you think are the MSOs opting for selling channels on a la carte basis only?
We believe that many of the concerns are driven by the worry about change and how does it impact them and how will they transition into a consumer oriented model. We are confident that platforms when they give themselves time will come around and understand that this is for the long term health of the industry.
While the leading MSOs have said that they would put all Star channels on a la carte, how have the independent MSOs and the newly formed cooperatives have reacted to the incentive scheme?
We are happy to share that the independent MSOs have applauded the new RIO for its transparent and non-discriminatory offering sign-ups have already began.
How many deals have you signed from the time the TDSAT came up with its order? How many of these have opted for scheme?
We have signed almost 33 per cent of the operators. About 10 per cent had already signed prior to the TDSAT order and will continue on those deals. Of the balance, all have opted for the new RIO incentive offering as it provides them with level playing field as well as flexibility to address their consumer’s needs.
Star India CEO Uday Shankar had said that meetings will be held with MSOs in various cities to make them understand the whole system, is that happening? Which cities have you covered? Which is the next stop?
We have had meetings with almost all the MSOs in the DAS markets, except the city of Vizag where we have had telephonic discussions with our customers. We have had one-on-one meetings to explain the new RIO incentive offering and its workings to all our MSOs.
Star has said that the incentive system will be very transparent. But will the system be transparent to the extent of one MSO knowing the discounts the other MSO is getting by meeting all the criteria?
This indeed and truly is a transparent system and Yes, one MSO can find out the discount that the other MSO will get by meeting all the criteria - A point to be noted is that, it’s uniform and non-discriminatory and hence the same yardstick applies to all MSOs, making it easy for them to establish and leverage their advantages by meeting all the criterias.