As per the latest FICCI-EY report, linear TV ad revenues in India are expected to remain under pressure despite projected economic growth and a resurgence of key advertising categories. While India’s GDP is anticipated to grow at a steady rate of 5% to 7% until 2027, ensuring a healthy advertising market, the shift of affluent Pay TV audiences to Connected TV (CTV) is expected to stress linear ad revenues.
The Indian TV segment faced another challenging year in 2024, marking a 4.5% decline in revenues for the second consecutive year following a 2% drop in 2023. This decline was driven by falling advertising and distribution revenues, coupled with an increasing shift towards Connected TV (CTV).
Key Industry Performance Trends
- TV advertising revenue fell by 6%, driven by a similar reduction in ad volume and a 12% decline in the number of brands using television.
- Distribution revenue declined by 3%, as Pay TV households dropped by 6%—a loss of 6 million paying subscribers, reducing the total to 111 million. A slight increase in ARPU to INR 281 (gross of taxes) could not offset the overall decline.
- CTV adoption continued to accelerate, with active connected TV sets reaching 50 million, of which approximately 30 million connected to the internet weekly.
Key Advertising Trends
- Sectors such as online gaming, automotive, BFSI, and Chinese brands are likely to return to TV advertising in 2025, buoyed by a consumer spending rebound.
- Increased government spending and export production incentives will further drive consumer expenditure.
- However, with high-value audiences migrating to CTV, linear TV ad revenue is expected to see a modest three-year CAGR of 1.2%.
Challenges in TV Distribution Revenue
Linear Pay TV distribution income is also set to decline as more households transition to CTV:
- Television distribution revenues are projected to fall at a CAGR of 2% till 2027, reflecting the decline in Pay TV homes.
- Local Cable Operators (LCOs) are increasingly offering broadband services, fueling the growth of wired broadband.
- The number of Indian households is projected to increase from 330 million in 2024 to 338 million by 2027, with a significant rise in the middle-class population.
- Electrification of rural areas and poor internet connectivity in Hindi-speaking markets like UP and Bihar will sustain Free TV consumption.
- The rising cost of Pay TV is pushing consumers towards Free TV services and YouTube.
- With Pay TV content now widely accessible on YouTube and OTT platforms, the shift to digital entertainment is accelerating.
- Social media and short-form video platforms are further reducing TV’s role as a family entertainment hub.
Industry Strategies to Maintain TV Reach
To combat these trends, broadcasters and distributors are expected to collaborate to sustain TV reach:
- Reactivating over 20 million deactivated set-top boxes (STBs) through incentives and curated packages.
- Implementing NTO 4.0, which will allow Distribution Platform Operators (DPOs) to set Network Capacity Fees (NCF) based on market dynamics and increase maximum discounts from 15% to 45%.
- Introducing regional packs for Tier-III and IV markets and offering deals to FreeDish homes to convert them into Pay TV subscribers.
- Major broadcasters will develop FreeDish strategies to ensure premium content remains exclusive to Pay TV.
- Consolidation in the TV industry is expected to drive further investments and innovation in linear TV.
Monetizing the CTV Opportunity
With the continued growth of CTV, there is a need to maximize revenue opportunities:
- A significant portion of Pay TV content is now consumed on CTV, either live or as catch-up TV.
- Monetization strategies will include bundled advertising deals across linear and CTV.
- A unified measurement metric across linear TV, CTV, and mobile could enhance ROI tracking and attract high-value advertisers back to TV.
Facilitating SME Advertising on TV
Digital SME advertising is projected to reach Rs. 258 billion in 2024. The report suggests innovative methods to bring SMEs to TV:
- Self-serve ad platforms, partnerships with social and e-commerce platforms.
- Integration of “scan-to-buy” and “click-to-buy” options with QR codes on linear and CTV feeds, adding a performance marketing aspect to TV advertising.
Enhancing the Consumer Experience
Broadcasters are expected to introduce more flexible and consumer-friendly offerings:
- Smart bundles at different price points based on regional preferences.
- Increased flexibility in channel selection within bundles to reduce churn.
- Placing TV content behind OTT paywalls or delaying free access online to retain Pay TV subscribers.
- Using short-form video content to create TV channels targeted at affluent audiences.
- Public-private partnerships to increase TV penetration, including subsidized TV and STB distribution.
Evolving Business Models for News TV
The shift of news consumption to digital and social platforms necessitates a transformation in the news TV business model:
- Multi-format, multimedia content tailored for younger and segmented audiences.
- Introduction of alternate revenue streams such as branded content and exclusive premium news products.
- Adapting to the TRAI mandate preventing pay channels from being available for free on FreeDish, requiring new distribution strategies.
The Revival of Family Content
The report predicts a renewed investment in family-oriented television content:
- Broadcasters will focus on commissioning and promoting family-friendly content to revive group viewing habits.
- This trend will lead to the rise of new production houses and creative talent across geographies.
The TV Landscape in 2030
By 2030, the TV industry will be divided into three significant sub-segments: Pay TV, Free TV, and Connected TV.
- TV subscriptions are expected to reach 214 million, supported by a growing household count and rising per capita income.
- Pay TV homes will decline to around 81 million, down from their peak of 130 million.
- CTV will become the primary distributor of large-screen content, competing with social media, short-form videos, and gaming platforms.
- A common industry-wide TV measurement metric, likely based on CPM, will become essential for planning and advertiser confidence.
- Large-scale measurement ecosystems utilizing household return-path data will improve transparency and credibility.
The FICCI-EY report underscores the shifting dynamics of India’s television industry. While linear TV faces revenue pressure, strategic collaborations, innovative monetization strategies, and consumer-centric content offerings will help sustain its relevance. The rise of CTV and digital platforms presents both challenges and opportunities, necessitating a re-engineering of industry models to cater to evolving audience behaviors.
