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THE PAY TV CONUNDRUM
The Star TV management has
decided to digitally encrypt and compress its channels in
the next month. Star Plus, Channel V and Star Sports are
slated to be free-to-air and delivered digitally to give
viewers a taste of CD sound and LD pictures. There are several
catches to the digital encryption of these channels. The
first relates to the quality of the cable networks. Cable
operators --even those affiliated to the multi-system operators
-- have yet to upgrade the quality of the branch and drop
cables in consumer homes. The result: the signal quality
is pretty erratic by the time it gets to TV sets. So will
digitally-compressed-LD pictures and CD-like sound be perceptible
to viewers?
Catch no 2 relates to the
fact that the digitally-compressed channels will not be
free-to-air for too long. The Star TV management will give
viewers a whiff of the service and then switch on the pay
button, asking cable operators to cough up anywhere from
Rs 5-10 for the channels.
That is ominous news for the much-pampered cable TV industry.
The situation will be a total reversal of what was happening
a couple of years earlier when cable TV operators arm-twisted
programmers into coughing up carriage fees if they wanted
distribution.
Already, Zee Cinema, Star Movies, ESPN and Discovery are
being delivered via satellite as encrypted signals. While
the first three are collecting carriage fees -- though not
to the extent they ideally should --from operators, Discovery
will start doing so in the next couple of years. The monthly
outgo per subscriber for the more sophisticated headends
for these channels is in the region of Rs 5-8. This figure
has been arrived at after considering that cable operators
are under-declaring their network size. Once Star Plus,
Star Sports and Channel V encrypt and start demanding carriage
fees, the figure is likely to double.
No doubt cable operators will
scream blue murder and several of them will just drop these
channels from their networks. But what will they do when
a premium sports event is shown exclusively on Star Sports?
Or a new Hindi movie is shown on Star Plus? Subscriber pressure
will force them to put a stop to their boycott, get on the
negotiating table, agree to a price and switch on the channels
again.
The point is cable operators have to realise that the party
is over: you have to pay to carry channels. To be able to
pay, you have to get your addressability act together. Even
if the investments are huge.
Article
appeared in a local newspaper in October, 1996
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