NTO 2.0: Broadcasters' À la carte Strategy Shapes Up

Sony, Star, ZEE, and Viacom 18 have priced their most popular channels above 12

Channels have begun to release their Reference Interconnect Offer (RIO) under the New Tariff Order (NTO) 2.0. RIOs from Sony, Star, ZEE, and Viacom 18 have already been released. All the three broadcasters have placed their most popular channels in à-la-carte with the pricing, more than 12.

On Friday, Sony Pictures Networks India (SPNI) released its RIO, in which it priced Sony Entertainment Television (SET) at Rs 24, Sab at Rs 23, Sony Six at Rs 20, Sony Ten 1 and Sony Ten 2 at Rs 20. The remaining 11 SD channels were priced at or below the TRAI-set MRP cap of Rs 12 (to be eligible for the bouquet).

Star has priced 12 out of 62 channels over Rs 12 each, across languages and genres. ZEEL has kept the price of its major entertainment channels such as Zee TV, Zee Marathi, Zee Bangla, Zee Sarthak, Zee Telugu, and Zee Kannada over Rs 12, similarly, Viacom 18 has set the price of Colors and Colors Kannada at Rs 21.

The New Tariff Order (NTO) 2.0, which goes into effect on December 1, 2021, separates the channels into two categories: à-la-carte and bouquets. Each channel's MRP cap must be set at or below Rs 12 to be eligible for inclusion in the bouquet; however, à-la-carte channels (sold separately) can be priced higher than Rs12. Also, for NTO 2.0, the maximum bouquet discount has been set at 33%, meanwhile, NTO 1.0 was free from capping on discounts.

The Impact:

TRAI says that NTO 2.0’s aim is to give freedom to the customers to choose what they want to watch and pay only for that.

Atul Das, Chief Revenue Officer – Affiliate Sales at ZEEL, says “The new pricing regime in 2019 brought in a major shift in the way television was consumed in India. On one hand, it brought in transparency about MRP of channels, while on the other hand, it offered freedom to consumers to select channels they wish to watch. With NTO 2.0, consumers will get even more flexibility in the selection of channels. We look forward to working with our Distribution Platform Operators (DPO) partners for a smooth transition.”

The move will encourage selective viewing among consumers, wherein, already popular channels like Zee, Star Plus, SET, Colors etc. can get most subscribers and others may lose viewers. This can increase the à-la-carte revenue to around 15-17% of the Tv distribution revenue than the current 7%.

Karan Taurani, Senior Vice President -Research Analyst at Elara Capital, explains, how the New Tariff Plans will affect the subscriber revenue growth, decrease Average Revenue Growth Per User (ARPU) and lead to a digital movement “We anticipate that subscriber revenue growth, which is expected to be in the 7-8 per cent range year on year, will be in the 3-5 per cent range in the first year of NTO 2.0 deployment. Following that, there would be medium-term steady-state growth of 6-8 per cent. We continue to believe that there is little room for TV ARPU growth, given the increased shift toward digital, particularly in urban areas.”


The move may also lead to the decline in subs revenue over the medium to long term as consumers may not INR 100 for four channels every month. This can lead to more consumers choosing OTTs over TV Channels, which will force medium to small broadcasters to shut their operations.

“Increased TV penetration and HD subscriber growth will continue to drive subscription revenue growth for broadcasters. Given the increased move toward digital, particularly in urban areas, we continue to believe that there is little room for TV ARPU growth; increased TV penetration and growth in HD subscribers remain the triggers that will contribute to subscription revenue growth for broadcasters. We expect consumers to either cut the cord or move to basic low ARPU packages as smart TV penetration grows.,” further adds Taurani.

Sports and news can still remain the most preferred genres as they require live broadcasting and viewing. “This is primarily due to the convenience of viewing the content in digital format sports and news are two genres that would be preferred, as they require live viewing. Furthermore, we believe that TV is the only traditional medium in which 60 per cent of revenue is pay based, its share may be slightly lower in the medium term, due to slower growth in TV subscriber revenue compared to ad revenue. Monetization of over-the-top (OTT) remains a challenge, as most broadcasters offer lower ARPU on their platforms and bundle offers with partners, further limiting ARPU.”

It's been speculated that TRAI or a group of distributors could take NTO 2.0 to the Supreme Court, claiming that the cap on network capacity charge (NCF) and carriage price has damaged their business the most.

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