Analysis of Viacom18’s Viewership Gains and Their Impact on Retail Investors and the Media Industry
Analysis for Layman
Viacom18, a media company owned by Reliance, has seen a significant increase in its prime-time viewership share on its flagship entertainment channels, Colors (Hindi) and Colors Kannada, in recent months. Colors now commands over 27% of the evening audience in the competitive Hindi general entertainment space, while Colors Kannada leads the ratings charts with a 37% share in its regional market. Viacom18 aims to turn this viewership leadership into higher monetization by targeting a larger share of the annual advertising spending, which exceeds ₹4,500 crores in both the Hindi and Kannada categories. Their content strategy, focused on appealing to a wider audience through mass entertainment fiction and non-fiction reality shows, has fueled this surge. The network is also integrating TV and digital video ad sales to benefit from a broader viewership.
Impact on Retail Investors
For retail investors, Viacom18’s regaining of ratings dominance in select Hindi and regional markets signifies the positive outcome of content revamps and increased funding from Reliance after the acquisition. Investments in fostering creative talent and attracting audiences should support pricing power and profitability in the long term. However, viewer loyalty can be fickle, and competition may result in high costs to maintain leadership. Broadcast network stocks like Zee and Sun TV may face relative pressures but have historically demonstrated resilience after momentary setbacks. Margins are also split across integrated operators’ wider media presence, and subscription losses on TV due to cord-cutting could offset gains from the video-on-demand sector. Regulatory risks related to digitization and advertising policies remain, regardless of the outcome of the TRP (Television Rating Point) wars.
Impact on Industries
The $40 billion Indian media and entertainment sector, centered around broadcast TV and advertising, is likely to experience increased fragmentation if Viacom18 successfully converts its recent viewership gains into a larger share of the revenue market. This could lead to greater reach potential for advertisers and bidding wars for creative talent and formats by players aiming to protect or enhance their market positions across languages. However, smaller channels may face existential risks if advertising revenue becomes more concentrated among leading networks. The accelerated integration of TV and over-the-top (OTT) digital media properties by large incumbents also poses adoption risks for independent OTT services lacking similar scale. Cord-cutting trends persist in the longer term as low average revenue per user (ARPU) consumers seek additional medium options.
Long Term Benefits & Negatives
Over the long term, Viacom18’s restoration of dominance in its core Hindi and Kannada entertainment markets underscores the importance of ratings and audiences in determining the economics of the broadcast industry, despite digital disruption. Leveraging the financial strength of its parent company, Reliance, helps Viacom18 compete over the long term with advertising-led rivals lacking such synergies. However, maintaining leadership requires continuous high-cost investments in talent and content amid fierce competition. Changing consumption patterns, particularly among younger demographics, necessitate ongoing platform innovation. While gains from mature TV advertising models provide some breathing room, failing to achieve profitable scalability in online and digital revenue risks ceding consumer mindshare to pure-play OTT disruptors.
Short Term Benefits & Negatives
In the immediate 1-2 year period, Viacom18’s strong increase in Hindi and Kannada viewership shares enhances the network’s bargaining power with advertisers, allowing them to better monetize their offerings and improve profitability during a period of macroeconomic sluggishness in the sector. Production house partners also benefit from increased reach. However, competitors are likely to respond quickly by intensifying their focus on countering Viacom18’s surge, leading to higher programming costs across the industry. The ambition to scale integrated TV and digital ad sales remains untested at scale in India, posing execution risks. If macroeconomic sentiment in advertising further deteriorates into 2024, even regained ground may fail to shield against cuts, as advertisers prioritize maximizing reach over loyalty. Smaller channels face more immediate risks compared to well-funded players that can withstand temporary margin pressures.
Potential Impact of Viacom18’s Viewership Growth on Companies:
Indian Companies Gaining:
- Increased viewership share translates to higher ad revenue potential, potentially boosting their top line and improving their already positive net profit (₹11 crore in FY23).
- Strong performance in Hindi and Kannada could encourage increased investment in Marathi and Bengali markets, offering further growth opportunities.
- Combined TV and digital ad sales strategy could unlock additional revenue streams and potentially attract positive investor sentiment.
- Colors and Colors Kannada:
- Higher viewership might attract more advertisers and increase advertising spends, leading to potential revenue growth for these specific channels.
- Strong performance could solidify their leadership positions in respective markets and boost brand reputation.
- Platforms with strong viewership like Colors and Colors Kannada offer targeted reach to specific demographics, potentially benefiting relevant advertisers in those regions.
- Integrated TV and digital ad inventory sales might offer more comprehensive campaign options, potentially attracting a wider range of advertisers.
Indian Companies Potentially Losing:
- Competitors in Hindi and Kannada GEC markets:
- Disney Star, Zee Entertainment, Sony Pictures Networks India, and Sun TV Networks could face increased competition for advertising dollars as Viacom18 gains market share.
- Loss of viewers to Colors and Colors Kannada could potentially impact their own ad revenues and overall market position.
- Marathi and Bengali GEC competitors:
- While Viacom18’s focus on other regions might initially benefit them, increased investment in Marathi and Bengali markets in the future could potentially intensify competition for viewers and advertisers.
Global Companies Potentially Gaining:
- Global companies advertising on Indian TV and digital platforms:
- Increased content consumption across platforms could offer wider reach and potential engagement for global brands advertising in India.
- Viacom18’s integrated ad sales strategy might simplify the process for international advertisers seeking multi-platform campaigns.
Global Companies Potentially Losing:
- Global media companies competing in the Indian market:
- Netflix, Amazon Prime Video, and other international streaming platforms might face increased competition for Indian viewers as Viacom18 strengthens its TV and digital content offerings.
Remember, this is analysis based on the available information. The actual impact on individual companies will depend on various factors, including economic conditions, marketing strategies, and viewer preferences.
- You can analyze market share data or advertising revenue figures of mentioned companies to strengthen your analysis.
- Consider potential risks or uncertainties associated with the news, such as changes in content preferences or economic slowdowns affecting advertising spending.
- Please remember that this analysis is for informational purposes only and should not be considered investment advice.
I hope this information is helpful! Let me know if you have any other questions.
Citation: ET Bureau. (2023, December 21). Viacom Looks to Monetise Rise in Viewership in Hindi, Kannada.