India is one of the most dynamic media markets in the world. Its size, combined with cultural diversity, make for a very interesting arena.
The proliferations of television channels, which currently number well over 400, is increasingly fragmenting the audience.
Now audience and attention fragmentation sine qua non of the market. Established players and new entrants — both have to encounter it and yet devise strategies to engage their audience.
In any industry, historical research proves that presence of competition always erodes the arrogance of the incumbent leader, depresses profits and leads to loss of market share.
In a hyper-competitive market the incumbent has greater pressure to maintain traditional business matrices like market share, profitability and cost, even as it tries to hold on to the current position.
To analyse the effect of new entrants, we have looked the channel shares data using the Herfindahl Index.
A high index denotes that market is dominated by few large firms and low index denotes that the shares are equally spread among many.
Other concentration measures like looking at the top four firms’ shares would not qualitatively change the way data gets reported.
We have deliberately picked up the English business genre and the Hindi general entertainment channel, or GEC, space on the concentration index because these two genres have seen considerable action - leading to hypercompetition — in the last couple of years.
Data clearly reflect that with the advent of competition, the index of concentration has dropped significantly from 5,000 to 3,586 in the English business news space, and from 2,550 to 1,713 in Hindi GEC.
What this tells is that concentration in any genre does not act as a barrier for an entrant if it has a tremendous learning curve, synergies to complement the foray and appropriate manpower.
The concentration in the English business genre with only two key players — NDTV Profit and CNBC TV18 —- operating was very high.
This was also viewed as a huge opportunity so UTVi and ET Now moved in.
The ensuing competition has seen NDTV Profit lose most ground, while CNBC has held on to its turf.
It would be very exciting to see how the war pans out.
The story on the Hindi GEC front has been more exciting. The leader Star Plus, which had been reining for a decade, has lost space and new entrant Colors has swept the carpet from it.
The concentration ratio of the genre has gone down drastically from 2,550 in 2007 to 1,713 in 2009.
Colors also created shackles in the genre by displacing a well entrenched player like Star Plus.
The moot point is, these two genres would witness the most dramatic competition in the years to come.
Competition in any industry adds value and keeps up the pressure on every player to perform.
The broadcast industry is no different and it has also exposed itself to hypercompetition.
Changing dynamics
1 The concentration in the English business genre with only two key players — NDTV Profit and CNBC TV18 — operating was very high
2 This was also viewed as a huge opportunity so UTVi and ET Now moved in
3 The ensuing competition has seen NDTV Profit lose most ground, while CNBC has held on to its turf
4 In GEC genre, Star Plus has lost space and new entrant Colors has swept the carpet from under it
Sudarshan Rajan is senior business director and Ramaswamy Ranganathan business group head of Mediacom.
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