Recently, we were invited to a housewarming party at a shiny new residential complex. The hosts, in their early 30s, had tastefully done up their apartment tastefully and as we sank into the comfortable sofas in the living area, our eyes wandered instinctively to the wall opposite. A Buddha painting serenely smiled back at us from where we had expected to find a new television. The hosts told us that they did not watch TV at all and got all their entertainment online, on-demand. Though we had encountered many people who told us they didn’t watch TV, we used to dismiss them as snobs or as people with selective amnesia. But this incident got us thinking about two questions—if many people we know hardly watch TV, what do they do for entertainment? Second, who watches TV?

Recently, there has been a change in the audience measurement metrics for television viewing. The newly formed agency Broadcast Audience Research Council (BARC) has expanded its coverage from 60 million earlier to over 150 million households. This means that the earlier rating system that gave a much higher weightage to urban population has now been replaced with a much more representative sample that covers a large portion of rural households as well. This has had a big impact on the TV viewership ratings (loosely called TRPs). For instance, in the Hindi general-entertainment (GEC) genre, while the top three channels by viewership remained unchanged (Star, Zee and Colors), the next two spots were taken up by free-to-air (FTA) channels that broadcast only repeat shows (BARC ratings, HSM CS4+,Week 27-36, 2016). Also, the viewership share of the top three channels fell to 37% under the new system from about 50% earlier. FTA channels, which as a group used to account for about 10% of total viewership, now accounted for over 36%. To be sure, it wasn’t as if India’s TV viewing habits had changed overnight, what had changed was the sampling and measurement.

The viewership number is the currency with which a broadcaster negotiates with an advertiser and it has now become important for the broadcaster to appeal to a wider audience. Think about it as voting rights being given suddenly to the entire country versus just the metropolises earlier. Just as the election spiel of a politician will change, so did the “content strategy" of broadcasters. Sample the names and content of some of the TV shows launched on leading Hindi GECs in the last few months—Naagin, Vishkanya, Kavach Kaali Shaktiyon Se and Brahmarakshas: Jaag Utha Shaitaan. As one media chief executive officer put it, this genre, “kitchen politics meets supernatural", was meant to cater to the new realities of viewership ratings. There are other instances of this shift, like 10 channels now playing contemporary Bollywood music with just one catering to English music. Several media houses are now thinking of original content for their FTA channels in order to woo the rural population.

While all this realignment is happening, it is pertinent to note that the rural population is also actively viewing English GECs. As much as 33% of the viewership for this genre comes from the rural demographic and for channels like AXN and Star Movies, this number is higher than 40% (BARC ratings, All India, CS4+, Week 41, 2015 to Week 35, 2016). Whether the broadcasters have rightly assessed what rural India wants to watch is the subject for a different column. As Mint’s media editor Shuchi Bansal observed in her recent column, what this has done, though, is to further alienate the audience that was looking for contemporary storylines and sleek production values. By the end of 2016, India would have 155 million cable and satellite (C&S) households. With the digitization push as well as higher disposable income, this number has almost doubled over the past nine years. Put differently, 72 million households have been subscribing to cable TV for more than 10 years. The medium may be suffering from some fatigue or even disenchantment. The kind of mass appeal that a Kaun Banega Crorepati or the original soap operas, Kahaani Ghar Ghar Kii and Kyunki Saas Bhi Kabhi Bahu Thi, enjoyed hasn’t been replicated since. While exhaustive data on the entertainment spending of this cohort is not available, we can get some glimpses of where the incremental entertainment spending might be going.

Movie collections have shown healthy growth over the past few years but within that, Hollywood content now accounts for an over 20% share. Who would have imagined that The Jungle Book would outsell many Bollywood movies and easily make it to the coveted Rs100-crore club? According to data from a leading multiplex chain, box-office collection growth for Bollywood movies was 13% in FY16, while the same number for Hollywood was 35%. An ever-increasing number of people are asking for entertainment on demand rather than linear TV. Hotstar claims over 75 million downloads for its app, which shows on demand original content as well as programmes from Star TV. Shemaroo’s content on YouTube gets over 140 million views per month and this metric has doubled in just over a year. Or take Salman Khan’s hit film Bajrangi Bhaijaan’ s trailer, which released in July 2015 and had 11 million views, while that of Sultan, which released a year later, had 32 million. The point being, a significant number of entertainment-starved people are looking for it online and the zest with which telecom companies are looking to recruit new data customers by offering better speeds at lower prices and cheaper devices, will only accelerate this trend.

From an investing standpoint, who benefits from this is not yet clear but companies are experimenting with different business models. This is an industry in its infancy and given the sheer size of the opportunity there is a fortune to be made by anyone who can effectively fill this need gap. While there is excitement in this arena, one hardly finds any meaningful representation of new media companies in the stock market. As investors, we are watching (pun intended) this space intently and feel that the seeds of a few large future multi-baggers are being sown today.

Amay Hattangadi and Swanand Kelkar work with Morgan Stanley Investment Management. These are their personal views.

Comments are welcome at theirview@livemint.com

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