Idiot box eclipsed by smart screens?

• According to recent estimates, sales of television declined by 4% YoY during the year, making it the first year when sales actually saw a drop in volume terms.
• Industry insiders attribute this to the rising smartphone penetration and “the Netflix effect”. It offers choice to the viewers to pay only for the content that they view.
• In order to boost the sales of TV sets, India should focus on both product diversification and market diversification.
• At the same time, the country should also look for ways to bring down the cost of manufacturing televisions.

Most of us grew up in joint or nuclear families. While the monotony of our regular chores kept us pre-occupied throughout the day, we ended up bonding with our family over dinner and watching news or daily soaps on the television. Now, however, as the times are changing, this ubiquitous routine is changing too! In fact, as news trends suggest, the county is witnessing a decline in the sales of television sets. According to the estimates, sales declined by 4% YoY during the year, making it the first year when sales actually saw a drop in volume terms.

According some industry insiders, this has been the result of a rise in penetration of affordable smartphones with low-cost data and “the Netflix effect”. Netflix has dramatically changed the way consumers access film and TV. While prior to this phenomenon, consumers went to the movies, rented VHS tapes or DVDs and watched whatever was on live TV; now they stream content instantly to any device, anywhere. According to the recent ‘A Billion Screens of Opportunity’ report (2019) authored by the researchers at FICCI and Ernst & Young, while cinema and TV segments grew by 12% over the previous year, OTT usage increased by almost 42% in 2018.

The global picture

The Netflix Effect is spreading like a contagion not just in India, but also in other parts of the world.  This has been attributed to the flexibility of being able to watch what consumers want when they want to. The biggest USP that of this medium is that players like Netflix have been creating their own original content, thereby attracting viewers watching traditional TV. Moreover, they offer choice to the viewers to pay only for the content that they view.

However, the fact that the TV sales in India are dropping low because of the rise of OTT platforms is only a part of the problem. A deeper analysis would reveal that India doesn’t feature anywhere in the global production/export scenario of TV sets across the world. A quick analysis of the top 10 exporters of TV sets in the world in 2018 will reveal how countries like China, Mexico, Slovakia, Poland and Hungary have managed to catapult themselves as leading players. At the same time, it is interesting to note, that back in 1992, the difference between China’s exports of electronic and electrical products (US$ 8 billion) and those of India (US$ 0.3 billion) was not stark, as per the estimates of NITI Aayog. Some of the things that India can draw from its neighbour’s experience, according to the think tank, include: focusing on becoming an integral part of the global value chain; making India the hub of manufacturing TV sets; attracting foreign firms like Sony, Panasonic, LG and Xiaomi to come to India; and creating Special Economic Zones (SEZs) to facilitate the development of this sector.

Top 10 exporters of TVs in the world	Value exported in 2018 (US$ million)
China	14,941.7
Mexico	10,326.2
Slovakia	5,241.3
Poland	4,205.6
Hungary	2,173.1
Malaysia	1,610.1
Viet Nam	1,511.4
Turkey	1,431.2
Czech Republic	959.4
United States of America	885.1

Source: ITC Trade Map

The Indian perspective

Some of the industry experts are also of the opinion that the fall in television sales is the product of poor sentiments in rural India. Added to this is the fact that the county was affected by a spell of dismal performance as it registered the weakest performance in the last 6 years, touching a GDP of 4.5% during July-September quarter, from 5% in the preceding quarter. This longest spell of slowdown in the last 23 years was accompanied by weakening consumption, driven by financial strain among rural households on account of stagnating agricultural wage growth and constrained productivity, as well as feeble job creation.

In a bid to boost the sales of TV, the country should focus on both product diversification and market diversification. Given the rising popularity of OTT channels, India must expand the production of smart TVs. At the same time, India must reach out to those countries that are the top importers of TV sets in the world (USA, Germany, UK, Japan, France, Canada, Italy, Spain, UAE & Australia). At present, it mainly exports to Sri Lanka, Bhutan, Hong Kong, Nepal, Bangladesh, Singapore and Thailand.

Top 10 importers in the world	Value imported by the world in 2018 (US$ million)
United States of America	13297.7
Germany	2934.5
United Kingdom	2250.9
Japan	1867
France	1456.7
Canada	1147.1
Italy	1138.2
Spain	1097.7
United Arab Emirates	1012.8
Australia	958.2

Source: ITC Trade Map

Top 10 Importers	Value exported by India in 2018 (US$ thousand)
Sri Lanka	11,443
Bhutan	368
Hong Kong, China	255
Nepal	234
Bangladesh	120
United Arab Emirates	87
Malaysia	85
China	77
Singapore	63
Thailand	49

Source: ITC Trade Map

At the same time, the country should also look for ways to bring down the cost of manufacturing TVs, for which the government removed import duty on open cell panels, which make 60-70% of the cost of TV sets last year. This could be done through offering tax sops, designing special package of incentives for mega projects which are extremely high-tech and entail huge investments, promoting research and innovation in this sector and imparting the required skills to the workforce.