Tuesday, February 10, 2009

Viacom Conquers India via Reality TV

Viacom Conquers India via Reality TV

Just a year ago, media giant Viacom (VIA) seemed to have lost its edge in India. Its MTV music channel was suffering as young people tuned out and turned on their Apple (AAPL) iPods, and its Nickelodeon network for children was struggling against local rivals more attuned to Indian tastes. Then last July, Viacom introduced a new Hindi-language entertainment channel called Colors, which has rocketed to the No. 2 position among the 350-plus TV offerings in the Subcontinent. "This is absolutely a comeback for Viacom in India," says Haresh Chawla, chief executive of Viacom18, the joint venture with broadcaster Network18 that oversees Colors.

To stand out in a crowded market, Colors had to spurn conventional wisdom. Instead of loading up on long-running soap operas, as most Indian entertainment channels have done, Colors opted for reality shows based on Western formats. That was a gamble, since in India, unlike most places, soaps are cheaper than reality shows, which rely on expensive Bollywood stars to draw viewers. With so many other channels offering Hindi-language entertainment, "we had to be disruptive," says Colors CEO Rajesh Kamat.

Global broadcasters are eager to boost their presence in India. In the past decade the likes of News Corp. (NWS), NBC (GE), CNN (TWX), and Sony (SNE) have all set up shop, hoping to blast ads to the country's 1.1 billion consumers. And while the market today is big—112 million households have TVs—that still represents just half of India's families. So there's more potential for growth in India than in China, where more than 90% of homes have TVs.

The Buzz Factor

Colors' first big offering was a clone of Fear Factor. In the show, called Khatron Ke Khiladi ("The Player of Danger"), Bollywood megastar Akshay Kumar challenged 13 young women to complete tasks such as outrunning angry dogs or bobbing for plums in a tub filled with snakes. That was followed by Bigg Boss, a take on the Big Brother concept where 15 people—from a roadside food-stall owner to a jailed gangster's wife and a politician's son—lived together for three months in a house filled with video cameras that documented their every move. The shows got plenty of buzz, with newspapers and magazines devoting multiple pages to the winners and losers, their strategies, and their shifting alliances. Soon to come: a show similar to American Idol and new versions of Bigg Boss and Fear Factor, which Colors announced on Feb. 7.

Colors didn't abandon dramas altogether. But instead of broadcasting them at 10 p.m., in the height of prime time, it ran the soaps starting at 7 p.m., then switched to the reality shows for the 10 p.m. slot. Based on audience research, Colors wove plots for its dramas around topical concerns such as poverty, politics, and child marriage, instead of tales of intrigue and infighting among members of extended families. "We stayed within the familiar family territory but used different subjects and stories," says Ashvini Yardi, Colors' programming chief.

Standing Out from the Crowd

The strategy worked. By December, 23% of TV viewers regularly tuned to Colors, and the channel was closing in on the leader, News Corp.'s Star Plus, watched by 27%, according to ratings researcher TAM Media Research. Today 10 of the top 15 programs in India are on Colors, TAM reports. "You can't take the tried-and-tested content route in a cluttered market," says Farokh Balsara, head of the Indian entertainment practice at consultant Ernst & Young. And Colors easily stood out from two other new channels that focused on family dramas similar to what market leader Star was offering. "If you clone Star programs, you cannot expect to attract our viewers," says Star India CEO Uday Shankar. "Colors dared to be different."

Competitors are revamping their lineups to fight back. Turner Broadcasting has teamed up with a local partner on a Hindi channel, called Real, to be launched in March. NDTV Imagine, an NBC Universal joint venture, has already launched two of its six new programs. Star Plus is replacing the far-fetched story lines of some dramas with more basic themes designed to have broader appeal. And local player Zee, which Colors shoved out of the No. 2 spot, has a new thriller and a reality show.

Some wonder, though, whether Colors can maintain its edge. The two big-budget 10 p.m. reality shows ran for a total of four months, but they have since been replaced by cheaper dramas. While ratings have so far held up, things could quickly change if Colors doesn't come up with fresh shows. And one insider says the channel's costs so far have been about 20% above the industry average of roughly $80 million annually. Says Meenakshi Madhvani, managing partner of Spatial Access, a Mumbai media auditor: "Do they have the funds to sustain this expensive model when the ad market has slowed down?"

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