Wednesday, 16 April 2014

Why don’t we have format shows on Radio!

Why don’t we have format radio shows of scale, and even if we have format shows why is it difficult to recall a single  name unlike the format shows on television, such as Fear Factor, Who Wants to be a Millionaire, Dancing with the Stars or many other such shows? Is it because of the nature of the radio as a local medium (each city having its own programming mix), or because of the economics behind it? Let us discount the fact that due to the aural nature of the medium, creativity on radio is limited. There are enough creative options to build format properties on radio.

In the case of multi city radio networks, I have seen concerted social campaigns that gained national traction and attracted public notice, be it Red FM’s ‘Dabaa Ke Bajaao’, urging the public to vote during the 2014 Lok Sabha Elections or Fever FM’s ‘Voice of Change’. Was it the magnitude of the cause behind the success of these social campaigns? Why can’t the same success with social campaigns be replicated to create format shows of national stature on radio?

These questions merit a detailed debate, beyond the scope of this post. Let us attempt an answer by taking an economic view.

We’ll make some assumptions.

Assumption 1: Contests/games format such as identify the voice, identify the song etc. are the result of a station’s own creative process. 

Assumption 2: The station uses a premium priced short code, i.e. each time you send a text to the short code, you are charged an amount typically INR 3.00 or any other  amount, which is not per your regular SMS tariff plan.

Assumption 3: The premium SMS charge is split between the telecom service provider and the short code owner (in this case the station) with telco keeping a lion’s share.

Assumption 4: The amount retained by the station is used to sponsor the prizes. For example, if the station receives 1,000 responses to a contest question on a given day on its short code, the total kitty is INR 3,000 (1,000 * INR 3.00). Assuming the revenue share is 50:50 between the telco and the station, the amount available to the station for prizes is INR 1,500.

Pretty simple, isn’t it?

Let’s add another entity to the mix. The entity that develops contest formats powered by the underlying software solutions, which integrate with various media to produce game shows that can also be played over radio. Let’s call this entity ‘contest IP provider’. Now, if a station uses the concept/format provided by this entity, the above kitty of INR 3,000 has three claimants. Assuming the share of the telco is fixed, not much is left on the table for the other two.

Is the radio ecosystem ripe enough to accommodate contest IP provider? What are the potential hurdles faced by such contest IP providers:

First, it’s an additional overhead for the station. A station has the ability to attract sponsors and advertisers even without paying extra for add ins. At best, it could be a quid pro quo wherein the station can provide air time to ‘contest IP provider’ to promote themselves, thus translating to zero dollars for the contest IP provider.

Second, even if it is a fixed license fee charged by the contest IP provider, the fee needs to be realized by the station’s sales and marketing folks when they go looking for sponsors for such licensed format shows. I believe sponsors may not be willing to pay more than what they are currently paying for air time because it increases their budgets. Sponsors may also give a pass to give high value prizes in lieu of dollars, which directly impacts the number of people who participate in the game/contest because the number of participants is proportional to the value of prizes.

Third, the SMS revenue share between telecom service providers and Radio Stations is not favorable for innovation in India. If the show goes well, the contest IP provider makes money for the telecom service providers. Not much is left for the radio station and contest IP provider, thus there is not much motivation for a station to run a licensed format show thereby incurring additional costs.

I am not into the skin of the business of radio, and would like to have your thoughts on this. Is the nature of the medium such that it does not lend itself to format/license shows of scale? Is there no room for Endemols, Celadors or Freemantles of the world on radio?

I’ll look forward to your answers.