Content providers facing problems too

WSJ reported that operating profits of Asian unit of Star Group dropped by 30%. Paul Aiello, Chief Executive at Star Group sums it up pretty well "our content needed to be refreshed across the board, and a lot of the ways that we monetize that content needed to be updated, too...we have to go local and deep."

TRANSLATION – ‘we are behind in content creation that our target market needs and because of that advertisers are not ready to invest in us.’

Let’s look at the sources of revenue of the content providers and the cable/Direct to home operators. Cable/Direct to home operators make money through the subscription that the end users pays them. These operators in turn pay for subscription to the channels to the content owners – in this case Star Group. Star content group has two revenue sources – subscriptions from the cable/direct to home operators and advertising revenue from advertisers who like the content and want to advertise during the advertising breaks.

Now the problem with Star Group is really that their content needs to be more relevant to the regional masses. Once they have this part covered, the advertisers will follow. Then they have to deal with competitive intensity that is heating up in India. As for China, they have regulators to deal with as content is very controlled in that country.