‘The transformation of the idiot box into a smart box’. This approach of a new DTH operator in India aptly exemplifies the ongoing transformation in the Indian digital TV industry. Ritesh Gupta finds out more for Television Asia Plus
1 March 2009
The face of India’s direct-to-home (DTH) market has evolved considerably over the past three and a half years with the entry of private players.
From a single-player market in 2005 (the first private player was Dish TV), when the market was growing at 42,000 subscribers per month, it moved into a content resolution phase in April 2006. During this phase, lasting till end 2007, the market witnessed the entry of Tata Sky and Sun Direct and overall, digitisation was triggered in the country. At this point of time, the industry was growing at 170,000 subscribers per month. And over the last year or so, the competition has increased further as two new entrants in Big TV and Digital TV made their foray. Post this, the subscriber growth rate rose considerably, touching the 500,000-mark per month, according to Dish TV.
With competition driving growth, the DTH market crossed 10 million subscribers mark by the end of 2008.
In its earnings release for the third quarter of fiscal 2009, released towards the end of January, market leader Dish TV mentioned that the total number of DTH households are projected to reach 57 million by the end of 2015.
For its part, Dish TV, which claims to have 48 percent market share, added 789,000 subscribers in the third quarter (ending December 2008), as compared to 529,000 new subscribers added during the second quarter, registering an increase of 49 percent. Its average subscriber acquisition cost for the quarter was US$58 and this increment was due to the depreciation of the Rupee. Overall, Dish TV’s main expenses include subscriber related expenses, employees and administrative cost, while its revenue comes from DTH services, bandwidth charges, value added services etc. Changing scenario There have been a couple of recent developments, which are expected to propel this industry.
First, is the launch of the exclusive digital household panel by TAM. It provides an option for broadcasters and DTH operators to maximise revenues through dual feed; increased emphasis on carriage fees / advertising revenue options for DTH operators; initial findings reveal that digital households spend 20 percent more time on TV as compared with analogue households; providing single window option to new and small broadcasters by way of teleport /distribution.
Also, the DTH Operators Association has been formed for a collaborative effort to address common issues such as service tax allocation, licence fees reduction and other regulatory issues. Some of the industry-level initiatives include licence fees going down from from ten percent to six percent with retrospective effect from April last year, consensus being sought for Entertainment Tax to be recovered from subscriber, and reduction in CENVAT@ four percent to benefit @ US$2.2 per CPE.
Within the market, going by Dish TV’s average subscriber acquisition cost, which increased by approximately US$5 in the third quarter over the previous quarter, the competition will result in more adoption of the service via aggressive marketing but at the same time all players would have to ponder over controlling their expenditure.
Among the new players, Bharti Airtel Limited launched Airtel Digital TV, its DTH satellite TV service in October last year. At the time of the launch, it was shared that service will be available to customers through 21,000 retail points including Airtel Relationship Centres in 62 cities across the country.
Airtel Digital TV uses the latest MPEG4 standard with DVB S2 technology.
The Telemedia business of Bharti Airtel Limited provides broadband and telephone services in 95 cities, DTH services and recently launched IPTV services (on January 19, 2009 when the company launched its triple play service with the launch of Airtel digital TV interactive - it’s IPTV service. The service will be initially available to customers in Delhi, Gurgaon and Noida). The strategy of the Telemedia business is to focus on cities with high revenue potential, except for DTH which is an all-India offering.
According to Bharti Airtel, its technology makes it possible to have a converged consumer experience across devices like televisions, computers, smart mobile phones and digital music players. At the time of its launch, it shared that for the first time in the country, TV viewers would be able to access local city information through interactive applications such as iCity; enjoy Internet-like experience on their televisions with iNet; and get live and personalised stock quotes, breaking news, horoscopes, cricket scores and shopping deals in the city without interrupting their TV viewing experience. Other highlights include universal remote for both STB and TV; highest STB memory enabling more interactive applications; and exclusive content such as World Space Radio.
Its entry-level packages start from US$51 or so, which includes one time installation charges and three-six month free subscription depending upon packages. The number of channels hovers around 140 (maximum).
A couple of months before Airtel’s launch, Reliance Big Entertainment came up with its Big TV DTH offering.
According to the company, Big TV achieved 500,000 subscribers within 60 days of launch. This is the fastest ramp up ever achieved by any DTH operator in the world, says the company. The subscribers have options for over 200 channels, 32 on-demand channels (in English, Hindi and six regional languages), which is highest in the industry, according to Big TV. The product is available initially in 100,000 retail outlets across 6,500 towns.
On the technology front, Big TV is India’s first pan-India MPEG4 operation, which gives superior picture quality and also allows for better transponder utilisation.
On the other hand, Tata Sky Ltd., the JV between the Tata Group and STAR, introduced Tata Sky+, a new-age service that uses the Personal Video Recorder technology, for the first time in the Indian subcontinent. It was introduced in October last year. The PVR enables the viewer to pause & rewind live TV as well as record up to 45 hours of live TV. Overall, it offers its subscribers 160 channels. Till May last year, it had added two million mark in a span of 20 months.
To its credit, the company also offers interactive services covering cooking, matrimonial classifieds, learning games and has introduced its unique bi-lingual programming guide.
The oldest player, Dish TV, which offers 182 channels, as part of its revenue increment initiatives, has introduced new packages, decided to increase price for its base packages and introduced smaller A-la-Carte packages as top-up on normal packages.
During the third quarter, the company added 12 new channels on its platform. It also launched Aapki Wish, Aapka Pack (your wish, your pack) offering two value packs - STB for US$30 and Combo Pack for US$43 (STB + Platinum Pack for three Months) also offering the freedom to subscribers to choose from a variety of 30 + a-la-carte Packs, ranging from US$0.3 - US$1.1 + tax. These packs have been so designed so as to offer maximum entertainment options and largest content basket at every price point.
Also, to increase the ARPU, Dish TV launched a Premiere Channel on its MOD service. Dish TV will broadcast Hollywood and Bollywood movies on this channel within weeks of their theatrical release. The consumption of movie on demand is less than two percent currently, according to Dish TV. It is expected that with more and more players doing the same, the consumption will increase.
“India is a nascent market and also the piracy of the movies and the related loss and the DVD market and CD market is very, very low in India. So, it will take some more time to build up that kind of consumptions,” according to Dish TV’s Jawahar Goel.
Considering the entry of several players just before the festive seasons, ARPU for a player like Dish TV went down by 10 percent or so to US$3.2. The idea was to acquire the subscriber at the lower base and then sell them the A-la-Carte packaging. The revenues from them are being built up. “The focus was on acquiring the subscriber at the highest pack and in turn paying the highest content cost and the related taxes, so we are now acquiring subscriber at the lower pack and allowing them to make there own packaging and pay accordingly. The add-on packs which are more revenue generating and profitable,” said a source.
If on one hand, the companies focus on aggressive subscriber customer acquisition strategy along with support from the industry-related initiatives, on the other, there are talks of improving business profitablity via cost rationalisation by some of the relatively established players. But without doubt, this battle has just begun and considering the 125 million TV households, and 67 million analogue TV households, there is plenty of scope for further penetration of DTH technology in India. TVAplusAnother new player in Sun Direct Pvt Ltd recently came up with the pan-India launch of its services in Mumbai. The highlights include: free dish and set-top boxes with every connections; basic pack at US$10.1; one regional pack free with the basic pack; 36-add on channel packages starting from $0.1 - $4; 130+ channels at $20.3 on 10-month subscription; offering MPEG4 Technology and soon to launch HD.
Its packages are customised in such a way that the subscriber pays only for what they see.
Tony D’Silva, COO, Sun Direct, says, “Our services and bouquet of packages are value for money as we have custom designed packages for every state and region. We spent considerable amount of time since our launch last December understanding the customer appetite for entertainment and how best we can cater to their entertainment requirements and putting our distribution and post sales services in place.”
It has garnered over 1.9 million subscribers since its launch in December 2007.
According to the company, a 80:20 joint venture between the Maran family and the Astro Group of Malaysia, unique bundling of channels and effective price packaging plans has established Sun Direct as the de facto leader in the four southern states. In the second phase during September last year, Sun Direct launched its services in Gujarat, Rajasthan, HP, Punjab, Haryana and Delhi & NCR as part of the pan-India expansion programme.
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