DTH players were on a dream flight in India so far, but the delay in rollout of Phase II of CAS has dampened expectations. vareen gadhoke ray & surbhi chawla discuss the upcoming trends and how DTH players can make them count
When Direct-to-Home (DTH) first came along, it brought the promise of streamlining the highly fragmented pay-TV market in the country, which had hitherto been the stranglehold of local cable operators (LCOs). All that the players really had to do was conquer, which they continue to do, through mud-slinging, comparative advertising and even some cheap ground level tactics. DTH was a very welcome platform for broadcasters and media houses, which were fighting these LCOs on the grounds that they were not declaring their total subscriber base. The launch of the first phase of Conditional Access System (CAS) brought more transparency, thereby aiding higher yield in subscription revenues. But the launch of the second phase of DTH, which was to make CAS mandatory in more areas of the country, has been delayed quite unexpectedly. This has stymied their dream run, and slowed down their onward march quite considerably. In such a scenario, what does the future portend for these players in India?
DIRECT TO HELL OR HEAVEN
The future of pay-TV in India is being driven by media owners and distributors, which are expanding market share with an eye on profits, rather than at the expense of profits. The major concern for this sector was that at a very nascent stage, seven major players (Dish TV, Tata Sky, BIG TV, Airtel Digital, Sun Direct, DD Direct and the newly launched Videocon d2h) along with organised CAS operators (like Hathaway and Sify) were slugging it out to get the maximum share of this growing pie. As a result, the first phase of growth saw the basic DTH box being offered at a subsidy, and at times, even virtually free of cost to catch hold of the early adopters and get them to experience this new wave of technology. The plus point of this can be seen from the fact that the Indian pay-TV sector generated sales to the tune of $6.5 billion for financial year ending March 2010 [Media Partners Asia (MPA)].
However, thanks to the continously intensifying tussle among the players, the sector is facing the same fate as the telecom operators. DTH players too are unable to garner as much in ARPUs. The tempering of their enthusiasm due to delay in Phase 2 rollout make it worse.
Yet, all is not lost. As per projections by MPA, the industry is expected to touch $12.1 billion by 2014 and $18.5 billion by 2020. In terms of volume, broadcasters and LCOs are most likely to lead in the long-term, while LCOs and cable multi-system operators (MSOs) will lead in terms of margins. Vivek Couto, Executive Director, Media Partners Asia, avers, 'Cable MSOs will probably face the most challenging future. Nonetheless, most national MSOs will be able to forge stronger last-mile links with the consumer for the long-term, with positive implications for future funding as well as large-scale deployment of digital pay-TV and broadband.' Furthermore, Indian pay-TV subscribers are expected to grow from 105 million in 2009 to 149 million by 2014 and 173 million by 2020.
THE TECHNOLOGY GIMMICK
On the question of who will make money, differentiation in services and products would help in 'unlevelling' the playing field. The next wave of growth for DTH would undoubtedly be paved by superior technology and advanced features, not to mention high quality content. Even in the developed countries, technological advancement is helping drive the next phase of growth. 'As a matter of fact, in UK, almost 60 per cent of all DTH boxes are DVR boxes and the expectation from the Indian market is huge,' shares Alan Dishington, GM, NDS India. The silver lining for the operators is that the digital video recorders (DVR) or the HDTV boxes that are being offered are not massively subsidised. 'The launch of Reliance Big TV HD DVR is part of Reliance Big TV's relentless pursuit of quality and profitable growth by blending the best in technology, content experience, reach and service,' says Sanjay Behl, CEO, Reliance Big TV.
But this can also become a me-too game in some time.
Content exclusivity will be another important game changer. Sanjiv Kainth, country manager, India and South Asia, IRDETO, agrees, 'There has to be a certain amount of exclusivity of content allowed to fuel competition and differentiate product offerings of the various operators... else it will be difficult for the ARPUs to increase.' Understandably, content providers are quite upbeat about the new opportunities that have opened up in this sector. A case in point is the upcoming FIFA World Cup and how Tata Sky, Sun Direct and Dish TV have already announced tie-ups and promotional packs to cash in on the greatest football jamboree. States Jawahar Goel, MD, Dish TV, 'We've strategically timed the launch of our HDTV box to coincide with FIFA. Later, we also plan to get Commonwealth Games on the HD platform.'
A DIGITAL QUAGMIRE
Being a low ARPU and cost sensitive market, the addition of new subscribers is very important for the growth and sustainability of the DTH business in India. However, the subscriber churn is of high concern to all operators. DTH operators are focussing on innovative offerings for better retention and ARPUs. Adds Salil Kapoor, COO, Dish TV, 'In the last two years, we've been working very hard to deliver quality service. '
The pay-TV market is not something, which will remain static in the long run. The growth will be fuelled not only by the new subscribers but also by the existing ones who migrate to a higher level of services. India is a huge market and the volumes will be there for some time to come. While the Phase II delay does affect their plans, DTH players will have to win their battles on technology and content.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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