Eyeing the eyeballs...

DTH industry: Home entertainment is switching to satellite telecast

Eyeing the eyeballs...


The battle for space in the Indian living rooms is getting fiercer. Half-a-dozen operators beaming in airwaves to homes from satellites are jostling with each other to be the main providers of home entertainment: they are offering direct-to-home (DTH) television service.

In recent years mobile telephony has undoubtedly emerged as the fastest growing industry in the country by the sheer growth in customer acquisition. Lesser known DTH is another industry which has also had a spectacular growth in India in the last four years. A DTH service brings TV programmes to home through satellites, a dish and a set-top box. Just as mobile telephony revolutionised personal communication, DTH changed the scene in personal entertainment, riding on a much superior technology platform and wider choice compared to the traditional cable connections.

Just check the figures: in five years flat the industry has grown from one million to 18 million subscribers and the number of players from two to six. Though government-owned Doordarshan is the oldest in the industry and offers free service, six private sector players are dominating the market and vying with each other for viewers. Together they estimated to have invested Rs 16,000 crore in capital expenditure.

Like mobile telephony, the DTH industry also has cut-throat competition among players. Digital technology is the major facilitator for the service and value added services are major drivers of growth. All players suffer from huge losses as average revenue per subscriber is around Rs 250 per month but everyone is out to grab subscribers, at any cost in an attempt to reach the break-even point of around nine million subscribers to turn profitable. Says Tata Sky Chief Marketing Officer Vikram Mehra, “DTH is a highly capital intensive industry with a long gestation period. Only people with deep pockets can survive the huge pile of losses in the initial years.”

The loss is mounting because newer players are offering freebies like free set-top boxes and free installations, though the average cost for every new customer is around Rs 2500. Even the oldest player in the industry, Dish TV, is bleeding due to the price war and large interest burden from massive investment in the business. Its net loss in 2008-09 was Rs 476 crore on a net turnover of Rs 737 crore. Dish TV Chief Operating Officer, Salil Kapoor, however, confidently says that the company will turn cash positive in the third quarter from now.    

Pot of gold

Are the DTH players chasing a mirage? They don’t think so. Analysts’ reports, consultants or industry players, all expect the boom in DTH to continue. The industry has been doubling in terms of number of subscribers and it will continue to do so at least in the next three years. A FICCI-KPMG report on Media & Entertainment industry, for example, expects the revenue of the DTH industry to double in two years from the present Rs 3,000 crore. Pointed out Dish TV’s Kapoor, “Present trends suggest the DTH market should multiply to around 35 million in the next two years.”

The potential for growth is mind boggling. There are 135 million homes in India with TVs, but cable and satellite (DTH) together have reached only 85 million, the balance 50 million homes watch TV using antenna. Industry experts believe that this entire TV population is a potential market for DTH, presently with only 13 per cent market share.

Advantage DTH

With the entry of four new players in the last-one-and-half years, Airtel Digital TV, Reliance Big TV, Sun Direct and Videocon d2h, the DTH market is crowded and noisy.

Together, companies are spending around Rs 40 crore a month in TV and print advertisements to grab attention. As Indians are aspiring for better lifestyles, they are shifting to DTH’s superior service as opposed to cable network which has many inherent disadvantages. Thirdly, increasing sales of LCD TVs, with falling prices, is also inducing consumers to go for DTH service riding on contemporary digital technology.

Agreed Reliance Big TV Chief Marketing Officer, Umesh Rao “The customer migration to DTH platform is driven by an intrinsic need to enjoy uninterrupted, high quality and wholesome entertainment at home. DTH services allow the customer the control & flexibility of content.”

Better than cable

DTH operators offer viewers a digital medium of audio and video compared to the analog-led transmission by local cable operator. The technological benefit offered by a DTH service offers the best cutting edge audio video quality which the analog-led cable service cannot match. Indian channel operators are also working on beaming high-definition (HD) television broadcasting both in terms of hardware and software.

Also television manufacturers like Sony, LG, Samsung, Philips, etc have started selling HD TVs. With the introduction of MPEG-4 technology some DTH operators will be able to support HD content. “As Reliance BIG TV was the early adopter of MPEG-4 technology for a pan India national service, we are quite excited about the advent of HD content,” said Rao.

Tailor-made offerings

One big driver for DTH is the personalised form of entertainment. Unlike a cable TV user who has to pay for all channels even if he does not want many of them, a DTH user can opt for a package consisting of channels he prefers. The rent for various packages offered by DTH operators varies from Rs 150 to Rs 350 a month, while cable operators charge a fixed amount of around Rs 300 per connection. Sun Direct DTH, for example, has different bouquets of channels for Subscribers in south India while other operators offer one package for the south and more choices for the rest of the country. The compression technology in DTH also helps in packing much larger numbers of channels through DTH. Reliance Big TV can offer 249 channels, Airtel Digital TV can offer 205 channels, Tata Sky 172 channels and Videocon d2h 185 channels. In contrast, a cable operator can offer a little more than 100 channels.

Scope for innovation

The DTH platform also offers a wide array of features, including electronic programming guide, personalised favorites’ list, on screen message for latest updates of new movies, account balance etc. Technology also allows operators to offer interactive services through dedicated channels.

Tata Sky, for example, offers 10 interactive options branded as ‘Actve’. It has transformed TV into a new-age educational device that enables children to learn in an interactive manner with lots of fun. It offers four services Actve Wizkids, Actve Stories, Actve Learning and Actve topper designed specifically for children of different age groups. Pointed out Mehra of Tata Sky, “We are the only DTH operator who has taken the interactive learning to schools, 856 institutions have tied up with us.”

Interactive service can also add an extra value to the bottom line as the value added service is offered at a price. Tata Sky charges an extra Rs 30 per month for its entire ‘Actve’ bouquet yet it got 5 lakh subscribers, Mehra said. Dish TV and Reliance Big TV offer about half a dozen interactive services each. Said Rao of Reliance, “Interactive services expand the entertainment options available to the viewers and enhance their overall experience of the service.”

The most popular ones are on shopping, astrology, games, cricket, news and learning. Another big hit with Indian TV viewers is ‘movies on demand’ where DTH operators offer advertisement-free movies at a price which works out much cheaper than a family watching a movie in a theatre.  Also on offer is a new type of set top box that can record TV programmes.

Tata Sky’s personal video recorder, for instance, has 80 GB storage space for recording any programme. It can be programmed in advance to start and end recording at a preset time for one week, offering a solution to viewers who do not want to miss their favourite serial. It can also be used to record two programmes at a time while watching the third one. Explained Mehra of Tata Sky, “Our PVRs have become very popular. After running a discount campaign for two months in the festival season this year we got more than five lakh customers.”

While rapid growth makes the DTH business exciting, operators know they will have to put up with losses for at least six to seven years before they see the real money.

Their pedigree also suggests that helped by deep pockets DTH players are ready for a long haul. Interestingly, DTH players in India are leveraging on their group’s core business to exploit the synergy. Dish TV is promoted by Zee Television group that owns the largest number of TV channels in India. Tata Sky is a joint venture of the Tatas and Rupert Murdoch-owned Star group which not only owns TV channels in many parts of the world but also runs successful DTH businesses.

Sun Direct is a company promoted by the Sun group that owns the most successful TV broadcasting business in south India. Airtel Digital TV and Reliance Big TV are floated by two large telecom conglomerates. The newest player, Videocon d2h, on the other hand, is a television set manufacture that is trying to sell DTH service bundled with TV sets. Some of these players may switch off their channels in the future when the competition forces consolidation in the industry, but till then the consumer is king with wide range of choices at the best possible prices.

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