1. Cable TV: How digitisation gave boost to multi-system operators in 2017

Cable TV: How digitisation gave boost to multi-system operators in 2017

As cable TV digitisation nears completion, multi-system operators (MSOs) have benefited from introduction of a transparent system.

By: | Published: December 28, 2017 3:58 AM
Cable TV, digitisation,multi-system operator, tamil nadu, india The process of digitisation has largely been complete with the exception of Chennai and some other parts of Tamil Nadu, where the matter is under litigation. (ANI- representative image)

As cable TV digitisation nears completion, multi-system operators (MSOs) have benefited from introduction of a transparent system. This in the long run will help MSOs to turn their businesses, which so far had suffered heavy losses into a viable one. “Thanks to digitisation, the cable business has become a transparent one, with local cable operators now providing bills for almost all connections. This further allows a MSO to build a direct relation with customers. Finally, as we clean up our books, we expect foreign investors to put in money under FDI, who so far have stayed away,” said Den Networks CEO SN Sharma.

The process of digitisation has largely been complete with the exception of Chennai and some other parts of Tamil Nadu, where the matter is under litigation.

Moreover, subscription revenue has also gone up, as average revenue per user (ARPU) has started to flow in, especially in case of markets that fall under Phases 3 and 4. According to a Ficci-KPMG 2017 report, the net ARPU for MSOs stands in the range of `95–105 for Phase 1, `80-90 for Phase 2, and `35–40 for Phases 3 and 4, respectively.

“Instead of getting a lumpsum amount from local cable operators (LCO) at the end of every month, we are now getting subscription revenue from each and every household. While this may not immediately help us to convert our losses into profit, going forward as ARPU increases, we will able to turn around the businesses,” said Siti Networks ED and CEO Rajesh Sethi.

The challenge now resides in increasing ARPU, which would further allow MSOs to offset the cost of content. In the case of paid TV channels, broadcasters provide channels at a certain cost, which has been fixed by the Telecom Regulatory Authority of India (Trai). “Currently, the ARPU generated from Phase 3 and 4 markets does not cover the cost of content charged by broadcasters. Similar is the situation of markets in Phases 1 and 2, where the small increase in APRU is lesser than the increased content costs,” said Hinduja Media Group MD Ashok Mansukhani.

The Ficci-KPMG report points out that as implementation of subscriber management system at MSOs’ end is not widespread, that has led to challenges around broadcasters ascertaining their share of the subscriber revenues. As a result, content deal between broadcasters and distributors remain largely on a fixed fee basis, with only a few broadcasters dealing on a cost per subscriber basis. Also, carriage fee remained flat in 2017, as cable operators have not added HD channels. According to industry estimates, at present broadcasters pay about `3,500 crore to cable operators as carriage fee on an annual basis.
“One of the reasons MSOs aren’t able to increase their ARPU is because direct-to-home (DTH) operators have captured the premium segment of consumers in these markets. Also, DTH now provide high-definition STBs compared with standard definition STBs given by MSO — which allows them to earn a high ARPU,” explained Jehil Thakkar, partner, Deloitte.

According to Sethi of Siti Networks, MSOs too are in the process of adding more HD channels, as they replace their current SD set-top boxes with HD. “We may be a bit late to the party, but with digitisation, will surely be able to play catch up,” he said.

Calculate your income tax post budget 2018 through this Income Tax Calculator, get latest news on Budget 2018 and Auto Expo 2018. Like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top