In its decade long journey, DTH operator Tata Sky has seen the industry go through massive changes. Having gradually worked through the challenges, the operator has identified VAS and interactive services as a successful way to discover new customers and keep them engaged. Having been very vocal about the satellite capacity problems for DTH ops, Tata Sky’s Harit Nagpal tells BrandWagon’s Chandni Mathur how the company is building capacity and its strategy ahead for DAS Phase III and IV. Excerpts:
Take us through Tata Sky’s journey and where it stands now.
It has been a process of complete discovery. It started off with basic offerings such as better quality picture and sound, to now offering more choices of programming, HD, SD and 4K boxes, recording options, services on multiple platforms and interactive services which are growing based on consumer needs. We are constantly discovering new things… some days back we launched a +1 service for HD subscribers. We will expand it to more channels as the service picks up. Our active subscribers are in the region of 12 million homes and 14 million boxes.
From the last three to four years, almost 70% of our new customers are coming from outside the main cities. And it’s not that those customers are subscribing to low-end plans. There are as many high-end plan users in cities as there are in villages.
What are the biggest challenges that the industry still faces?
We have come to a stage where we are working around the challenges. High taxation is a problem but we are hoping with the implementation of GST that will get solved. There were challenges of capacity that are getting taken care of now. There are no insurmountable challenges today. I’d rather be an optimist here. Phase I and II are over, III is happening and IV will happen too. I think every stakeholder’s interest needs to be understood and addressed before a solution is reached. We are happy at the pace at which reform is happening.
The DTH policy is still not in place. The licence fee issue is pending. How do you see that affecting the business?
The license fee issue is 12 years old. It will get resolved. There are lines that need to be ironed out and multiple stakeholders whose interest needs to be taken care of. I think there is some compromise being found out where everybody’s interest is partly or wholly covered.
VAS and interactive services have been an important part of your offerings. Are you able to monetise effectively?
Monetisation happens when a customer pays directly and secondly, it increases my customer’s affinity to the core services, so his chances of staying with me and continuing to pay me go up. For the +1 service, we are not charging anything extra, but chances are if you are watching three hours of TV in a day you might watch some more. If I am able to do that with the same price you are paying me, chances are you will not miss that extra day when the renewal comes up. To me that’s monetisation. I expect at least 20-30% of the people watching the delayed service, and if that happens, the service has done its job. As the awareness goes up, the viewability will increase.
What kind of traction do the VAS offerings see? What percentage of subscribers hops on?
No service will ever penetrate more than 7-9% of the mass. I don’t think any one interactive service can penetrate across the masses. You have to have a long-tail of services. On each of these services, you may not have much traction but collectively they give adequate penetration. Currently, a third of our base would be subscribed to one or more services. Our aim is to have a service that interests every subscriber, but I would be happy if at least 60-70% of my base has one or two services that she finds of use. We have seen that R2 a day is something that people don’t mind, and we have to make it modular so we can cater to different types of customers.
What is the progress on Phase III and Phase IV of digitisation? You had launched R99 packs across Southern markets with an aim to acquire more subscribers in DAS III/IV markets. Has it helped?
The progress is pretty good. Phase III has progressed well and we have a very large number of our new subscribers coming from there. This year, Phase III would have grown 60-70% higher than the previous year. Phase IV is also growing, not at the same pace but I am hoping that by December, it will also start growing at the same rate. But don’t expect Phase III and IV to get over in one year like Phases I and II, because those were cities. These are states; it takes time. It will require a lot of work and one has to be prepared for three to four years of work in these areas.
The Rs 99 pack was an introductory pack, which is essentially a bunch of FTA channels, and you just have to add one more language or genre to that. It was more for the convenience of new customers to understand how packs are made. It is helping well and we have got in new customers.
Do you see consolidation helping the DTH industry?
Consolidation in the industry has happened by market shares getting polarised. Today, for example, 95% of the market is polarised among four operators. From six, we have become four relevant operators in the market, so that’s consolidation. It’s a good number and is essential for the industry to stay competitive, continue to improve the offering and keep prices competitive.
Is Tata Sky planning an IPO? If yes, who will divest and who will remain put between Tata, Star and Temasek?
Nothing is on the cards as of now.