The television industry is seeing a growth that no one could have imagined two decades ago. Viewers, then, had to make do with a sole national channel and limited hours of programming in a day. Bad transmission and blackouts were the order of the day. The choices for general entertainment were slim and the hunger for quality entertainment was huge for viewers.
The entertainment boom, years later, presented viewers with a riot of channels to choose from. The advent of the cable & satellite (C&S) era brought with it channels across genres (general entertainment to niche channels) and a host of distribution platforms like the conditional access system (CAS) and direct-to-home (DTH) television. From owning merely the humble television set, viewers could now own a dish antenna and receive satellite programmes through services like DTH. A rapid growth in the digital distribution platforms further revved up the television industry, now worth Rs 226 billion and expected to touch Rs 600 billion by 2012, growing at a compound annual growth rate (CAGR) of 22%.
DTH services were first proposed in India in 1996 but the plan met resistance over issues like cultural invasion and national security. The approval came finally in 2000. Now any number of companies can apply for the DTH licence, and players like Dish TV, Tata Sky, Sun Direct, DD Direct Plus and the more recent BIG TV provide DTH services.
The television industry is in a transformational phase, with more subscribers signing up for digital networks like the DTH. According to a PwC report, India has three-and-a-half million DTH homes. With more consumers seen shifting to digital services, the DTH subscription is projected to grow at 44% CAGR over the next five years. But many hurdles are there before the segment?s growth.
Says Smita Jha, associate director, Pricewaterhouse Coopers, ?The DTH market is not yet mature in the country. Since DTH came in at a time when CAS implementations had not succeeded and as a second entrant in the television market?when cable had already witnessed its bloodbath?DTH players had a tough time sustaining themselves.?
An industry expert says out of the 125 million television homes in India, around 60% are C&S houses; the remaining 40% are the potential target group of DTH players. ?DTH service providers should make the most of cable companies being fragmented, and also target areas that do not have any cable penetration like rural areas?, he points out. Other hindering factors are the high taxes and the non-availability of exclusive content.
Vinay Agarwal, chief executive officer, Dish TV, explains, ?Though the DTH market is growing at a 60% to 70%, the fact that the DTH market is heavily taxed is affecting the penetration of DTH in the overall television homes.? DTH players have to pay a service tax of around 12.36% with an additional licence tax of 10% of the revenue along with a variable tax and entertainment tax. An analyst reveals that the entertainment tax on DTH providers in states like Maharashtra is the highest, at around 20% to 30%. ?The fact that DTH players lose a lot of money in taxes is a major setback,? avers Agarwal.
Globally, DTH players have the right to air premium and exclusive content, which is the differentiating factor for them. However, Indian DTH players are still not allowed to air exclusive content. Says Vikram Mehra, chief marketing officer, Tata Sky, ?Exclusive content should be allowed on DTH platforms. The Indian market is very price-sensitive and consumers need to be tantalised with exclusive, niche content which would give DTH a better edge over other modes of distribution.? Since DTH is an addressable platform, advertisers can concentrate on focused and targeted advertising. Hence, audience measurement too becomes an easier task.
Most DTH companies have slashed their price points to attract more subscriptions. Big TV DTH, for instance, is available at an entry level of Rs 1,490, with Rs. 1,000 towards installation of the customer premise equipment. The launch offer includes three months of complimentary subscription, after which customers can choose from a range of packages starting from Rs. 100. Tata Sky and Dish TV, too, are available at subscription costs starting at Rs 99 and Rs 100, respectively.
Despite the rock-bottom pricing, the concept of DTH is fairly new and needs to reach almost all corners of the country like cable. Like that happened during CAS implementation, when cable operators had to market the concept of set-top boxes, DTH players need to educate people about the concept and the various value added services, like interactivity, it presents, feel industry experts. ?DTH service providers need to focus more on a quality and value-centric strategy to market themselves rather than sticking to a price-centric approach. Educating consumers about addressability and value-added services would help the growth of this sector?, says a Reliance spokesperson.
Mehra of Tata Sky too feels it is a very early phase for the DTH in the country and with the spread of digitisation the industry will grow faster. In the long run, the player providing consumers with greater value and better quality, not necessarily the lowest price point, will benefit the most. Reforms in government regulations, in terms of technology and availability of exclusive content, DTH services could give consumers more value for their money.
