The direct-to-home (DTH) services industry witnessed robust growth in January-December 2010, with subscriber base spurting 50% to nearly 30 million from 20 million at the end of 2009. This was aided by a decline in subscriber acquisition costs (SACs) or the average cost of signing up a new customer by 21% y-o-y and 3% Q-o-Q, and reduction in the price of set top boxes (STBs). SACs are expected to fall by another 20% in two years, say analysts. With falling SACs, declining content cost for service providers and deeper penetration into the rural markets, India’s DTH industry is projected to overtake the US DTH market, currently the biggest with 34 million subscribers, by the end of financial year 2011-12.
Farokh Balsara, national leader ? media and entertainment, Ernst & Young, says, ?The DTH industry grew at a robust pace in 2010 and will maintain a CAGR of 15-20% in the next 3 years. It is estimated to reach 40 million subscribers in FY12, and achieve break-even by FY13-14. We saw new entrants in the DTH business and consolidation from established players. We’re likely to see foreign players like Liberty Media making an entry into the Indian DTH circuit.?
Dish TV, which has a subscriber base of 9 million, added 1.4 million subscribers in the first half of FY11 and is likely to add another 1.8 million in the second half.
A company spokesperson added that Dish TV aims to gain 28-30% market share by the end of FY11 at an average revenue per user (ARPU) of Rs 150. For Sun Direct TV, the prominent DTH provider in the south, the subscriber base moved up to 6 million in the fourth quarter of FY10. For the same period, revenues grew 43%. The company expects the DTH subscriber base to grow at a CAGR of 30% over the next two years.
Other players like Airtel Digital TV, which currently has 4.7 million customers, added close to one million in 2010. A senior official Bharti Airtel’s DTH services says, ?Customer acquisition for the DTH industry has been on the higher side as all operators subsidise initial start up costs. However, with the industry adding scale and volume, India today is the largest buyer of STBs. The ARPU for the industry would be anywhere between Rs 180-200 and we are at the higher end of the same.?
A research report by Edelweiss yields 76% of DTH subscribers are from small towns and rural areas. Cut in the entry price has had a positive impact on consumer psyche. The price points for pay per view format on DTH channels has also come down from Rs 75-100 in 2009 to Rs 25-75 in 2010.
The Airtel official adds, ? The need to be entertained, coupled with diversity of broadcast channels, PPV opportunities, gaming and interactive services are the biggest growth drivers for DTH in India.?