Digitisation of television is growing at a scorching pace. And that?s sweet news for direct-to-home, or DTH, players; never mind the entertainment & media industry?s slowing pace?its growth lagged to 10.3% in 2008 from 16.7% a year earlier. But industry players agree that the digitisation drive, expanding by 35-40% annually, could open up new business models and dynamics for the DTH segment, still run by a handful like Dish TV, TataSky, Sun TV Direct, DD Direct, BIG TV and Airtel. Videocon, fresh after a rebranding exercise, too will join the DTH rush soon.

Since the DTH market in India is tiny and vastly untapped, its potential for growth is immense. Consider the numbers industry experts are bandying about: India?s TV viewership is the second largest in the world?we are adding over 14 million new TV sets a year to the 130 million TV households; of these, 97 million are cable & satellite (C&S) homes, growing at 25-30% annually. The DTH market now has 14-15 million subscribers, but by 2012, it could swell to 35-40 million.

?DTH is growing very fast,? says Salil Kapoor, COO, Dish TV, the first DTH player with a subscriber base of 5.5 million, adding, ?Though it has taken time to take off, last fiscal we added about 2 million subscribers and we hope to add 2.5 million subscribers this fiscal.?

Eight-month-old Reliance BIG TV is also upbeat about the market, boasting of a subscriber base of 1.8 million. ?We are bullish on the prospects of the DTH market in India,? says Umesh Rao, chief marketing officer, BIG TV.

BIG TV is expected to be a significant growth driver for Reliance Communications, though its entry was late by two years after the appearance of DTH in India. ?That does not make much of a difference,? argues Rao, ?because the penetration of the DTH market is still at a nascent stage.? Players like TataSky, Dish TV and BIG TV will have a big role in converting C&S homes to DTH. Tata Sky?s CMO Vikram Mehra told FE that the company, which joined the fray in 2006, hopes ?to reach 8 million households by 2012 from 3.5 million now.?

Similarly, BIG TV targets a subscriber base of 3 million by the end of the current financial year. Even new entrants like Airtel DTH, launched in 2008, are aggressive in the market. Ajay Puri, director & COO, DTH Bharti Airtel, told FE the DTH households are expected reach 45 million by 2013. Industry experts see DTH business capturing at least 40% of the C&S homes by 2015.

According to PwC India entertainment and media outlook 2009, India is among the largest media consuming and content-creating industries but constitutes only around 1% of the global industry. Says Marcel Fenez, global managing partner, entertainment & media practice, PwC: ?The onset of increased digitisation will expose the industry to new business models and dynamics. For each industry?s diverse segments to participate fully in this growth, they will first need to embrace the digital future. This is as true in India as in the other important entertainment & media markets globally.?

The challenges are great: 82 million of India?s 97 million cable TV households still run on the analogue technology. The entry of DTH players into the pay-TV market has a given a strong push towards digitisation, but the numbers are still small to make an impact. With more players in the DTH market, the consumer is spoilt for choice with each one trying to outdo the other in providing value-added services. If some are offering latest technology, others are banking on a widespread distribution network or on out-of-the-box packaging or programming.

?We have the best combination of titles for our movies on demand,? says Kapoor of Dish TV. Then, Rao says, ?BIG TV has an edge over existing players in offering latest technology and innovative packaging.?

DTH players believe regional TV viewers will be the biggest growth drivers of the market. ?India is a group of countries with different languages, different genres of preference every few miles apart? so the potential for differentiation is huge,? adds Kapoor. Two call centres of BIG TV, which launched with 200 channels on its platform, handles over 50,000 calls per day in 11 languages.

An IMRB & TAM-S survey reports that 23% urban consumers opted for DTH because of better quality, 16% for more number of channels and 8% for better schemes. Easy payment options, affordability and user-friendliness also figured among their reasons.

?Aggressive marketing campaigns, ambitious growth targets, competitive pricing, superior digital quality, more channel options, interactive applications, games, DVR (digital video recorders) and other digital add services have made DTH operators like TataSky and Bharti Airtel instantly popular with consumers,? says Alan Dishington, sales director, NDS India, which creates technologies that enable pay-TV operators to securely deliver digital content to TV set-top boxes, DVRs, PCs, mobiles and other multimedia devices.

Experts say cable networks are facing the heat of competition from DTH players. Already, cable players like Hathway and DEN have realised the importance of digitisation for their success and survival. ?They are upgrading their networks and adding competitive services to rival DTH operators, while still offering popular local content to viewers,? says Dishington. Speaking about the trends in the DTH industry, Dishington says, ?India has a strong appetite for new technology and value-added services like DVR and iTV (interactive-TV) applications. With increased digitisation and digital penetration we will see a greater consumer demand for video on demand, DVR, interactive games and applications, and pay per use services.?

The challenge, insiders point out, has been the way the market is structured ?with a skew towards cable TV?. Says Rao: ?It requires a huge paradigm shift in the mindset of TV viewers to choose the latest proposition in the market and forgo the service that they have been using in the past. This shift has its own pace but has definitely started.?

But advertisers, with their ears to the ground, are already pushing the digitisation drive. Explains Dishington: ?The advertiser?s demand for targeted marketing & advertising will see the growth of advanced advertising solutions that are measurable, addressable and interactive and also open new avenues for revenue generation. As the infrastructure improves, viewers will opt for advanced technologies such as interactive TV, HDTV, mobile services and converged solutions.?

A KMPG-Ficci report, issued in February 2009, says the number of digital pay TV households (including digital cable, DTH and IPTV) in India will grow at a compounded annual rate of 35.4% to reach 71 million by 2013. Obviously, digital players and business partners are clued in.

?With inputs by Monalisa Roy