DTH industry likely to grow 6% in FY21, finds Crisil report

By: |
September 29, 2020 9:52 AM

It is estimated that the industry, which accounts for about 37% of TV subscribers, could be worth `22,000 crore in FY21

In the last few months, DTH subscribers have altered their subscription plans in accordance with availability of fresh TV contentIn the last few months, DTH subscribers have altered their subscription plans in accordance with availability of fresh TV content

After seeing a decline in subscribers when fresh content disappeared from TV screens, direct-to-home (DTH) broadcast service providers may now buck the overall trend and add to their topline in FY21, ratings agency Crisil has found.

According to Crisil, DTH operators have added a healthy number of subscribers and could register a 4-6% revenue growth this fiscal. It is estimated that the industry, which accounts for about 37% of TV subscribers, could be worth `22,000 crore in FY21.

“At a time when most other industries are seeing a 20-30% drop in revenues, the overall revenue of the DTH industry has remained stable with a marginal decline of about 2-3% in subscribers. Despite the initial decline, there was a marginal increase in average revenue per user (ARPU) in Q1 FY21,” Sachin Gupta, senior director, Crisil Ratings, said.

In the last few months, DTH subscribers have altered their subscription plans in accordance with availability of fresh TV content. A Tata Sky spokesperson said, “We observed changing trends over the various phases of lockdown and then unlock.”
Initially, there was a surge in the number of subscribers recharging their accounts. Over time, due to lack of fresh content in key genres such as GEC and sports, Tata Sky witnessed subscribers optimising their channel choices. “Now, we see many of the dropped channels being added again, as fresh content and sports has come back on TV,” the spokesperson added.

DTH providers also benefitted from their large content libraries and value-added services which came to viewers’ rescue when they ran out of fresh content to watch on GECs. For instance, Airtel Digital TV picked up on the nostalgia fever and brought ’80s TV show Malgudi Days to the platform in May.

“Nostalgia, boredom, and convenience of adding new content may have helped these platforms. The process to activate one such channel is effortless and does not pinch much at `40-45 per month. However, growth of this kind is not necessarily sustainable in the long term,” cautioned Paritosh Joshi, principal, Provocateur Advisory. Further, inertia to change the service provider has worked in favour of content suppliers, Joshi said.

He said when the pandemic is over, the unchallenged growth of the likes of Jio, who bundle telecommunications and entertainment, is the barrier that DTH players and other distributors will need to overcome. This is why operators are working on finding ways to stay relevant to their subscribers. Tata Sky, for instance introduced Tata Sky Binge, an OTT aggregator service, last year, which gives subscribers access to content from eight apps. The service is priced at `299/month and comes with a free Amazon Fire TV Stick.

Last fiscal, the DTH sector saw a healthy revenue growth of 14% (9% rise in subscriber base and 5% in ARPU). This fiscal, the subscriber base is seen increasing by about 7% to 68 million, which will lift revenue by 4-6%. According to Tata Sky, nearly 70% of new connections are coming from smaller towns and rural India. CRISIL finds that the pie of cable TV subscribers is reducing and these subscribers are moving to DTH platforms.

Even though there is a surge in the demand for smart TVs, DTH players may remain insulated from the challenge they pose until a large number of households have access to high-speed broadband. “India’s wired broadband penetration (as a percentage of total household) is currently less than 8%. Unless there is a significant infrastructure expansion by telecom operators, growth of OTT streaming on smart TVs will be limited,” said Gupta.

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