With no differentiation in channels, players are banking on value-added services to stand out in intensely competitive entertainment space
In this age where entertainment is literally in every person’s hands through smartphones, direct-to-home (DTH) operators are upping their game to survive in an intensely competitive market. While the content in the channels they offer is not under their control, it is in offering value-added services that they are trying to outdo each other.
The value-added or interactive services are nothing new; they have been around for some years now. But with multiple entertainment options and expansion of DTH to rural areas as well, these operators, including Dish TV, Airtel Digital TV, Tata Sky and Videocon d2h, are compelled to offer services ranging from music, movies, gaming and learning that make them stand out.
Like telecom, subscribers don’t opt for a DTH service for its value-added services; these are just add-ons to engage the customer. It may attract viewers, but will not be the main reason to retain them. But these value-added services, priced between Rs 5-60, can help players increase their ARPU (Average Revenue per User) moderately to significantly. And with a good consumer base in the range of 45-50 million, the DTH sector is spicing things further with value-added services.
Harit Nagpal, MD and CEO, Tata Sky, says that from its customer base of 12-13 million net subscribers, no one service contributes more than 3-4% of the base. So one needs to have a large number of these services. Dish TV has just launched a value-added services offering for children at `9 per month for a period of 60 days. Similarly, with the summer holidays on, Tata Sky has also launched a new kids’ service titled Kids Showcase that features movies from across the globe.
DTH players state that though the contribution of value-added services in their revenue would be negligible, the use is growing at a very fast pace. Ashesh Jani, partner, Deloitte Haskins & Sells, feels, “The subscription model has limitations and with this being a volume business where you need numbers, if a player has value-added services, the expectation is that when 4G kicks in, it will be easy to stream selective content, giving additional revenue to DTH.”
He, however, admits that value-added services have not taken off the way they could have and is an added cost presently. Then there is the cost of maintaining a library, apart from the technology cost of servers.
After three-five years, as volume growth in the industry starts to taper, operators will have to focus on enhancing ARPU and that is where investing in value-added services will actually help bring in some degree of product differentiation.