The CAS Saga

Such low levels of declarations have been attributed to the lack of transparency in the last mile distribution end of the business, which is controlled by the 30,000 odd local cable operators and independent cable operators across India.

Attempts at increasing transparency have been made through a combination of technology and regulations. In 2003, an attempt was made to introduce CAS. As per CAS, the Indian home would receive two sets of channels:

• FTA channels - a basic bouquet of channels for which the customer would pay a flat amount, the pricing for which may be regulated by the Government as required;
• Pay channels - for which the customer would pay an amount fixed by the channel/bouquet owner. All pay channels would be routed through an addressable system.

However, the implementation of CAS did not take-off as expected due to lack of uniform acceptance by all segments of the television value chain i.e. Broadcasters, MSOs, LCOs, alternate platform providers and end consumers. After many controversies and stumbling blocks finally CAS was introduced successfully.

DTH Market:

There is an immense opportunity for DTH in the Indian market. The opportunity in India almost 10 times that in developed countries like the US and Europe. For every channel there is a scope for broadcasting it in at least ten different languages. So every channel multiplied by ten, that is the kind of scope for DTH in the country.

Investments by five large corporates in DTH services- Dish TV (Zee Group), Tata-Sky (Newscorp-Tata JV), Big TV (Reliance Group), Digital TV (Bharti Airtel Group) and Sun Direct (Sun TV Group)- is leading to a rapid increase in DTH subscriber growth rates of ~0.5 million subscriber additions per month as against ~50,000 in 2006. Videocon, sixth DTH operator launched its services recently.

The ‘Indian Readership Survey 2008 R2’ findings have shown that the Dish TV is the largest player with over 3.1 million subscribers, followed by DD Direct, Tata Sky and Sun Direct, which has a predominance in the southern zone. The zone wise analysis puts the western zone with 2.24 million topping the subscriber base charts and the North, South and East following the lead.

DTH operators wooed subscribers with several value additions including release of latest Hindi films. Film production house Eros International’s release Aa Dekhe Zara became the first film to be available on demand for DTH service users less than two weeks after its cinema hall release. The movie was released on a revenue-share basis. Slumdog Millionaire, the Oscar-nominated film by Danny Boyle, was also on the ‘Showcase’ of Tata Sky on its payper-view (PPV) service.

Starting with a million strong subscriber base in August 2006, Tata Sky, a DTH joint-venture Company between Star (owned by Rupert Murdoch) and the Tata Group, now has more than 2.7 million connections and the forecast for 2012 is that it will further increase to eight million.

The Indian DTH growth scenario bodes well for the advertising industry as well with over Rs 30-40 crores being earmarked by these companies annually for advertising revenues. While Tata Sky has roped in Bollywood actors Amir Khan and Gul Panag for its promotion, Shahrukh Khan endorses for the Dish TV.

Tata Sky recently launched the NDS-developed XTV personal video recorder (PVR) that enables the customers to watch a particular TV show while recording another. It is being hailed a ‘major introduction’ in the Indian DTH market. Within a few days of its launch 2, 500 PVRs, priced at Rs 8, 999, were sold as claimed by the Tata Sky. This places Tata Sky among the top 19 ‘pay-TV operators’ around the world with NDS solutions being a unique introduction to facilitate flexibility of PVR to their subscribers.

A deal along similar lines was announced by Bharti Airtel, in the provision of DTH services, dependent on NDS for its conditional access. Sun Direct, which entered the DTH sector as a discounted brand in opposition to Tata Sky, notched at a 30 per cent premium and supposedly mopped up over a million subscribers within a short time span.

DTH operations in India could be enhanced if the dearth of satellite capacity is removed by increasing the number of available Ku-band transponders that at present is 12 on Insat 4A, which in turn would mean more channels for viewing.

Tax burdens on DTH are another area of complaint for operators. A demand of a tax holiday of five years from the government has been mooted by the DOAI that should incentivise the DTH industry as its market has reportedly surpassed the Japanese one in the last five years.

Around 40 per cent of revenues are siphoned off to pay taxes and license fee and another 12 per cent for services imposed by the Central government. Apart from this, there are entertainment taxes that differ from state to state. Cable TV operators also give a stiff level of competition to the DTH sector by suppressing their prices artificially by way of under-declarations.

The growth of DTH market also witnessed a ‘technology-war’ amongst DTH players. With new players Bharti Airtel’s Digital TV and Reliance’s DTH service Big TV launched in 2008, a technology war erupted between these new players and the older players, Dish TV and Tata Sky use of technology in the set-top-boxes. The older DTH players claimed that the latest MPEG-4 technology, as used by the new DTH players, violates existing guidelines for DTH operations citing reasons of inter-operability. In the view of the older DTH players, the new DTH players are required to offer commercial inter-operability with the existing MPEG-2 set top boxes being used by the older DTH players. The matter is currently under dispute with BIS.

Key Players:

• Dish TV: “The key differentiator for Dish TV is Sabse Zyaada content. Dish TV offers the largest width and depth of content with 240 channels and services, Sabse Zyaada channels across Genres/languages along with Sabse Zyaada Value at every price point. Be it Regional content, Sports, News, Movies or Kids Channel Dish TV offers Sabse Zyaada Channels on its platform as compared to Cable, Digital Cable, IPTV and other DTH players”, says Salil Kapoor, COO, Dish TV.

• TATA SKY: TataSky is cashing on the Nano drive these days. As a part of the exclusive offer, consumers can now avail a special 20% discount (about Rs 300) on a new connection and a discount of Rs 500 on installation on booking a Tata Nano. Company has come up with summer bonanza for all age groups for the holiday season. There are many offerings on Actve Stories, Actve Wizkids and Showcase.

• SUN DIRECT: DTH player Sun Direct an 80:20 joint venture between the Maran family and the Astro Group of Malaysia launched its first high definition (HD) broadcasting services on DTH in India. The DTH provider is planning to spend around Rs. 150 crore in fiscal 2009-2010 for marketing its product in a bid to increase subscriber base from the existing 3.1 million to 6 million. Company offers free dish and set top box (STB), excluding the installation charges on new connections.
• RELIANCE BIG TV: It plans to sell up to 49% to foreign private equity companies and global DTH players. US-based DTH firm Direct TV are said to be in the talks with Big TV. The company expects to lift about Rs. 8,000 crore. The company has added 15,000 technical experts and installation professional as part of plan to increase customer’s service operations across 500 locations in the country.
• VIDEOCON: The Group, which made an announcement of Rs 1, 000 crore for the DTH venture earlier, made a soft launch of its Videocon D2H services in Macau Its service will be called D2H+.
• AIRTEL DIGITAL TV: Bharti Airtel’s direct-to-home (DTH) arm has launched its mobile DTH units for cars as a source of revenue to cash in on the election fever. Bharti is looking at integrating all their services including mobile phone, wireline phone, broadband, IPTV and DTH services and lure customers with their one bill approach for these services so that customers get maximum benefit and convenience.

Competition and Strategies:

Since there is no content exclusivity, DTH operators are identifying new revenue streams like Near Video-on-Demand (NVoD), pay-per-view (PPV), personal video recorder (PVR) and interactive offerings. Tata Sky, for example, offers multiple value added services through its Active brand, such as gaming, educational channels for kids, matrimony services and cookery shows. Airtel has a tie-up with Infosys for offering interactive and digital applications. Their other interactive services include NEWS ACTIVE, SPORTS ACTIVE, enabling to choose – Multi Camera Angles, Multiple Language Feed, Match Highlights & Statistics etc.

EPGs on DTH are a common feature since there are about 200 channels and consumers find it difficult to scan through. Some EPGs give details of programmes where as some are just simple listings.

So far DTH has not poached upon cable’s market share but marketing by DTH operators—focusing on sound and picture quality, flexible payment structure and new interactive services is clearly targeting existing analogue cable Subscribers.

Future options on DTH will include ‘Payments via DTH’, localized/targeted Ad platform, TV Commerce, streaming rental movies/ticket booking/online gaming etc.

DTH Industry Market Share (2008)

Indiabiznews, June 28, 2010