Battles in the sky

The rush for subscribers continues, but DTH companies must acquire content at cheaper prices to stay in the race.

Having met its target of acquiring one million subcribers in its first year of operations, direct-to-home (DTH) company Tata Sky is looking to overtake its rival and the country's largest DTH company Dish TV in the next 18-20 months.

The Zee group's DTH arm Dish TV currently has 2.3 million subscribers. According to sources, Tata Sky is looking to overtake Dish TV in the next 18-24 months through aggressive marketing, better quality of service, and possible discounts in pricing of its current offerings to its susbcribers.

Currently, a Dish TV connection comes at a one-time payment of Rs 3,150 plus a monthly outgo of Rs 160-300 while Tata Sky costs Rs 4,000 (one-time) plus a monthly outgo of Rs 160-300.

"Tata Sky may drop the one-time charges by 10-15 per cent for a limited period so as to take on Dish TV," an industry source says.

"The company's aggressive future plans also take into account the planned launch of DTH services from Reliance Bluemagic and Bharti Airtel company," a source familiar with the plans of Tata Sky says. While Reliance Bluemagic may be launched by the year-end, Bharti's DTH venture will take off by March 2008.

Launched on 8 August, 2006, Tata Sky acquired one million subscribers in a record time of 12 months. According to industry sources, the Zee group's DTH arm Dish TV acquired its first 10 lakh subscribers in about 20 months from its launch in mid-2004.

But Tata Sky is not viewed as a threat within Dish TV. "Certainly, Tata Sky's launch pushed us to become aggressive and helped us cross the acquistion of two million subscribers faster than the time we took to acquire the first one million subscribers," Arun Kapoor, chief executive of Dish TV recently told Business Standard.

Dish TV's confidence to take on Tata Sky and other new entrants in the DTH market lies in offering its services at very competitive rates.

"With our advantage in offering the best quality DTH service at more than Rs 1,000 cheaper than our competitor, we can take on any DTH player in the country," says Kapoor of Dish TV.

Both Tata Sky and Dish TV are offering their services at highly subsidised rates. While the per subscriber subsidy on Dish TV connections is Rs 700-900, it's Rs 1,600-1,800 for Tata Sky. Tata Sky has superior set-top boxes (STB) that are expensive in comparision to Dish TV's STBs, therefore Tata Sky looses more money per subscriber, DTH experts say.

But if Tata Sky is to overtake Dish TV, and both are to expand their susbcriber bases, both companies will have to acquire content at cheaper prices, the experts opine.