With a subscriber base of around 10 million since its launch in 2003, the DTH television service has not been finding it so easy to dislodge the cable operators from people’s homes. In its efforts to attract more people, the HD TV was expected to play a big part.
But, the HD (high-definition) TV rollout is expected to slow down, thanks to the depreciating rupee. When the rupee was stronger the industry had it better. The set-top boxes, used to unscramble the signals, gets costlier as the rupee gets weaker as these set-top boxes are imported.
The price rise comes at a time when most DTH operators are planning to introduce high-definition (HD) TV services in India. This would require very high compression technology (MPEG4-supported) set top boxes. The price rise could result in re-evaluation of the extent to which the HD service will be introduced by DTH operators.
Tata Sky has already introduced its PVR service. Dish TV had plans to start selling its HD set top boxes by December 2008. BIG TV plans to launch its HD services by Q4 of current fiscal.
According to industry sources, some 3 million set-top boxes are imported by the DTH operators every year. The industry has seen more competition with new entrants like Big TV and Airtel DTH joining the party in 2008, joining the existing operators like Dish TV, Tata Sky and Sun Direct.
South India makes up about 35 per cent of the DTH market. Interestingly, all DTH operators are said to be planning to start increasing the prices in the south first since the southern market is known to be less price elastic i.e., the proportion of change in the demand to a certain proportion change in price. Hence, the chance of people ditching DTH service is much lesser.
The weakening rupee is expected to increase the cost burden of set-top boxes. According to some DTH industry estimates, a DTH player buys an MPEG2 STB at Rs 1,568-2,450 and an MPEG4 STB (higher compression technology) for Rs 2,500-3,038. However, “it acquires a subscriber for Rs 2,600-5,600 per STB. Subscriber acquisition cost of DTH operators include the cost of the set-top box, monthly content cost, advertising and promotion cost,” said a spokesperson of a DTH operator.
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In the past few months, all DTH firms reduced the STB prices and subscription rates. The price war that ensued with the entry of new players like Reliance ADAG and Bharti Airtel, the lowest monthly subscription fee hovered around Rs 99.
For the past few months the operators had been absorbing the taxes, said a retailer.
The DTH operators are planning to introduce new packages as a precursor to the increase in the prices for new connections.