New commanders have been chosen for a bruising fight in one of the world’s fastest-growing direct-to-home markets
With the Indian direct-to-home (DTH) market set to become the largest in the world — touching a subscriber base of around 33 million by the end of the financial year — a battle is brewing between Dish TV and Tata Sky to corner a larger share of the pie.
The two operators, who together service over half the subscribers, have outlined ambitious targets. While Dish TV aims to cross the 10-million mark by March 2011, Tata Sky, which is second in the pecking order, earlier this year expressed an intention to double its consumer base by 2012. It had a base of around five million consumers at the end of last financial year.
Battle lines are now clearly drawn and the commanders recruited. Dish TV recently roped in R C Venkateish, whose first task will be to recruit over two million consumers by the end of the financial year. “Venkateish has had an excellent track record heading leading brands. His experience gives him a well-seasoned perspective, which perfectly complements Dish TV’s needs as a rapidly growing company with the highest marketshare,” Dish TV Managing Director Jawahar Goel said.
Meanwhile, Harit Nagpal is slated to take the reins at Tata Sky when Vikram Kaushik retires as chief executive officer in December. Changes appear to be already underway. Tata Sky, which has always maintained it does not want to shore up subscriber numbers at the expense of profitability, surprised many in the industry when it slashed the price of its set-top box (STB) by 40 per cent last month to Rs999, as part of a no-strings-attached package. “The pricing points have been devised to make our service affordable for all sections of society. We want to make our service more popular in smaller towns,” explained Vikram Mehra, chief marketing officer.
Dish TV, which dominates the subscriber base with a marketshare of 32 per cent, offers STBs for Rs1,390, inclusive of content for two months. “Pricing points are no longer a barrier for consumers wanting to opt for a DTH connection. At this level, the market is very comfortable and the growth momentum is firmly in favour of DTH in the pay TV market,” said Venkateish.
The DTH industry in India is growing at 8-9 per cent a year. If the trend persists, experts say, it would account for around 50 per cent share of the cable and satellite market by 2013. The half-a-dozen-odd operators in the country, with a combined subscriber base of around 30 million, today have a 30 per cent share of the pay TV industry.
To ride this rising wave, Dish TV has firmed up plans to further strengthen its distribution network. Venkateish said, “Our distribution is the strongest among all industry players. We will scale up the network in coming months to increase our penetration.” Dish TV aims to increase the number of dealers, who provide recharging options to 100,000 from the present 60,000. On the hardware front, distribution touch-points would be upped to 75,000-80,000 from the current 50,000.
Innovations are also being made on the product line-up, with Dish TV looking to introduce another two to three value-added services. On the cards are transaction services. “Value addition has become very important in the DTH segment. As we get into newer technology, there would be greater opportunity for value-added services,” added Venkateish. Additionally, the company is looking to generate revenue from advertisements by using its 8-million-strong subscriber base. For the premium segment, Dish TV has high-definition and movie-on-demand offerings.
Tata Sky too is customising its product line-up for rural and urban markets. Mehra said, “We are conducting research to understand what subscribers additionally want from their television viewing experience. Our educational application, Actv English was based on insight we got from rural and semi-urban households. We use Hindi to teach English to homemakers and children today. The service has been a huge success and we have over one million users.”
For subscribers at the upper end of the pyramid, Tata Sky has launched personal video recorders, high-definition and pay-per-view services. The company gets 8-10 per cent of monthly sales from Tata Sky Plus, a premium offering.
“Companies launch products and then market them in rural areas. We develop our products based on consumer requirements. For instance, our Actv gaming service has not been designed for serious gamers, but people in smaller towns, who are slowly being exposed to gaming via mobile phones and social networking sites. The application already has over 50,000 users,” Mehra added. Tata Sky monetises interactive services and boasts the highest average revenue per user in the market. But high acquisition costs — which involve subsidising STBs and installation — have meant that DTH operators are reeling under losses estimated to be in excess of Rs6,000 crore. Dish TV is the only player that is Ebitda (earnings before interest, taxes, depreciation and amortisation) positive and expects to break even next year.
A recent study conducted by Media Partners Asia, a Hong Kong-based firm which researches the media, entertainment and communications segment, projects it may take another three years for other players to come out of the red.
