Speciality television

BROADCAST: DTH players hit on a new ploy to hook customers - niche channels.

For those who've seen high definition television (HDTV) abroad, there's good news back home. When it launches later this year, Reliance ADAG's DTH service, Big TV (that's Blue Magic re-branded), will include a few HDTV channels. HDTV allows high resolution pictures that can be captured only on special HDTV sets (Plasma and LCD TVs).

"HDTV is popular in Japan and the US. Not a mass service, it can be exploited in Malabar Hills in Mumbai and in south Delhi," says a Reliance ADAG executive. In the US, channels like Golf TV, NGC, HDNet Movies and Food Network are available in HDTV.

HDTV is just one among the special services that multi-systems operators, DTH service providers and IPTV companies are looking at offering to hook consumers. Other premium channels, which may have limited viewership, are also eyeing India's addressable pay TV market.

NGC Network India Private Limited, for instance, is said to be negotiating deals with DTH operators for introducing niche channels from the Fox stable. NGC's marketing vice president Rajesh Sheshadari is tightlipped about the plans.

"Technology between any two DTH operators being the same, you go for service up to a point. But the success of the DTH brand depends on the product. Now, broadcasters will package new channels for the platforms," he says.

Sheshadari is right. Television 18, which runs four news channels, is setting up a new company with former Dish TV head Sunil Khanna to create niche channels that could drive revenues for DTH operators. "We will build channels for which viewers will pay a premium," says Khanna.

For instance, if only six million of the 70 million cable and satellite viewing households are interested in classical music or say, golf, a music or golf channel could be packaged and delivered to them at a premium.

"For 15 years Indian television has been advertising driven. Now there is pressure on content providers and platform owners to think of programming which could generate subscription," says Khanna.

It's not difficult to see why the industry will need content that's sold at a premium. "Structural changes in the industry have made TV homes addressable. Penetration of set top boxes, installed for cable (conditional access system), DTH and IPTV, is growing, allowing platform owners to talk to the consumer," explains Khanna. In five years there will be nearly 20 to 25 million addressable homes.

The trouble is this addressability comes at a price. The set top boxes are subsidised by over 50 per cent. The cost of customer acquisition is also high. Consequently, DTH players are bleeding with ARPUs (average revenue per user) stagnant at Rs 190-230.

"We lost Rs 90 crore in the last quarter," says Jawahar Goel, Zee group vice chairman and head of Dish TV. "Even our rival would be losing money," he says referring to Tata Sky. The Tata-Star JV, Tata Sky, refused to share its financials.

ARPU must grow to at least Rs 400 to Rs 500 a month for the companies to move towards profitability, says Goel. For that, platforms need to sell premium content, feels Khanna.

A Tata Sky spokesperson does not agree: "The industry is faced with too many issues to even start thinking of special content. The Indian law does not permit exclusive content on a DTH platform. Why would you promote exclusive content and then see it on the rival platform the next day?"

Agrees Ashok Mansukhani, cable industry expert and president, corporate affairs at Hinduja TMT: "To improve ARPUs you must know the customer. And there is no research on what the customer wants. In television, all research is advertiser driven." He feels that value-added services like "time-shifted" rather than niche channels will drive these platforms.