The Ambanis do not like to do anything small, so much so that when Anil Ambani decided to develop a new brand, he called it Big. He is putting scale where his mouth is. Last week’s launch of Big TV DTH is trying to live up to its name. It took off with 100,000 subscribers (employees and those that came in in the soft launch in March) in 2,500 towns, 10,000 hoardings, 15,000 television advertising spots, 20,000 radio spots, and 500 newspaper inserts. Chief executive Arun Kapoor, a man of average build, is talking about 100,000 outlets in 6,500 towns very soon. Having spent five-six years with mobile telephone service providers and headed Dish TV, Zee’s DTH service, before joining the Reliance fold, Kapoor says the way ahead is the telecom way. When Shuchi Bansal and Suveen K Sinha caught up with Kapoor, he was training his guns on 40 per cent share of the market in a year, by which time the total number of DTH subscribers may treble to 18 million. Edited excerpts:
What is big about Big TV DTH?
We have a strong presence in telecom and we have a media and entertainment business. The DTH business actually sits at the intersection of these two. What I deliver is entertainment and the manner in which I deliver has to do with telecom and communication. My brand architecture is derived from BIG TV Entertainment.
But I am embedded as an organisation within RComm (Reliance Communications, the mobile phone service provider) because the infrastructure that I hope to leverage to deliver content is the telecom way. We will launch in 6,500 towns through 100,000 outlets. Big TV DTH can also take advantage of the phenomenal cross-bundling opportunities with other Reliance ADAG properties.
What is the telecom way?
What is your entry cost in mobile telephony? On an average the handset cost is Rs 2,500. What’s your monthly pay-out? Rs 200! The DTH business is very similar. It is a population game. However, the trajectory may be different — we may not add 10 million subscribers a month. But the direction is the same.
How will you cross-bundle DTH?
I can do cross-bundling with Big Cinemas and Adlabs where we can demonstrate the product, or promote it through the sites that we have like Big Adda and the gaming sites. The other aspect could be bundling with the Reliance community. We have a base of 50 million telecom customers. Of these 3 million are post-paid, with whom we have a monthly relationship. We are launching a special package for all these guys.
Look at Reliance Energy in Delhi and Mumbai. There are 5 million Reliance Energy customers who receive a bill from us. So my ability to reach out to them, give them a customised offering, and collect money on a monthly basis is phenomenal. We have a shareholder base of 4 million. Then there is the insurance business.
How many of these can you convert into DTH customers?
We’ve worked out some numbers but I can’t reveal them now. There will be unique offers for all of them. The beauty is that these offers don’t load my pricing as they are not available in the open market.
Even if you get the numbers, how do you propose to service them?
We did an employee launch in January and a soft launch in March. So between our trade partners and BPOs, we already have about 75,000 to 100,000 subscribers in 2,500 towns. We have tested the system. We will be in 6,500 towns via 100,000 outlets. Competition is in 4,000 towns and 35,000 outlets.
That’s distribution. What about service?
Service has two parts: field service and back-end service. We have 6,500 installation teams and the infrastructure capable of handling 5 million subscribers annually. Reliance has a 10,000-people-strong captive BPO with centres in Mumbai and Chennai. Today, we have enough seats to service 50,000 customers every day.
How many subscribers will you get in the first year?
The industry today is about 6 million and three more operators are coming in. By the end of one year, this industry will add another 10 million to 12 million subscribers. Of that addition we hope to get a 40 per cent share.
That sounds ambitious.
No, Dish TV used to sell a million boxes. Then Tata Sky came. Dish TV continued selling a million and Tata Sky started selling a million boxes, too. When Dish TV was alone it was spending Rs 1 crore a month on advertising. Today, Dish spends Rs 10-12 crore a month and Tata Sky slightly more. The DTH industry spends Rs 300 crore a year on advertising. When the new players join in, all of them put together will spend Rs 1,000 crore in promoting the category. If that does not open up the market, we have no future.
Besides, India is the second largest TV economy. We sell about 14 million TV sets a year. Of this, 4 million are top-end, which is 29-inch-plus sets. This is the customer who will go in for DTH.
What’s your advertising budget? Will Abhishek Bachchan be the brand ambassador for Big TV DTH?
For a 40 per cent market share I need to spend a lot of money or I will be nowhere. We are doing 10,000 hoardings, 15,000 TV spots and 20,000 radio spots. There will be 500 print media ads.
We are not against a brand ambassador. But for the launch we thought we had a powerful product proposition. We did not want to take anything away from the brand. For the next few months there’s no brand ambassador. But we are completely open to it and the Bachchan family has a string of associations with us.
It’s widely believed that you will bundle DTH with an LCD TV offer.
It’s very, very likely. Discussions are on with television manufacturers. We have to work out whether you buy a DTH connection and get an LCD TV free or you buy an LCD and get a DTH connection free. It could work both ways. The deal structure is in place but I can’t reveal it. But some form of bundling will happen. It’s part of my budget.
What role will technology and content play?
My Mpeg4 platform will be superior. Tata Sky and Dish are on Mpeg2. In Mpeg4, the picture quality is much better. It helps me to beam out more channels as it has a better compression technology. Currently, I have eight transponders which give me a capacity of 230 channels. I will get another four transponders in the next four-five months. Then I can launch another 130 channels.
From the future perspective, Mpeg2 does not support high-definition content while Mpeg4 does. India will see a revolution in High-Definition both in terms of software (channels) and hardware (TV sets) in the next six months. Total dhamaka hone wala hai (there will be a big bang). We are ready for it.
Also, Mpeg4 allows triple play — that is, audio, video and data. As a telecom company, we have a huge advantage. Our box is not a vanilla box. It is a box with higher memory and it already has space for a USB modem. Triple play gives you a return path. In the next two to three months, we will launch DVRs (digital video recorders) which can record hundreds of hours of programming.
We have the widest range in content. The film channels will be our huge USP. There are 32 film channels. Of these, two will show only previews and trailers.
What about your pricing strategy?
The entry price — Rs 1,490 plus installation — is similar to the existing players. The big differentiator is subscription. We have four base packs starting at Rs 100. You can buy a base pack and then keep adding channels. So you personalise and pay only for what you want to watch. It puts a tremendous burden on the company but it is not straight-jacketed.
The DTH industry is bleeding. What is your break-even target?
I can’t divulge that but please don’t benchmark us against every one else. Rivals are adding 1 million customers every year. My scale is very different. Yes, it requires deep pockets to be in this business and the box subsidy is high. This business is about acquiring scale. Some people also say that we have stepped into the market too late. What is too late when the industry is set to triple every year?
