India’s DTH pay TV market ended 2011 with almost 44.4 million subscribers, 30 million of which were on a net basis. This is equivalent to 25-30 per cent average market share, according to Media Partners Asia’s (MPA) latest research findings.
Dish TV continues to lead with a market share of 28.2 per cent, while late entrant Videocon D2H has seen robust additions to surpass Big TV. Tata Sky and Airtel Digital TV have 19 per cent and 16 per cent market share, respectively.
Big TV and Sun Direct have seen limited growth due to funding, churn and legacy satellite issues.
In November 2011, major operators implemented price increases, largely across basic packs, while also lowering trade margins by Rs 200-250 per new subscriber (US$ 4-5 per subscriber). The price hikes should boost ARPUs (average revenue per user) and, together with lease rentals, will help offset rising subscriber acquisition costs (SAC) from a depreciating rupee. Lowering of trade margins post festive season will also help to check the high rotational churn in the DTH industry.
The fourth quarter of fiscal 2011 marked a fresh peak and trough for the DTH pay TV market in India in terms of gross subscriber additions. While the industry added 1.6 million subscribers in October, a mere 0.61 million came on board in December. The quality of subscriber additions from this point onwards is expected to be superior, resulting in improved churn and better yields.
If key issues on capacity and after-sales service are addressed, the government’s mandatory digitalisation drive could be a significant catalyst for DTH to grab high-ARPU customers and increase reach in larger TAM meter markets, says the MPA research. MSOs envisage about 15-20 per cent churn in cable subscribers to DTH. Some operators expect this could grow in excess of 30 per cent in the early stages of Phase I deployment.
There is also a need to ramp up after-sales service by DTH companies, as the lead time to address a given complaint ranges from three to five days and is highly subject to the minimum number of enquiries received and the number of on-ground engineers. Satellite operators are also concerned about the capacity constraints to carry signals on the currently used FSS or Fixed Service Satellite band. Amongst major DTH operators, Dish and Airtel are adequately placed in terms of channel capacity for Phase I mandatory cable digitalisation.
Dish TV: It has launched its DVR service for its HD subscribers called truHD+. The DVR service is priced at Rs 2,690 per subcriber, which is at a steep discount of 45-55 per cent compared to its competitors’ offerings. The company has launched a new marketing campaign – ‘Dish sawaar hai’ – with an ad spend of Rs 25 crore. Out of the total gross base of 12.5 million subscribers on Dish TV, about 2 per cent are on HD.
Price hikes in November and a more aggressive push on HD services will improve ARPUs, but SAC will remain under pressure. Subscriber additions will remain slow as indicated from the company’s revision in guidance of annual gross subscriber additions from 3-3.5 million to 2.6-2.7 million.
Tata Sky: The company has recently introduced on-demand services, which includes catch-up TV and access to a library of 500-1,000 movies for premium subscribers. Tata Sky has been the most aggressive on value-added services, which on average contribute a relatively high 9-11 per cent to its monthly subscription revenues. Moreover, the segment is profitable net of all expenses including content, bandwidth consumption, advertising, promotion and taxes. Also, the operator leads the market in terms of the contribution of HD subscribers to monthly additions. Most of these additions have come from its existing subscribers upgrading to HD.
Airtel: Metros constitute 8-11 per cent of monthly subscriber additions. The company remains focused on its core operations, ramping up customer care services, HD content offerings and stocking up STBs. The company’s ARPU is tracking at Rs 160 per month.
Videocon D2H: The fast-growing DTH operator is looking to sell a minority stake of around 20-25 per cent to a PE firm, according to the MPA report.
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