It took six years for the Direct-to-Home market to get its first private player in the Essel Group-promoted Dish TV in 2003 since Rupert Murdoch-controlled Star Group (then Star TV) gave a demonstration of the service on March 26, 1997 to a select audience in Delhi, and nine years for Star's Indian joint venture, Tata Sky, to get the nod. The next two ventures may not take that long.
As the Rs 1,600-2,000 crore (Rs 16-20 billion) DTH venture of the Tatas and Star Group, in an 80:20 joint venture, takes off by mid August, and with Sun TV and Anil Ambani's forays in the wings, DTH has clearly come of age. As the competition is heating up with 4-5 players, analysts predict DTH prices to fall by 50 per cent.
With over 3.25 million subscribers, DTH penetration is roughly 5 per cent of the 61 million cable and satellite homes. Dish TV and public broadcaster Prasar Bharati's plain vanilla free-to-air offering, DD Direct Plus currently logs 1.25 million and 2 million subscribers.
DD, being a non-encrypted service, is believed to reach over 4 million, pushing the total DTH reach to over 5 million. Dish TV claims it is adding 100,000 connections every month - and 200,000 during the festival season.
While PriceWaterhouseCoopers predicts the base to touch 10 million households by 2010, other industry estimates peg it at 15 million by 2012.
"DTH may end up having 10-12 per cent of the existing cable business with significant substitution in the urban cable homes that want better quality of service," said Smita Jha, principal consultant, PWC.
Dish TV would have 150 channels on air with Star, Sony, Discovery and Ten Sports going on board. With Star and Sony bouquets available on DTH, the content becomes equivalent to that of cable - displacing a major handicap it was faced with in the past.
As far as pricing was concerned, odds had been stacked up against DTH so far but competition could remove this disadvantage too. "Though Dish TV had the first mover advantage, the entrants - Tata Sky, Sun and Anil Ambani's ventures - are all coming from the stable of financial powerhouses and that can dip prices by 50 per cent," explained a sector analyst.
A DTH set top box currently costs about Rs 3,000-5,000, with monthly charges ranging from Rs 200-Rs 1,000. A cable connection costs about Rs 150-350 per month and Rs 1000 for installation.
With government denying exclusivity in content - a "must provide" clause on broadcasters which implies that any bouquet going on one DTH platform, has to be made available to all others - pricing, value added services, marketing prowess and brand power become crucial parameters.
"Price would be very important in the price-conscious Indian market. We may see some very innovative pricing strategies in the Star venture and even in the Ambani venture," said PWC's Jha.
Adds Sunil Khanna, chief executive officer, Dish TV: "It is like the telcos, all of which provide voice and text connectivity, but still compete. Brand building and VAS then become very important." While people would come to DTH for better viewing, these factors would pull them towards one specific operator, he added.
Media watchdog TAM says 88 per cent of the DTH households are in rural areas. "DTH would have a stronghold in rural areas where cable access is difficult and in niche urban households which demand innovative, interactive content," says TAM India's Chief Executive Officer, LV Krishnan.
This reality is not lost on the existing players. While Dish has tied up with Open TV to provide the first-ever interactive programming in news, music and sports, movies on demand and exclusive gaming portals in its VAS offerings, Tata Sky too would be launching such interactive content.
DD Direct too is becoming aggressive and plans to increase offerings from 33 to 100 channels in a year. "Our mandate is to reach the remote areas where cable is inaccessible. But we'll stick to beaming free-to-air channels," says Prasar Bharti's Chief Executive Officer, Naveen Kumar.
The bullishness of broadcasters is not tough to fathom - DTH is a broadcaster's delight. Agrees Khanna: "There are no issues of being blocked out by the cable operator, under-declaration of subscribers or being kept outside the prime band. The system is fully addressable, the providers can have interactive gaming and movie portals and, ultimately, it is a superior technology."
However, some challenges remain. "The flipside is that with technology moving so fast, DTH can have competition from IPTV, even mobile TV," said TAM's Krishnan.
