Case Study On Consumers Behaviours In Dth Market

Published Date: 02 Nov 2017

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INTRODUCTION

DTH services entered India in 1996. But they did not get approval from government because there were issues related to country’s safety, security and cultural threats. In 1997, Government put a ban when the Indian Sky Broadcasting was to launch DTH services in India and ultimately in year 2000 DTH got the approval. As per the new policy all operators required to establish earth stations in India within 1 year of getting license from the government and DTH licenses in India was costing $2.14 million and was valid for 10 years. Those companies offering DTH service supposed to have Indian origin head and foreign equity should be up to 49 per cent. With the progress of the time, the prices of the set- top box have come down greatly. Due to liberalisation in the policy, the Overall investments required for setting up DTH infrastructure dropped and consumer started the reaping the benefits of low tariffs. The most important thing that DTH operators are betting on the service that coming during the time when the government was forcing for conditional access system (CAS), which made cable television more costlier, reducing the tariff margin between DTH and cable. Some features of Direct to home are as following:-

1) DTH offers best quality picture than Cable TV.

2) DTH can easily reach to remote areas where cable TV failed to penetrate.

3) DTH have the potential that allows for interactive television services such as movie on the demand, Internet access etc.

In India, currently there are 6 private DTH service providers-Reliance Big TV, Dish TV, Tata Sky, Sun Direct, Videocon D2H and Airtel Digital TV and one Government DTH service provider- DD Direct+ and expected to have large subscriber base in coming years. Out of these 6 private players, Dish TV and Tata Sky are the main market players.

PLAYERS IN DTH MARKET IN INDIA

Dish TV

Dish TV is one of the India’s first private Indian companies to start Direct to Home (DTH) satellite broadcast operations in the country and DTH service was begin in the year 2004 with the launch of Dish TV by Essel Group's Zee Entertainment Enterprises. Dish TV India Limited is an Indian company that provides DTH satellite television. The company is a division of Zee Network Enterprise (Essel Group Venture) and is ranked 5th in the list of media companies in the Fortune India 500 roster of India’s largest corporations in 2011. Dish TV had about 13.4 million customers as on June, 2012. At present, Dish TV is the largest in Asia and would to be the world's largest DTH company in next couple of years.

Zee Network incorporated Dish TV to modernize television viewing. It offers features like Programme Guide , parental lock, games, 400+ channels and services, interactive TV and movie on demand. Its major competitors are cable television and DTH service providers—Airtel digital TV, Reliance Big TV, DD Direct+, Tata Sky, Sun Direct, and Videocon D2H.

TATA SKY

Tata Sky is 2nd major player in DTH industry providing digital television services to Indian viewers. The company entered Joint Venture between TATA Sons and Star Group with 80:20 stakes. TATA Sky is incorporated in year 2004 and provides with scope of media and entertainment choices to customers. Its home satellite dais brings more than 200+ television channels including movie on demand, interactive service, games, learning, recipes and chat rooms etc.

Tata Sky brand is leader by being introducing innovative & customer’s convenience services. Yet, no any brand has beaten Tata Sky in terms of various offer & services. It has strong brand equity & also provided offers where consumers are getting "Value for money" and there always been efforts directed towards understanding the customer needs and emerging demands & committed to meet their expectations. Tata sky brand has maintained positive and strong brand image with slogan "ISKO LAGA DALA TO LIFE JINGA LA LA".

Airtel digital TV

Airtel digital TV is an Indian direct broadcast satellite service provider owned and operated by Bharti Airtel. Its satellite service launched on 8 October 2008, transmits digital television and audio services to households in India.

On 13 December 2012, Airtel Digital TV has total 304 Channels and Services including 17 HD channels. Its primary competitors are cable television and Digital service provider. It has a total subscriber base of 7.4 million till June 2012.

As per report of MPA, Metros constitute 8-11 per cent of monthly subscriber’s 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

Reliance Big TV

Reliance digital TV limited is a part of Reliance Communications Ltd., a subsidiary of Reliance Anil Dhirubhai Ambani Group founded by the Late Dhirubhai Ambani, the Indian business tycoon and owned by his son Anil Ambani. BIG TV started its operations on 19th of August 2008 with the punch line "TV HO TOH BIG HO".

Reliance Digital TV is one of the largest Indian pay TV providers, providing direct broadcast satellite service including satellite television, audio programming, and interactive television services to commercial and residential customers in India. It was the 5th DTH service launched in India.

Videocon D2H

Videocon D2H is the DTH services provided by the Videocon Group. Videocon Group is an Indian multinational, expanded in all over the world. The Videocon having 17 manufacturing location in India and plants are in the country like China, Poland, Italy and Mexico. It is also the 3rd largest picture tube manufacturer in the world.

Videocon D2H is one of the largest Indian DTH provider and delivering Digital services including television audio programming, and interactive television services.

Company came with innovative ideas and started offering DTH service with differentiating features compared to competitors in Indian DTH market, Videocon D2H came with inbuilt Satellite LCDs & TVs which were DTH enabled, sizes ranging from 19- 32cm. This was unique concept in the DTH market that brought up the company image at different level in the appearance of other players like Dish TV, Tata Sky, Airtel Digital TV, Sun Direct and Reliance Digital TV.

Currently Videocon d2h is offering more than 400 channels and services which include 22 HD channels, one 3D channel and 21 Active Music Services. In May 2011, Videocon d2h started offering HD Digital Video Recorder (DVR) box with 3D which enabled to record live content. Videocon d2h is the first DTH provider in India to offer a 3D compatible set of box since none of the other DTH providers had a 3D compatible Box.

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.

Sun Direct

Sun Direct is a conglomerate designed to share risk between the Maran's Sun Network family and the Astro Group of Malaysia. Sun TV entered into a "Memorandum of Understanding" with the Astro group on January 27, 1997, since the government of India did not permit the application of KU band transponders for pay TV services, the plan was put on hold. After the DTH policy announced by the government in December 2007, Astro group occupied 20% stake in Sun Direct TV, the cost of stake estimated to be approximately $115 million. Sun Direct TV got registered on February 16, 2005. However, the failed launch of INSAT 4C resulted in a deficiency of transponders, postponement of launch. The service was finally launched on 18th of January 2008 after availability of transponders from INSAT 4B.

Sun Direct offered subscribers a satellite dish and Set-top box for free and basic monthly plan as low as Indian Rupee symbol.svg 75(approximately). Currently basic monthly plan costs Indian Rupee symbol.svg 143(approximately).

Sun Direct spread rapidly across the country offering lowest pricing of DTH service in India. In the month of December, 2009, Sun Direct was launched in Mumbai, Country's financial capital and announced its pan India launch. By 2009, Company registered with one of the fastest growing DTH provider with 3 million subscribers within short span of time.

Sun Direct is an Indian direct broadcast satellite service provider. Its satellite service, launched in 2005, transmits digital satellite television and audio to households in India. Its primary competitors are cable television and other DTH service providers are Airtel digital TV, Reliance Big TV, DD Direct+, Dish TV, TATA Sky and Videocon D2H.

DD Direct+

DD Direct+ is an Indian free to air digital satellite television owned by Doordarshan, providing digital video and audio programming to residential and commercial in India. It was launched on 16 December 2004

Its primary competitors are cable television and other DTH service providers—Airtel digital TV, Big TV, Dish TV, Sun Direct, Tata Sky and Videocon D2H.

DD Direct+ offers 56 television channels and 23 radio channels. Out of 56, 22 channels are broadcasted by DD itself and the remaining 34 are private channels.

INDIAN DTH SUBS

The Pie depicting the percentage of market share captured by DTH players, Dish TV continues to lead with a market share of 27.9 per cent, while late entrant Videocon D2H has seen robust additions to surpass Big TV. Tata Sky and Airtel Digital TV have 19.1 per cent and 15.8 per cent market share, respectively. Big TV and Sun Direct have been limited growth due to funding, churn legacy satellite issues .

(Market Share Percentage as on June 2012)

The pie chart given below showing the number of subscribers for each DTH player captured and the figure is in millions, clearly states that DTH industry emerging as one of the fastest growing industry in India.

Top of FormBottom of Form (Figures in million as on June 2012)

History and Evolution of Transmission of television Programme

On 15 September, 1959 the transmission of television programme began in India at a make shift studio in the All India Radio Building and the programme was aired within the radius of 25 Km with a small transmitter. The journey of From Black & White to color television TV show in 1982 to digital broadcast in 2004, the public broadcaster has grown with tune of time.

 It started with 20 television receivers in and around Delhi and transmitted one hour educational and developmental programs twice a week. But in 1965, the transmission started daily as a part of All India Radio. In 1972, television service was started in Mumbai and Amritsar. Till 1975, television service was extended to seven Indian cities and Doordarshan remained only the television channel in India. The television service was separated from radio in 1976. Each branch of All India Radio and Doordarshan were separated and started functioning under the management of two separate Director General in New Delhi. With this, Doordarshan came into existence as a National Broadcaster.

In 1982, the National telecast had begun and color TV entered Indian market with live telecast of the Independence Day speech by Indira Gandhi (Prime Minister) on 15 August 1982, followed by Asian Games held in Delhi in 1982. Since then, more capacity installed for better transmission of network and physical infrastructure developed to accelerate the reach of Doordarshan. Nearly 1400 terrestrial transmitter and 46 Doordarshan studios made DD National programmes accessible to more than 96 % of the Indian population.

In late 1980s, more and more people started buying television sets, although there was a single channel coming on the television. As a result television programming started experiencing the market saturation. Hence the government realised the demand of time and door opened up for another channel known as DD2, later on DD2 become DD Metro that featured national and as well as regional programming. Both channels were broadcasted terrestrially. In 1991, the Government of India adopted the new economic policy to bring economic and social reform in the country under the regime of Prime minister P.B. Narasimha Rao. As consequence of new economic policy, the Indian government opened the door for private and foreign broadcaster. This resulted into Foreign broadcaster entry into Indian entertainment world and channels like CNN, Star TV and domestic players like Zee TV and Sun TV started satellite broadcasts. There are some primary reason behind rapid expansion of television in India are:- 1)Large chunk of market was still unexploited. 2) Easy accessibility of relevant technology and a variety of programmes. 

Cable television has been growing and capturing larger portion of Indian television market. The cable TV industry saw drastic market explosion in early 1990s when the broadcast industry was liberalised, and witnessed the entry of many foreign giants such as Star TV Network in 1991, MTV, and others. Sun TV is the first Indian private channel launched in South India in 1992. Resulting from Liberalisation, Globalisation and Privatisation (LPG), Indian television in the 1990s witnessed the westernisation of Indian society in many significant ways. This was an inescapable consequence of living in a global village. Territorial channels grown vigorously along with a ample number of Hindi channels and some English channels. The liberalised Indian markets gave birth to cable television and entry to channels like MTV, STAR Plus, BBC, Prime Sports and STAR Chinese were the 5 channels that gave Indians a fresh breath of life. Zee TV was the first private owned Indian channel to broadcast over cable. A few years later, the channels like CNN, Discovery, National Geographic Channel entered India. Star started expanding its presence into telecast by introducing STAR World, STAR Sports, ESPN and STAR Gold. By end of 2001, HBO and History Channel were the other international channels entering India. In 2001-2003, the international channels like Nickelodeon, Cartoon Network, VH1, Disney and Toon Disney came into foray.

 Conditional Access System or CAS is a digital method of transmitting TV channels via-a set-top box (STB). In this process, signals are encrypted and viewers need to install a set-top box to receive a decrypted signal. The STB is required to watch only pay channels. The idea of CAS was disputed in 2001, due to possibility of charge hikes by channels and subsequently by cable operators. CAS was first experimented in four major cities of India and eventually it is accepted in other Indian cities and towns as well. This lead to explosion of Indian television market and it is estimated to touch more than 100 million home if market grown at the same pace. 

ROLE OF IT IN DTH MARKET EXPANSION

The Direct-To-Home (DTH) service, was introduced way back in 2004 in India, have been penetrating Indian households at a faster pace due to its unmatched quality. According to the research findings by RNCOS, the Indian DTH market is experiencing rising demand for convenient and easy modes of payment. As of now, there are few recharge option like local dealers, mobile phone, IVR and online, are common mode of payment for DTH subscribers. Auto debit and customized services like cash card are offered by a few service providers. In India, the maximum numbers of DTH recharges are done by local dealers.

With the advent of technology, DTH services have exceeded different broadcasting procedures and changed radically television experience. In reality, the overall Indian broadcasting method has undergone a phase of development caused by changes in consumer preferences and greater standards of television viewership. Apart from these factors, the number of DTH subscribers in India is estimated to progress at a CAGR of around 23% for the year 2011-2014.

CURRENT PACE OF GROWTH IN DTH MARKET

The Indian DTH market was expected to overtake the US by 2012 according to study done by Media Partners Asia (MPA). DTH subscribers will rise up from a net installed base of 17 million in 2009 to attain 45 million by 2014 and 58 million by 2020. India will grow to be the largest DTH market in the world in terms of total installed subscriber base by 2012, exceeding the United States.

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As per report of "KPMG-FICCI" estimated the growth rate from 2010 to 2015 and was expected to surpass the figure of 71 million DTH subscribers at the end of year 2015.

According to recent study by Media Partners Asia (MPA), In 2009, 15% of Indian households had at least one set-top box, this number will go up to 38% by 2014 and nearly 50% by 2020 with HDTV would be gaining more attention of the customer after 2010, determined by DTH satellite networks.

Cable broadband would be a crucial motivator of future cable sector profits, will rise from 8,50,000 households in 2009 to 3 million by the end of 2014.The future of DTH in India will be determined by media owners and distributors, growing market share with close watch on profits, Instead of cost incurred for making profits, according to MPA. The Indian pay TV sector generated sales of $6.5 billion for FY March 2010, while EBITDA profits for the sector reached $800 million, implying a mode of profit margin of 13%. MPA sees industry sales growing to $12.1 billion by 2014 and $18.5 billion by 2020, margins will improve to 15% and 23% over the same period, with EBITDA profits reaching $2.3 billion and $4.4 billion. In terms of volume, broadcasters and local cable operators (LCOs) will lead long-term, while LCOs and cable multi system operators (MSOs) will lead in margins. Most direct-to-home (DTH) satellite pay TV operators will start making money after 2013.

MPA report says that Cable MSOs probably face the most challenging future as capital intensity and competitive dynamics are such that the premium placed on funding and execution skills is growing at an alarming rate. Nonetheless, most national MSOs will be able to forge stronger last-mile links with the consumer long-term, with positive implications for future funding as well as large-scale deployment of digital pay TV and broadband. We are more positive on India’s DTH opportunity than previously, particularly when secured firmly in position to consolidate and improve pricing power with continued growth.

It is suspected that DTH market will consolidate from six to four platforms within three to five years, and only four will be making money at the EBITDA level by FYE March 2013. Finally, the combination of a strong economy, a larger pay TV audience and digitization will also boost the market for broadcast groups. Competition will remain intense, as the main theatre of war shifts to regional markets. The major risk to all our growth assumptions is regulation, which continues to commoditize and destroy industry value." Projections from Media Partners Asia (MPA) suggest that Indian pay TV subscribers will go up from 105 million in 2009 to 149 million by 2014, and 173 million by 2020. This means pay TV penetration will grow from 78% in 2009 to more than 90% in long-term. Cable service providers will maintain 70% market share by 2014, reduced to 64% by 2020, while DTH will scale up to almost 35% share in long-term. Total pay TV subscription revenues will rise up at an average annual rate of 14% over the next five years and 10% over the next decade, reaching US$8 billion by 2014 and more than $12 billion by 2020. Revenues from HDTV and VAS (including VOD, HDTV and PVR) will contribute more than $500 million by 2014, rising to $1.5 billion by 2020. A renascent economy, a rising pay TV market and the growth of regional media should help bolster pay TV advertising growth to an average annual rate of 14% over the next five years, and 10.5% over the next decade. MPA discern visually the total pay TV advertising market reaching $3.2 billion in 2014, and $5.1 billion by 2020.

FOREIGN DIRECT INVESTMENT (FDI) IN DTH MARKET

The Telecom Regulatory Authority of India (TRAI) has put forward with approval as being suitable that the Foreign Direct investment (FDI) restrictions in DTH, teleport and national and state level cable network operators should be go up to 74% from the current 49%. Also, the Foreign Direct investment restriction in local cable operators (LCO) has been advised to be reduced to 26% from the present 49%. It has also been put forward that the limits for IPTV and mobile TV be fixed to the extent of 74%. The rise in the FDI restrictions from 49% to 74% in broadcast bearing services is likely to fetch in consolidation. Besides, more expenditure in this vertical will help raising the standard of technology

Remote and rural market raises revenues

The remote rural areas market turning to be emerging as a major revenue producer than the urban areas. Presently, out of the 22 million DTH customers, 60% reside in rural areas and small towns. Rural subscribers continue to produce revenue for all the six private DTH service providers. Higher purchasing power combined with aggressive push by the DTH service providers is turning out to be successful. In addition, the quality of being at hand of territorial language channels at low cost is luring the rural subscribers to DTH.

Remote and semi-urban areas constitutes 65% share of the new subscriber base for Airtel digital tv, videocon d2h and reliance big tv. The well recognized DTH service providers like dish tv, tata sky and Sun Direct DTH, the proportion between urban and rural customer is nearly equal. Tata Sky is focusing on unexploited rural markets for growth. On the other hand, Dish TV has freshly become aggressive in semi-urban and urban markets, presently 40 to 45% of its sales are from the rural markets, as compared to a previous figure of 70%.

DIGITISATION PROCESS IN INDIA

Digitisation Process Phase-I

The Ministry of Information and Broadcasting released the official report after the completion of I-Phase of Digitisation ended on November 11, 2011 and presented the current subscribers base added in the I-Phase of digitisation process. As per the installation figure shown metro-wise by the Information and Broadcasting Ministry put forth the following details:-

Delhi-25.15

Kolkata-17.74

Mumbai-22.4

All three metros have total 64.93 lakh set of box installed during the 1st phase digitisation process. As per the figures released by the Information and Broadcasting Ministry, 29 lakh subscribers had DTH connections in the four metro cities before digitisation declared mandatory for the households.

The official statement shared "How Ministry’s teams have been conducting vast field visits in the Mumbai and Delhi to examine the violations. In addition, the teams have collected direct feedbacks from family by interacting and interviewing them. 

Digitisation Process Phase-II

The deadline for 2nd Phase of digitisation is Pre- set to be 31st march 2013.

A higher management level meeting headed by Shri Uday Kumar Verma (Secretary, Information and Broadcasting), reviewed the preparedness for Phase II cities, wherein the deadline in 38 cities in 15 States expires on 31st March 2013. 

Information and Broadcasting Ministry has asked the Multiple System operator (MSOs) to make a complete estimation of the number of Set of box, gathering and analysing credible data from the ground level. Multiple System Operators have also been asked to furnish information about the roughly calculated number of Set of box and their plans to acquire to ensure that the expiry date of 31st March 2013 would remain intact and that the preparation of Phase II should be completed on pre-set notified deadline.

COMPARISON OF CABLE AND SATELLITE TV SERVICES

Equipment

For cable television, subscribers need receiver boxes connected to television. Satellite customers need to place set of box outside of their building in addition to receiver boxes connected to television.

Cost

The cost of television programming is based on packages of channels, rather than individual channels. Companies try to offer a wide range of packages with varying numbers of channels to appeal to all consumers and budgets. Cable television is pricey than satellite programming because the topical franchise charge are added to local cable costs. Take into account the installation and equipment costs when making your decision. Many cable providers offer free installation. A few cable providers added up to four receivers with service, while satellite equipment turn out be costly, provided if subscribers signed a contract with satellite providers often offer free or deeply discounted equipment.

Channels

Satellite providers offer local programming only in larger cities. If customer lives in a small city and willing to see local television programming, then stick with cable operators. The channels provided by cable and satellite players ranges from more than 300 for cable and more than 250 for satellite.

Restrictions

If subscriber lives in a remote area where cable providers do not have infrastructure to expand then the only choice will be satellite programming.

Signal

Cable and satellite TV providers transfer their signals in two separate ways. Cable providers have connection laid down under the earth that are tapped into with a coax cable that connects subscriber TV with a set up box. Satellite TV provider delivers signals through satellites on the earth and in external space to individual satellite dishes for which subscription is done.

Limitation

Weather is a major hurdle when dealing with challenge of consistent transmission of signal for both cable and satellite providers. Sometime due to heavy rain, snow and wind causes disturbance of satellite signal. Also, Single affected by trees and tall buildings.