8/4/2019 TATA_SKY_2

1/8

1.) What is the market size of DTH ?

Volume and subscription revenue (values of sales in volume and the

subscription revenvue amount)

Are numbers growing or the values growing ?

http://www.pluggd.in/dth-industry-in-india-analysis-297/

India has a total television population of close to 135 million, out of which 80% have access to cable and

satellite (i.e. 108 million). The total DTH subscribers are close to 30 million. Thus the DTH has a market

share of approximately 20%. The subscriber base for DTH in 2006 was meager 1 million. Now for an

industry which is just 5 years old, it is a great achievement.

How the DTH industry has grown in these 5 years.

In 2005 Dish TV was the only player in the DTH industry and was registering subscriber growth mainly in

the areas where cable TV was not available. The subscribers were not ready for the cost of set top box.In 2007 CAS mandate was introduced in selected metro cities, where users had to invest in a set top box.

Though the initiative was not very successful, it gave a wider acceptance to the DTH and consumer

became ready to pay for the set top box. Spotting the opportunity Sun Direct launched its services in

2007 with a drastically low one time cost involved for DTH subscriber. Followed by this Reliance, Big TV

and Air-Tel and Videocon launched their services. The market became competitive. Every player came

with innovative offerings, Dish TV offered Movie on Demand free worth the cost of set top box, Air-Tel

and Big TV offered free subscription for first few months etc. All these things were coupled with

aggressive marketing campaigns. Tata Sky gained the maximum subscribers during this period.

So where is the real growth happening for the DTH industry. Is it the urban areas or rural? Though DTH is

comparatively expensive than cable service, the growth is coming from the rural area. If we see statistics

the growth for the digital segment in rural areas were 34%, 49% and 64% in the past three years.

(source:- TAM Annual Universe Update 2010). The growth in the rural segment can be attributed to

frequent power cuts in the rural areas. DTH platform gives the rural consumer access to their favorite

programs, with the help of generator/ invertors, which is not possible with the cable service in most of the

areas.

Though DTH has certain advantages such as better picture/ sound quality, better customer service. It

also has a disadvantage of price. The DTH player have to pay various taxes such as Adjusted grossreceipts @ 10%, service tax @ 12.36%,VAT @ 12.5%,CST@3%,corporate tax, Excise duty@ 16%,

Customs duty, CVD ,customs duty etc. Whereas the local cable operators easily get away with

government taxes by underreporting the subscriber base. Thus gaining a clear cost advantage. The

regulator should take a note for the same and provide regulations for the same.

http://www.pluggd.in/dth-industry-in-india-analysis-297/http://www.pluggd.in/dth-industry-in-india-analysis-297/

8/4/2019 TATA_SKY_2

2/8

At the same time in Indian market One size fits all strategy doesnt work for long. So, the DTH players

have to design packages suitable for rural consumer enable them to enjoy the digital content (For eg.

Levis jeans had enabled consumers to buy their jeans with an EMI scheme).

The DTH industry is expected to grow at a CAGR of close to 24% .The future of DTH industry will largely

depend on innovative marketing tactics adopted by the DTH players. The stage is all set for DTH industry.

Let the real game begin.

[Guest article byMahesh Bendre.]

Data regarding subscription revenue :

Mumbai: India will become the largest direct-to-home (DTH) market in the world in terms of subscribers by

2012, overtaking the US, according to a study by Media Partners Asia (MPA).

The number of Indian DTH subscribers will reach 58 million by 2020, and 45 million by 2014 from a net

installed base of 17 million in 2009, the report said.

Pay television industry sales in India are also seen growing to $12.1 billion by 2014 and 18.5 billion by

2010, it said.

Most direct-to-home (DTH) satellite pay-TV operators will start making money after 2013.

MPA projections indicate that Pay-TV penetration will grow to more than 90 percent in the long-term from

78% in 2009. Cable will retain 70% market share by 2014, falling to 64% by 2020, while DTH will scale upto almost 35% share long-term, the report said.

Total pay-TV subscription revenues in India will grow at an average annual rate of 14% over the next five

years and 10% over the next decade, reaching $8 billion by 2014 and more than $12 billion by 2020.

MPA sees the total pay-TV advertising market reaching $3.2 billion in 2014 and $5.1 billion by 2020, helped

by a resurgent economy, an expanded pay-TV market and growth of regional media.

http://mbendre.wordpress.com/http://mbendre.wordpress.com/

8/4/2019 TATA_SKY_2

3/8

2.) Basic segmentation of the market

Pricing, regional, locational biases, product forms or any other

segment we observe

DTH market: Big names homing in.

Its the kind of skirmish that brings back memories of the heydays of the cola wars. Airtel Digital launches a teaser

campaign on TV; virtually overnight Reliance BIG hijacks the creative concept and counters Airtel with a TV

campaign of its own. Tata Sky lines up plans to announce its intention of offering its platform for ad sales; Dish TV

quickly puts together a press conference and makes public its ad sales pitch. And in a throwback to the fierce

telecom battles, everyones already started playing an aggressive price war even though most players will say

that direct-to-home (DTH) is a growing pie and theres plenty of room for everyone.

The DTH market in India stands at roughly seven million subscribers, which is less

than 10% of the 85 million C&S homes in the country. However , industry estimates

predict DTH to touch 25 million subscribers by 2012, and thats the number that

every DTH brand has set its sights on. So apart from Tata Sky, Dish TV, Airtel Digital

and Reliance BIG, southern heavyweight Sun TV has entered the fray with Direct,while Videocon is planning to enter the market in early 2009. The mad scramble for

eyeballs has already resulted in some high decibel advertising and a promotional

blitzkrieg. Prasoon Joshi, executive chairman, McCann Erickson India, the agency

handling the Sun Direct account, acknowledges the competition in the DTH arena.

Its a cut throat business as its an emerging category and all players want top-of-

mind recall, he says.

Pricing :

One way of ensuring top-of-mind is through the competitive pricing of packages. For

instance, Sun Direct, the 80:20 JV between the Maran family and the Astro Group ofMalaysia, has a campaign on air that clearly demonstrates the brands decision to

go price first. Playing the price card is a good first-past-the-door tactic early in the

game, especially in a category like DTH, where its always harder to get subscribers

to switch between brands. Unlike in, say, mobile telephony , where subscribers are

at liberty to shuffle between two or even three service operators by switching SIM

cards, in DTH, the onus of having to change set-top boxes and get refunds works as

a deterrent against brand promiscuity.

While pricing may be a good opening gambit, the key to long-term

sustainability will be strong product and package differentiation. This

becomes even more imperative because DTH as a business operates on long

gestation periods and demands deep pockets. Ruling out the possibility of making

money in the first year or two, Tony DSilva , COO, Sun Direct DTH Services , says:

In the long run DTH players will make money on the number of channels their

customers subscribe to. Customers may start with a basic package, but theyll

always want more. There may be a kernel of truth in that, given the subscriber

segmentation strategy that Tata Sky has adopted with the launch of Tata Sky+.

8/4/2019 TATA_SKY_2

4/8

The top end of the market was looking for the best functionality and service , and

to tap that segment we launched Tata Sky+, explains Vikram Kaushik, CEO, Tata

Sky. The middle market was targeted through a greater array of choice and value-

added services , while the bottom end was addressed with affordable pricing.

The competition to accumulate subscribers and capture market share is intense. BIG TV, which launched last

August, claims to have gained half a million customers within the first two months of launch. Says Sanjay Behl,

group head brand & marketing , Reliance Communications: We are targeting a 35% share among the players

who are entering the market with us, and looking at the initial numbers, that looks possible. Airtel DTH, on the

other hand, is focusing on geographical reach; in the first phase it has targeted 62 cities, which is set to go up to

257 towns within six months of launch. We expect to gain 20% market share of net new additions to the category

in year one, says Atul Bindal, president, telemedia services, Bharti Airtel.

Distribution will be extremely critical for all players, particularly in the

post-sales period. Many potential subscribers, particularly in rural areas , are

wary of subscribing to DTH, given the poor post-sales record of some of the existingplayers in the absence of a good after-sales network, subscribers in rural parts

are known to use the services and goodwill of local cable operators to fix niggling

problems with their DTH dishes and set-top boxes. It is easy to reach first time

buyers through a network of 30,000 to 40,000 retailers, but when it comes to

recharge coupons for DTH, it becomes difficult for consumers . BIG will look at being

present at places where anybody can get us, be it the grocer or paanwala, says a

senior official at BIG TV. In a bid to tap rural markets, BIG claims it will look for

potential partnerships with echaupals , post offices and even fertilizer companies.

Sun Direct is also looking at non-conventional channels for distribution, which

includes retail outlets, rural self-help groups and people in homogenous businesses.

Says DSilva , We are creating a set of trained professionals in DTH hardware

servicing to support our distribution , post-sales services, installation and activation

teams. We promote Sun Direct in all heavy footfall areas, where we demonstrate

the product and explain add-on packages.

While round one of the DTH war is about aggregation of captive eyeballs

(and thats pivotal for round two), round two will have to be about

aggregation of content; or rather, unique content. For the success of one

DTH brand over another will be determined by the speed with which it

moves from being just a platform for TV content to being an easily-

customizable , content-led medium. Already, the showcase strategies of

players like Tata Sky and Dish TV which, for instance, recently aired Oye Lucky!

Lucky Oye! on a pay-to-view model with great success points to how things will

shape up in the future.

Other Questions some of which have already been covered are:

8/4/2019 TATA_SKY_2

5/8

3.) Segmentation of TATA Sky

How has TATA Sky evolved ?

What is their market share ?

What is their USP ?

4.) What is the future of TATA Sky growth avenues ?What market share projections will TATA Sky be able to garner ?

What will be the pricing implications and the communication strategy

?

I can give u the rough estimates

30 million homes are with DTH connection in India

out of which 15% are HD connections

Dishtv holds the maximum share of approx 40%

followed by tata & bigtv. Sun use to hold 2nd position but i dont have the current

figures whether its 3rd or 4th position.

around 14% would be bigtv

the above fig are estimates only

8/4/2019 TATA_SKY_2

6/8

First DTH Company having ISO 27001:2005 accreditation

8/4/2019 TATA_SKY_2

7/8

Interactive services like ACTVE English and ACTVE Cooking, for which the operator

charges Rs 30 per application, have more subscribers in Tier II and Tier III cities than

in urban areas. With our differentiated content, we will continue to earn sizeable

revenue than competition.

In a bid to make your TV the new playground, Tata Sky Ltd in associationwith

Hungama Game Studio has launched its gaming service - Actve Games. The service

aims at providing over 50 different games throughout the year onTata Sky Actve

Platform, with at least 6 of them to be enjoyed daily. The games will cater to all age

groups across multiple genres such as sports, action, adventure, arcade, cards and

racing, among others.

850 schools use Tata Sky Actve Education Tata Sky has added a new lingo to our

everyday conversation-isko lagadala toh life jhingalala. Launched in August 2006,

the country's second-largest DTH service provider has already crossed the 5.5

million subscriber mark. Beaming over 200 channels, the DTH major has five call

centres, which take calls in 11 languages

8/4/2019 TATA_SKY_2

8/8

"Currently, we have 4.5 million subscribers and we are aiming to achieve total

subscriber base of 8 million by 2012," company Chief Marketing Officer Vikram

Mehra told reporters here.