MUMBAI: The DTH sector. What once seemed a lucrative arena has now seen companies getting acquired and merging, the competition being intense . Today, India is the largest DTH market in the world by number of subscribers. As on 30 September 2017, there were 66.99 million active pay DTH subscribers in the country. This does not include subscribers of free DTH services.
A recent report published in Livemint sees Tata Sky CEO and MD Harit Nagpal stating that DTH has become a completely commoditised industry, like selling coal or steel, as everyone has access to everything today. He said, “If I drop prices, everybody will drop prices. So, there is really no differentiation. The only sustainable differentiation is process-centred, which is largely service. So, your boxes should fail less often, your picture quality should be good, your user interface should be better than anyone else’s, wherever there’s a failure, your response time should be the fastest.”
Nagpal also revealed that Tata Sky’s current revenue is in the region of Rs 6000 crore where the current run rate (everyday recharge) is worth Rs 20 crore per day. Its revenue and profitability are increasing by 15-20 per cent y-o-y. The DTH player is witnessing subscribers mushrooming by 15-20 per cent every year.
Dismissing the general perception that Tata Sky is a premium service, he says that it isn’t so. However, the company has a higher proportion of high definition subscribers who pay Rs 500-600 every month. In the past five years, Tata Sky recorded 60 per cent new subscribers coming in from smaller towns and villages who pay Rs 200-220 per month, which is also a huge amount for them. For a business to be successful there has to be a balance of low, medium and high paying subs, Nagpal told Mint. Too many low-end customers will hamper profit and too many high-end ones will curb growth.
The merger of Dish TV and Videocon to become India’s number one DTH entity has been of the key highlights of 2018 but Nagpal does not view the situation as a challenge and rather thinks Tata Sky’s numbers are equal to theirs or higher.
Cord cutting is a rage in the US with subscriber after subscriber giving up traditional TV services for OTT platforms like Amazon Video, Hulu, Netflix and Youtube. The internet content is either free or significantly cheaper than the same content provided via cable.
In the US, cable costs $100 per month whereas in India it's a mere $5. So, when Netflix or other OTT platforms are available at $10 each, a consumer would rather prefer watching the latter. But this won’t be the case in India due to the low pricing. Nagpal is of the opinion that India will never give up on TV even if people get on to watching OTT.
Tata Sky recently tied up with OTT platforms Netflix, Hotstar, Youtube and Amazon Prime Videos in order to make them available to its subscribers. The DPO says simply changing the customer premise equipment will allow Tata Sky subs to receive both the signals—from the satellite and from broadband, enabling viewers to watch on TV screen, live TV via satellite whenever they want to, and OTT via broadband whenever they want to.
Nagpal concluded by saying that he does not feel pressure from OTTs since he is in the content business. “My life depends on the customer. I was buying content from broadcasters earlier and supplying it to the customer via satellite. The customer sometimes wants to watch the content of his choice, my job is to fetch that content for him. I am not wedded to the satellite,” he stated.
