KOLKATA: Waking up to a new pricing regime, followed by an unprecedented pandemic, natural disasters, and tensions with China, 2020 turned out to be a gloomy year for the cable TV distribution industry. While the difficulties are not over, 2021 brings hopes of reacquiring churned subscribers and easier ground operations. Additionally, broadband is going to play a greater role than ever in consumer stickiness.

The TV distribution industry, especially the cable operators, lost around 20 per cent subscribers during the Covid crisis, but experts are optimistic that most will come back this year. The distributor platform operators including both DTH, cable operators are expected to see a double digit growth on an industry level.

“Last year was difficult due to Covid2019, especially ground operations. As the opening up is happening, ground operations are looking better. If you talk about other network operations, acquisition of a new customer, or those who churned, I think that’s coming easy. It will be a much better year,” GTPL Hathway business head – video and chief strategy officer Piyush Pankaj says.

Although Siti Networks Ltd CEO Anil Malhotra cautions that normalcy has yet to return and cable operators have to maintain an outside network, he acknowledges that the company has noticed a rise in content consumption and broadband penetration. He also mentions that there will be further consolidations in the market.

Pankaj points out that the loss in subscribers was mostly from commercial effects coupled with the previous churn during the new tariff order. Those clients have to come back now as corporate offices will be reopening soon. “Hence, this year will be a boom for gaining back the customer,” he asserts.

Another reason for churn in pay TV consumers was the migration of workforce to hometowns due to work-from-home mandate. Dish TV and Watcho corporate head-marketing Sukhpreet Singh says that trend will settle down for this year with people returning to their workplaces. Moreover, the overall propensity of the mass consumer looks promising as the economy is projected to rebound.

However, Malhotra says that new subscriber addition will only happen when households not penetrated by TV start getting connected, like what was seen post-digitisation. Moreover, the chances of the economically weaker section to take up new pay TV connections during this financial crisis seems lower, he believes.

Despite several challenges last year, the large DPOs did not stop innovating. Tata Sky was one of the most aggressive players to chase the connected TV market.  “We will continue to look at innovations which are useful for customers and bring an element of delight. For instance, last year we added Smart Guide banners on our EPG interface which shows most viewed channels, recommends new ones, trending ones, etc. We also added trending shows on key genres functionality on pressing the yellow button on the remote. Such innovations have made content discovery seamless and easy on our boxes,” shares Tata Sky chief innovations officer Anurag Kumar.

GTPL Hathway is also expected to roll out hybrid box (single package including cable, broadband and OTT services) this quarter along with the launch of other new services and products like combined distribution, broadband through partners and marketing activities. “We are a service industry, we will have to adopt whatever new technology comes in,” Siti Network’s Malhotra reaffirms.

Like other players, Dish TV too introduced many new features, and brought out a user generated content offering last year. But Singh believes what is more important is they have innovated when it comes to customer service. The company has already progressed to remote management of services in a sector where call centres, visits to customers’ homes are basic necessities.

In addition to that, Singh says that they are going to add more new functions not only for new age products but also for traditional pay TV boxes. The operator has started the year by introducing Scan to Help feature on its mobile app to help customers solve set-top box (STB) related problems by themselves using various AI and ML technology.

Along with including entertainment from foe-n-friend OTT platforms, the value added service (VAS) still holds potential for the sector. NXTDigital media group CEO Vynsley Fernandes believes there is still a huge opportunity for value-added service (VAS), he noted in a recent interview. The main reason is the availability of various content in the linear model and in different regional languages. Even Siti Network’s Malhotra thinks regional market holds the opportunity for new VAS offerings while old genres have lost their charm.

And for 2021 and beyond, broadband is going to be the magic mantra for DPOs, especially for cable operators. 2020 saw major MSOs expanding their footprints. While Airtel already has a big presence in the sector among DTH operators, Tata Sky also recently launched a broadband plan with a speed of one Gbps. After Jio’s grand entry in the home broadband space, other players like Airtel have aggressively started upping their game in the segment. Last year, both these players increased their subscriber base and notably, smaller players also saw their market shares going up.

“For both DTH and cable, it is becoming very important to get into home broadband sector. That’s where the future lies and they need to focus on. Cable companies are at a much better place as they are already using fixed-line pipe infrastructure, not the wireline infrastructure DTH players use. But they will have to incrementally invest and partner telcos. The cable industry is still fragmented and there are private equity plays still possible provided they come together and invest for future growth in home broadband,” media analyst Rajiv Sharma notes.

However, he mentions that DTH operators are still proving a higher quality reliable service compared to cable operators. Sharma is of the view that it will still take some time to narrow down the service gaps.

Overall in terms of both cable TV and broadband side, aggregators like Jio, Airtel have an edge in terms of value and content, says Elara Capital VP research analyst (media) Karan Taurani. According to him, subscribers will keep moving to aggregator followed by DTH in long term. While some large MSOs can strike content partnerships to retain consumers, most MSOs won’t be able to spend on content partnership because they don’t have enough cashflow.

“In terms of challenges, the telco operators are going to pose big challenge to the cable industry. LCO, MSOs have to come together to counter that challenge, innovate more to secure customers,” GTPL Hathway’s Pankaj cautions.

Like other sectors in media and entertainment, DTH and cable is also mired in regulatory issues too. The verdict on amended new tariff order cases is still awaited, there could be more clarity on the proposed STB interoperability issue this year. DTH operators ended last year with amended license guidelines which brought a sense of relief and stability in the sector after a long period. “We welcome the recent DTH guidelines issued by the Union cabinet. We continue to request for a level playing field with cable operator with regard to licence fee,” Tata Sky’s Kumar says.

At the same time, the new DTH guidelines issued by the ministry of information and broadcasting (MIB) can have a far-reaching impact on the sector, such as increasing the potential liabilities of incumbents when renewing their licenses. The top four DTH operators are liable to pay Rs 7,700-8,000 crore, credit rating agency Crisil said recently.

On the manufacturing side, the industry has been highly reliant on foreign imports. The dependency did not bode well for the industry during Covid2019 crisis as operators faced a huge challenge to get equipment during the lockdown. This year can a bring change in this direction as the draft National Broadcasting Policy is highly focused on the Make in India pitch. The policy aims to indigenise the production of consumer premises equipment including set-top boxes.