According to market estimates, DTH subscribers' base in India is growing at a CAGR 18% and is expected to surpass 41 million by the end of March 2012. The industry has been growing at 11 million or thereabouts for the last 3 years. This year with the CAS implementation in 4 metros, a slightly higher industry growth is expected. However, DTH is not everyone’s toy. The Parliament, mandates that all cable TV operators will have to transmit TV signals in an encrypted format through a digital addressable system, wherein there would be complete digitization in the four metros- Delhi, Kolkata, Mumbai and Chennai by October 31st, 2012. The regulation is a true industry game changer for the industry with cable, DTH, broadcast, and content sectors defining new strategies to better adapt to shifting landscapes. DTH companies are now going back to their drawing boards and labs to come out with low-cost Set Top Boxes. According to ASSOCHAM, of the 140 million households in India, close to 100 million are yet to be digitised.
Industry analysts forecast that the process of conversion from analog to digital in India will cost around US$ 3 - 4 billion. Also arranging the resources for the required set up within the stipulated time is a challenge. Thus, at the face of all this are we really setting logical deadlines?
Almost half households in India today own a television set. For the average Indian family, the TV is the primary source of news, entertainment and education. The liberalization of the Indian economy starting 1991 meant that Indians started getting exposed to the world with international programs being beamed right into their homes. Over a period of time, their expectations of local content increased. This led to what is termed as an explosion of channels catering to every kind of segment whether it is news or local entertainment channels. So today, we have more than 550 channels broadcasting across India. This may not even take into account local channels specific to regions. TV manufacturers did not anticipate this surge and as such analog technology provided by them limited the actual number of channels they could actually receive.
Benefits of Digitization of Cable…
Digitization of cable network will hugely benefit the entire ecosystem consisting of the government, broadcasters and consumers. For consumers, this translates into wider choice of TV channels, better quality of transmission, increased value added services and paying for what they view.
Shashi Arora, CEO- DTH/ Media, Bharti Airtel, opines, "For the government, greater customer declaration will lead to better tax compliance and tax revenues. Broadcasters will enjoy a reduced dependence on advertising revenues with subscription-based services as well as a lowering of carriage fees. I think digitization is a must for a country like India as it removes the biggest issue like underreporting and is a win-win situation for all stakeholders."
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| Shashi Arora CEO- DTH/ Media, Bharti Airtel | K Jayaraman MD & CEO of Hathway Cable and Datacom Limited | Mrinmoy Purkayastha Associate VP, Marketing from AltenCalsoft Labs |
K Jayaraman, MD & CEO of Hathway Cable and Datacom Limited, explains, "Digitization aims to correct the anomaly and put the power back into the hands of the consumer. As per The Cable Television Networks (Regulation) Amendment Bill, 2011, the cable TV industry is required to convert all subscribers from analog signals to digital set-top-boxes which will allow operators to offer value-added services to consumers. Digital TV will enable consumers to watch high quality digital television channels of their choice on a-la-carte basis. Also, digital systems will have the capacity to deliver many more channels to the consumers than the current model based on analog."
Cable Service vis-à-vis DTH…
Cable TV and DTH had its own bag of benefits. Post digitization, while the former will offer multiple channels at a lower cost, DTH offers Interactive services, that goes beyond entertainment. These interactive services are customized for user across groups like kids, youth, farmers, housewives etc. Instead of getting to watch pirated, camera prints of latest Bollywood movies, DTH subscribers get to see Censor Board approved digital prints of latest blockbusters on pay-per-view.
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| Anil Khera CEO, Videocon D2H | Ankur Jain Managing Director, JAIN HITS | Venugopal Iyengar CMO, Sun Direct |
The modified deadline presents us with a unique opportunity to reach out to and impact a greater segment of the market. The rush for digital services will peak around the last fortnight of October, 2012 and we do not want to disappoint the consumers and drive them towards the costlier option of DTH services," says, K Jayaraman of Hathway.
“However, once Digital Cable networks are fully operational and stable, DTH vendors are likely to see churn with users switching from DTH to Cable due to better reception (not affected by rain, etc) and new value added services being offered by the larger MSOs. In the next 18-24 months larger MSOs are likely to reduce the cost for TV viewing and shift the competitive landscape to bundled Internet, Video calling and other value added services to enhance ARPU. DTH vendors need to prepare for this shift,” opines, Mrinmoy Purkayastha, Associate Vice President, Marketing from AltenCalsoft Labs.
Anil Khera, CEO, Videocon D2H, quips that the decision of opting for either mode of service on a di gital platform lies totally with an individual. He can study the options and offers before zeroing on his choice. The consumer can visit any retail outlet for a DTH demo and know the various advantages of DTH, he can also check all the details on respective company websites. DTH players currently offer much more packages and channel options and value added services compared to cable. The offering from DTH players will have an advantage over a cable operator’s but at the end of the day it is an individual’s choice depending on his tastes and preferences.
The tug of war between Cable Operators and DTH has instigated others to come up with midway solutions. An upcoming company, JAINHITS claims that today there are 60, 000 LCOs who control Rs. 20K of revenues. Post digitization, they will loose control over their subscribers as the subscribers will be controlled by the party who owns the head-end which has CAS and SMS.
Ankur Jain, Managing Director, JAINHITS, says, "In order to keep control of their subscribers the operator needs to install Digital Head-end. TRAI has put in place interconnect, tariff and quality orders. In order to ensure compliance with these guidelines the head-end will cost the operator 3-5 cr. Since most of these operators cannot make such investments or handle annual recurring expense of Rs. 1 crore to comply with all new regulations many of these people will go out of business. JAINHITS is a solution to all their problems. Now they can go digital in Rs. 15 lakhs and keep their customer. Further 30% of India cannot be digitized without JAINHITS as it is just not valuable for cable companies to put any other kind of head-end in those areas due to density of population issues or ROI issues."
Challenges…
As per Venugopal Iyengar, CMO, Sun Direct, there has been a fair amount of progress with digitization. There is an estimated 8-9 million household that will be up for conversion of digital television. The main issue is receiving the boxes.
Also according to some industry sources, digitization of cable TV would not be possible within this approaching time limit as well. The US completed the entire digitization in 2009. We are trying from 2002 and the struggle is still on.
Finally…
The government has planned to digitize the whole country through a phase-wise process by 2014. The bill mandates complete digitization in the four metros of Delhi, Kolkata, Mumbai and Chennai by October 31st, 2012, during its first phase followed by 38 cities having a population of over 1 million by 31st March 2013. The entire urban cities will be digitized by 30th Sept 2014 and then the rest of the country by 31st December 2014. Government is keeping a close watch on the day to day conversions and is taking weekly reports from all the stakeholders. However, at a phase when the first lap is not reached within time should we be expecting that there is a chance to complete the race? Hope the other laps are covered soon to augur a win-win situation.
