The Day I&B Ministry released their first ad promoting mandatory digitalisation of Cable TV industry, there was an ad of the same size of half page by a DTH operator trashing the cable STB as a 'Dabba”.
Another DTH company states in their full page ad in newspapers that 'cable will seize to exist 'from 01 July.
One DTH operator was not so blunt and told people 'Sirf Cable Nahi, Life Badlo'.
DTH operators didn't leave any stone unturned in wooing the Cable TV subscribers into their fold, be it their print media ads, TV ads, online promotions or other promotional activities.
When the deadline for digitalisation in the four metros was extended to 31 October 2012, DTH operators were all upset. They felt that it was unfair to extend the deadline.
Why were they reacting like this ? What has DTH service to do with digitalisation of CableTV. DTH is already a digital service.
The truth is that all DTH players were planning to cash in on cable's unpreparedness to meet the digitalisation deadline and so had stocked themselves well with STBs, installation staff, infrastructure, customer service initiative etc. It is surprising how they were so sure of Cable's failure to digitalise that they had invested millions to make hay while the sun shines for them and now when the deadline has been extended, they feel so insecure as if they will lose their business to digital cable once it gets completely transformed into a digital service.
With 47 million DTH connections covering 30% of the C&S market and growing at the rate of 18% or more, what is making DTH companies feel so threatened?
Let us see the background of DTH in India and its unprecedented growth to understand the mindset of the operators.
• DTH service was introduced by pay broadcasters like Zee, Star and Sun Group because they wanted to reach direct to subscribers keeping cable operators out of their reach. Their was no other way to sell pay channels were as pay channels being given in a single package in analog cable.
• First DTH license was given in 2003 but till 2006, DTH operators were fighting for content because the major content owners were other competing DTH operators.
• The real growth of DTH started after 2007 when content was amicably shared by existing players.
• India is not a pay TV market as majority of people can not afford costly entertainment. Cable became popular because operators charged subscribers according to their economic status.
• DTH could not penetrate in the urban areas where cable TV already had a strong hold. So it spread only in rural areas and cable dark regions.
• Firstly making people buy STB was an uphill task, secondly selling multiple packages of pay channels was extremely difficult. Operators offered schemes at heavy discounts to lure subscribers, thus getting into deep debts.
• Six DTH operators are too many for fair competition where the content with them is same. So they invested more in value added services, interactive content, DVRs HD and other sops for the subscribers.
• Where as TV channels have increased more than 800, transponders and technology does not permit more than 300 channels on DTH. More over HD channels consume more bandwidth.
• DTH operators can not fulfill the demand of their subscribers because most of them are broadcasters with many channels of their own. Hence they prefer to place their own channels in the popular packages rather them provide channels of their competitors.
• All DTH operators face a high churn rate where subscribers stick with them only till the initial ‘Subscription Free’ period of two three months to. Then they either go back to cable or change their operator.
• Since number of channels on DTH is limited, they avoid carrying all the regional channels.
• Broadcasters force lumpsum deals with the operators rather than make them pay for what their subscribers are watching.
• Since DTH is competing with analog cable which is much cheaper, their ARPUs remain very low. ARPUs vary from `150/- `180/- per month. This indicates that majority of people opt only for the basic package. Where as if a subscriber wants all the popular channels that he gets on cable, he would be paying between `400/- `500/- every month.
• There is no exclusive content or local content on DTH which a subscriber can enjoy on any cable network. DTH operators elsewhere in the world thrive on adult content or sports but in India adult content is not yet allowed. Sports channels are priced too high, beyond the reach of majority of Indians.
• Lastly many people become disappointed with DTH service during rains and atmospheric disturbances that disrupt the service.
Due to the above reasons, DTH service has not been able to well in the country inspite of a high growth. Its growth has been made at the cost of CableTV which was ignored by the government since the beginning. The biggest setback to CableTV was not allowing it to go addressable in 2003. This made people move to DTH which was digital and with quality. Let us be truthful that it is a costly service because satellite space is required and servicing a country like India is a big challenge.
This is the reason that none of the DTH players have broken even till date. It is another matter that they all are companies with deep pockets and hence are able to survive till date. But with all the problems listed above, they feel highly insecure and they know that their growth has reached its zenith and will keep going down contrary to what some research agencies predict.
Only way DTH can continue its growth as in the past is when majority of Indians change their mindset and prefer to have a quality product and be ready to pay more for that.
This will not happen immediately unless drastic changes are brought in the industry and public awareness increases. This, to my mind is the main reason why broadcaster lobby along with DTH lobby are pressurising the government to implement digitalisation at the earliest.
We fail to realise that only market forces can bring such changes and governments can do nothing other than facilitate such changes through education and economic reforms. No amount of force can make a poor family go in for a high quality digital picture with home theatre sound.
Government has realised this and so decided to delay the first phase. I am afraid, there many be more delays in future because even in highly developed nations too, it has taken ten to twelve years to achieve a reasonable level of digitalisation.
Once cable becomes digital, people will start noticing the difference and their perceptions will change.
The biggest mistake that the DTH operators have done is marketing their services for the masses whereas, inherently it is a costly service and popular amongst the high economic section of the society worldwide.
India has about 22% penetration of flat panel TVs that can provide the best picture and sound. This should be the main target of the DTH operators. They have everything for a rich person; quality, convenience, variety, technology. Innovations like DDB (Digital Direct Broadcasting), DVRs, HD, 3D etc. DTH has a great potential among the top 25% of Indian society. So DTH should stop waiting for cable TV's doom and focus on selling an elite service at a high price to the top segment of subscribers instead of competing with poor man’s CableTV service.
I am sure DTH operators will feel much secured and continue their growth relentlessly.