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 22 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.
Let’s have a look at 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.
Today the market shares of various players are as follows
- DishTV : 30%
- Sun Direct: 25%
- Tata Sky: 22%
- BIG TV : 13%
- Airtel : 8%
- D2H : 2%
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 gross receipts @ 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.
At the same time in Indian market “One size fits all” strategy doesn’t work for long. So, the DTH players have to design packages suitable for rural consumer enable them to enjoy the digital content (For eg. Levi’s 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 by Mahesh Bendre.]