Impact of Digitisation Policy on Dth Business

The television distribution scene in India has for many years seen the dominance of cable wallahs.
Digitization only started in a big way when DTH players pumped in huge sums (there was no
ordinance then) and succeeded in building a critical base of subscribers in the country. As a result
cable operators were seen as laggards. Sample this: there are about 40-45 million DTH homes out of
the total viewing population of more than 225 million households, so DTH has grown despite
competition from cable and is likely to increase the subscriber base substantially with the recently
passed ordinance by the government.

As for the cable operators and MSOs, they are left with no option but to invest in infrastructure. Den
Networks is investing Rs 1,000 crore and expects to get 2.5 million subscribers in the phase one.
Hathway will invest Rs 500 crore and they are also bullish about increasing the subscriber base.
Analysts feel that now is the perfect time for MSOs to increase their share in the business.

So, while it seems all good for the industry, the fact is that digitization is something that was always
talked about, and is now a work in progress as far as complete digitization is concerned. The
government has, in a recent development, pushed the sunset day for four metros from March 2012
to June 2012. The date for cities with a population more than 1 million is March 31, 2013.

For broadcasters, this is a big relief from the carriage fees, which in the past have resulted in loss of
revenues. The four metros is a big market with 20 million households; and digital homes eating into
cable and analogue… But, digitization, for broadcasters, also means that the consumer will now have
a choice of what channel to pay and watch. That in experts’ minds is a challenge many broadcasters
will have to face – to keep their viewers’ interest levels high and for the long run.

Subhash Chandra, Chairman, Zee opines, “Digitization will only help the television industry further
grow. The government’s decision on clearing the ordinance is a very positive move. It will give a
boost to the cable and satellite industry and help create a more sustainable business model for the
television industry.”

On the growth of DTH players in the county, he said, “DTH is leading the adoption of digital
technology. There are about 39 million gross DTH subscribers in the country. Now they have a great
opportunity to consolidate their businesses.”

However Dinyar Contractor, Editor-in-Chief of Satellite and Cable TV Magazine, has a contrary view to
the whole scene. He feels that there is still some time for digitization to happen pan-India (2014) as
the ordinance states. And that broadcaster are wary of going digital, or are wanting to delay the
process of digitization of TV in India, as the profits are not much, plus there is the risk of losing
eyeballs, as there will always be viewers who are not open to the idea of paying and viewing, as
against the concept of free-to-air channels.

Tarun Katial, CEO, Reliance Broadcast Network Limited, feels, “Digitization will bring-in fair reporting
of subscriber base, which will lead to standard pricing and subsequently eradication of local
monopoly. It will help companies increase subscription revenues and reduce down carriage fees for
broadcasters in a phased manner.

Ajay Chacko, President, A + E Networks | TV 18 JV, says that the move will bring in more
accountability in the business. And apart from additional subscription revenues, he believes that
digitization offers a whole new benchmark for broadcasters, and a platform which is more
measurable than cable and analog.
Neo Sports COO Prasana Krishnan welcomes the ordinance. “This is the much needed change in the
industry. What it will do to the industry? I think it will revolutionize the broadcast landscape in India.”

If the ordinance were not passed, Mr Katial is of the opinion that the current capacity constraints in
analog cable would have stifled the growth of new channels and introduction of technologically
advanced content. “The carriage costs paid by broadcasters which currently remain high in view of
the limited bandwidth of analog cable would decrease post digitization. This would allow
broadcasters to make higher investments in programming and marketing, thus improving the
customer experience,” he explains.

Another advantage the industry will see over the years in the fast adoption of HD television and 3D,
which will open new revenue streams. As far as television distribution industry is concerned, the
ordinance will lead to more transparency and greater accountability. It means opportunity for all
stakeholders – broadcasters, distribution platforms including cable companies, MSOs and DTH.
Photograph: Airtel Digital TV HD Recorder from airtel.in

It is estimated that India has 127 million C&S television homes, out of which around 32 million are
DTH, 7 million digital cable and the balance 88 million analogue cable homes. The first phase of
digitization of analog TV broadcast, which covers the four metro cities – Delhi, Mumbai, Kolkata and
Chennai – is mandated to be completed by June 2012, while the entire country is to be digitized by
December 31, 2014 when analogue signals will be finally switched off completely.

It is expected that the industry will need to invest around Rs75 billion in the process, and Phase I
alone will need around Rs11 billion. This is based on the assumption that the cost of digitization per
subscriber will be Rs1,500, out of which around Rs600 will be borne by the customer.

The following present some of the key aspects of digitization:

How does digital cable compare with DTH, the current digital
distribution leader?
Digital cable has the capacity to carry 1,000 Standard Definition (SD) channels and surpasses DTH,
which can only carry 250-300 SD channels at present due to limited transponder availability. In terms
of technology, digital cable is capable of having a “return path”, which is not possible in the case of
DTH. This limits the latter’s scope to provide value-added services and dual play. Digital cable is able
to provide a larger number of regional channels, and given the growth of the Indian media sector –
fueled largely by regional content – this could be a significant advantage for it.

However, in terms of customer connect, management capabilities and readiness, DTH players have a
definite advantage, since while they have had B2C from the beginning, most Indian MSOs still have
B2B. DTH players already have in place customer-centric systems and processes, including multi-
 lingual call centers and field engineer forces. They understand the implications of running a B2C
business, having already implemented subscriber management systems, customer relationship
management systems, and so on. Moreover, DTH players have already invested heavily on building
their brands, using ambassadors such as Saif Ali Khan, Aamir Khan, Shah Rukh Khan and Abhishek
Bacchan, thereby making DTH an aspirationally more desirable product.

Due to the factors mentioned above, it is expected that there will be a churn of subscribers from
cable operators to DTH, particularly in Phase I. While certain MSOs peg this churn at 15 per cent in
favour of DTH, DTH players are more optimistic and expect to gain up to 40 per cent of MSOs’
customers. This churn will, however, largely depend up the readiness of MSOs to meet digitization
deadlines and also take advantage of the marketing and sales efforts of MSO and DTH players.

Another factor that needs to be considered is Headend in the Sky (HITS). HITS operators may find it
advantageous to assimilate smaller LCOs by becoming their technology service providers and
providing them with content as well as SMS, CRM and billing services. However, this could pose
issues for MSOs, who are counting on aligning themselves with such LCOs.

Evolution of the distribution system

The distribution system comprises four key segments:
• DTH companies
• Large national multi-service operators (MSOs) – 5-6 players
• Small MSOs with a regional presence – around 25 players
• Small LCOs (local cable operators) – around 40,000 players

Currently, national MSOs have interests in several smaller MSOs and LCOs. This is either in the form
of investments or JV agreements.

Going forward, the distribution system is expected to evolve, based on the ability of small players to
scale up their operations. Today, the main role of an MSO is to buy content from broadcasters,
decrypt it and distribute it to LCOs for last-mile distribution to customers. All customer-facing
operations are performed by LCOs, which include billing, collection, repairs and maintenance.

Once digital addressable systems are set up, some of the smaller MSOs or more competent LCOs may
decide to provide all services to customers themselves. In this event, they may break away from their
parent MSOs, and assisted by funding and systems setups, be in a position to manage their customer
bases on their own, and thereby gain a large share of the total subscription revenue generated.

Therefore, we expect that broadcasters may not only be dealing with the big 5 MSOs, but the big 50
MSOs as well in a short time, which would be a definite advantage for them.
The depth of relationships of MSOs with their JV partners and the LCO community will be critical for
a successful national roll-out. It will determine which and how many LCOs team up with each MSO,
as well as the share of revenue an MSO can expect to receive from LCOs.

The entry of pure-play global cable operators such as Liberty and Comcast could result in
consolidation of the industry. The proposed change in FDI limits for all cable distribution to 74 per
cent, and the sheer size of the Indian TV market, is sure to interest such global players. PE players
have shown a significant interest as well, but appear to have taken a watch-and-wait approach to
determine how phase I of the digitization process plays out before deciding on whom and how much
they will fund.

How will ARPUs move?

Given the past as a benchmark, one likely scenario is that the base pack of free to air (FTA) channels
is priced at around Rs100 plus taxes. Earlier indications from TRAI indicated a rate of around Rs83
plus taxes, but given that several channels are expected to opt for FTA in the digital arena, this will
probably increase. The cost of this base pack is, therefore, expected to increase at an inflationary
rate of around 8per cent every year.

High growth rates of 10-15per cent are likely to be seen in tier 1 and tier 2 packages, which will
comprise most of the popular pay channels, e.g., the GEC and sports channels, and be priced
between Rs150 and Rs250 plus taxes. Premium packages, priced at Rs300-500, and including
packages that have a large number of niche and HD channels, will probably grow at 15-20per cent
per annum.

Compared to the current ARPU of Rs140 per subscriber, we expect that within two years, the average
family cost per TV set will increase to Rs250, inclusive of taxes. The important factor to note is that
households with two or more TV sets (according to estimates as high as 20per cent or more in the
four metros) are likely to opt for addressable digital systems, and thereby, increase the size of the
industry significantly.

Application of a price cap, either at per channel level or a package level, could prove detrimental to
the roll-out of digitization. The equilibrium brought about by market forces would ensure optimal
price points from a customer perspective.

The tax impact could be significant as well. The so far largely untaxed 88 million analog subscribers
will now be subject to taxation, and this is likely to result in an increased cost of Rs25-45 per
subscriber per month. In all probability, this cost (around Rs4,000 crore a year) will be transferred to
customers by the industry, and therefore, ability to increase ARPUs may be impacted in the short
term. Therefore, the efficiency of the value chain will be critical in determining the actual incidence
of taxes levied on LCOs, MSOs and broadcasters. The cost incurred to digitize networks also needs to
be considered in terms of a one-time write-off or by spreading its impact over several years.

How will ARPUs be shared?

Honestly, we don’t know. Today, many LCOs retain up to 85per cent of the revenues they collect
from their end customers due to under-declarations made by subscribers, and the balance is split
between MSOs and broadcasters in a ratio of 1:2.

Different MSOs are proposing different splits. Some envisage an equal split between the
broadcaster, MSO and LCOs. Some expect LCOs to retain 50 per cent of the collection, even two or
three years down the line (given that it would be difficult for them to give up their revenue share).
According to a recent news article, TRAI is considering a regulation whereby LCOs will retain 70 per
cent of the collections. Some sources indicated that MSOs may guarantee revenues for certain LCOs
at their current take-home levels for a year or two.

Eventually, once addressability sets in, the share of revenues is expected to be driven by services
provided to the customer. Broadcasters will get a share for the content they provide; MSOs for their
buying efficiency and the technology support they provide; LCOs a share that is proportionate to the
last- mile and customer-facing activities they provide. If we compare this to the telecom sector, 60-
70 per cent of the revenues are retained by telcom, as compared to 90 per cent by MSOs and LCOs.
This percentage needs to come down to global levels, where less than 50 per cent is the share of the
distributors. But this will take time.

How carriage fees are likely to move

 Every business has a cost of distribution, and media is no different. The cost of carriage will remain,
one way or the other, whether as a per subscriber technology, a provisioning cost, a fee to place a
channel in a package or as one to position a channel within a genre.

There is likely to be some reduction in carriage fees, since digitization will result in eradication of the
artificial scarcity caused by the analogue infrastructure. However, in the long term, carriage fees are
expected to continue in one form or the other .

In all probability, strong channels (and those that are included in much-demanded broadcaster
bouquets) will end up paying a reduced carriage fee, and weaker ones will pay a higher amount.

The role of TAM

TAM is expected to continue being the leading provider of viewership measurement services in India,
since no method or technology is currently planned in any large-scale STB implementation program
or any other system to find out which person in a household is watching which part of which
program. It may be possible to determine how many subscribers have subscribed to a channel by
aggregating data from leading MSOs, but that is not a measure of actual viewership.

Alternative business models

Broadcasters and distributors can now think about implementing channels by using innovative
methods to share risks and rewards. Some such methods could be:
• Broadcasters selling channels to distributors to exploit these in the form of ad sales and subscription
revenues
• Re-packaging existing channels for local audiences of MSOs and larger LCOs
• Creating channels based on dubbed content from popular channels, to be rolled out as regional
language channels across larger MSOs
• Broadcasters, etc., distributing specially packaged film or music channels on a revenue-sharing basis

The recent recommendation made by TRAI to limit the total advertising time on pay channels to 6
minutes per hour and FTA channels to 12 minutes per hour could also have a significant impact on
the number of channels that continue to “go pay,” should such recommendations become the law.
Such a rule would boost transparency in TV distribution, and given that advertisers would not be
willing to pay twice for the same audience reach, would also push up per-channel prices significantly.

Moreover, in addition to regular revenue streams, new ones would emerge for MSOs. For example,
Hathway has demonstrated that it can generate 10-15 per cent of its revenues through broadband,
and this could become a service other operators can also begin providing. Video on demand, gaming
and niche content could also be provided at local levels.

In summary, although the timeline for digitization is aggressive, the ordinance is a concrete step
toward enabling systematic growth in the industry and more equitable distribution of revenue across
the distribution value chain. All stakeholders are expected to benefit from the digitization process –
transparency generally ensures this. It is, therefore, in the best interest of the industry that all
stakeholders ensure that this initiative is implemented in as speedy a manner as possible, and make
sure that no political, regulatory or any other road-blocks interfere in the process.

Only 59 per cent of digitization has been achieved in the four metro as per the first ever independent
survey of the extent of digitization in the four metros was conducted by Television Street Maps for
MxMIndia. This number is in sharp variance to the claim made by the Ministry of Information and
Broadcasting that 87% of the four metro was digitized.
The figures for the four metros tell the story:

For Cable & DTH:

Mumbai: 86% (Govt: 99%)
Delhi: 45% (81%)
Kolkata: 53% (81%)
Chennai: 49% (85%)
The gap grows when you look at the achievement of digitization only in cable homes.

Mumbai: 62% (Govt: 99%)

Delhi: 34% (78%)
Kolkata: 35% (74%)
Chennai: 19% (60%)

On Tuesday, we made a clarion call to the mandarins of the Ministry of Information and Broadcasting
urging them to put an end of this charade of make-believe numbers of digitization.
MxMIndia strongly believes that digitization is THE ONLY way in which the broadcast business can
survive and thrive. For too long there has been much confusion amongst stakeholders. With half-
baked regulations and guidelines, certain sections of the ecosystem were getting away with unethical
practices.

India has been among the most happening markets in the global broadcast business. Most of the
world’s media superpowers are here. What was needed was some order in the business. Which
digitization was going to bring in this, as it happened internationally. Unfortunately, the government
has appeared to have missed  a trick in its attempt to execute this.

The Sunset Date for the switch from analogue to digital transmission in the four metros was first
fixed as June 30, 2012. Then it was shifted at the last-minute to October 31. When this writer
mentioned that even that date looks tough to achieve, there were many in the industry who said
that the momentum will build eventually.

Although MxMIndia had been running a series starting 100 days to the June 30 deadline, we didn’t
look at digitization in a big way until there 50 days left for November 1. But soon after interacting
with all stakeholders, we figured that none of the numbers on the extent of digitization achieved that
were being dished out could be believed.

It is then that we commissioned Television Street Maps (TSM), India’s largest and widest channel
distribution monitoring service covering over 1500 headends across  675+ cities/towns, to conduct
this study. TSM placement monitoring data is provided on a weekly basis to its clients who include
names such as Indiacast, One Alliance, Viacom18, MSM, Star, UTV, etc. Besides providing
distribution monitoring for analogue and digital for Class-1 towns, TSM has recently started providing
distribution monitoring for LC1 towns as well as Digital Track, a system to analyse Digital offerings of
MSOs and DTH companies.

Over the last two years, TSM has been tracking cable headends on a daily basis and reporting on a
weekly level in almost a cable census style – covering every headend for the geographies it
represents. While the data provided here are just the toplines we intend to provide detailed insights
to our client on DAS. (see box: Jaldi 5 interview with TSM Business Head Joydip Kapadia: Data based
on ground-level info + professional & expert assumptions ).

Methodology of Data Capture:

Over the last two years, TSM has been capturing TV channel distribution on a daily basis – the
expanse of which is now a staggering 1500 headends across 675+ towns. This daily activity has been
augmented since August 2012 for the four metros to capture the movement from analogue to digital
at a more granular level. This augmentation/ expansion has been done using extensive ground
intelligence and multiple verifications due to the criticality of the data. To ensure correctness of the
data, more frequent scans were done in the last few days. The current release is for the ground
situation as on October 23, 2012.

The ground info on Analogue versus Digital has been layered with metro universes data collated
from census and other third party sources to ultimately validate and put together the digital
penetration data for the 4 metros.

The sharp variance in the numbers as per the TSM survey and those put out by the government is
reason for worry. But this is precisely what led MxMIndia to commissioning this study. No one really
believes the numbers that are being put out by the government though MxMIndia, like other media,
has been publishing these.
Â
MxM View
MxMIndia recommends that the government act in a mature way on the issue. While a delay will
mean a loss of face, it’s better to schedule for a time when 100 percent digitization is truly achieved.
At the time of writing, we’ve heard of rumours that the government may well announce a delay by
two months. We would urge the government to not look at December 31 as the Sunset Date. There
is a fair amount of special programming on television planned on that day and the government
would be well advised to look at a date like January 31.

However, while doing so, it must get assurances from the governments in West Bengal and Tamil
Nadu on compliance. The government must also meet all stakeholders to ensure that everyone is on
the same page and is working towards the greater common good. It may be a good idea for it to
appoint a full-time Officer on Special Duty for digitization. Either someone from its ranks, or pulled
from the industry.

A note of caution: there is a general election coming up in 2014, possibly earlier. Elections have been
lost due to grave national issues and teary ones like onion prices. If there’s any mess-up with
digitization, the government can ill-afford a crisis where the masses won’t get to watch their
favourite shows on telly. Then, the cry will surely be: alag chahiye!

The impact of digitisation across the pay-TV value chain in India

11 May 2012 Content type: Article
Tags: Emerging Asia–Pacific, Pay TV, Media regulation, Article, Media, Regulation
The government-mandated digitalisation of cable TV in India will affect more than 88 million
households, and forever change the way revenue is split across the pay-TV value chain.
The Television Networks (Regulation) Amendment Bill of 2011 enshrines in law the Indian
government's goal of moving all analogue broadcasting to digital signals. The process will be
implemented in a series of phases, but the bill's 'sunset clause' stipulates the total switch-off of
analogue signals by the end of 2014. By that time, the 88 million households estimated to be
receiving analogue cable-TV services will have to be moved onto digital platforms.
The pay-TV value chain in India has three main elements (see Figure 1):
• broadcasters on one side
• distributors in the middle – consisting of a combination of multi-system operators (MSOs)
and local cable operators (LCOs) on the cable side, and direct-to-home (DTH) players on the
satellite side
• customers at the end of the value chain.
Figure 1: The pay-TV value chain in India [Source: Analysys Mason, 2012]
Most players will benefit from the digitisation process (with the sole exception of LCOs), though the
extent of benefit and the execution challenges faced will vary.
End customers will enjoy greater choice, and at not much greater prices
Customers will benefit in terms of:
• greater number of channels available
• improved picture quality
• choosing and paying only for those channels that they actually want (a more 'a-la-carte'
approach)
• Access to value-added products and services, such as digital video recorders (DVRs),
premium VoD and so on.
Finally, driven by demand dynamics and high competition, the price that the customer will pay for all
of these better, additional choices and features is not expected to be drastically higher than the
current price of analogue cable TV.
LCOs will suffer as a result the complete transparency
In the current scenario, LCOs are required to report the number of subscribers for which they provide
last-mile access to the MSOs, for revenue-sharing purposes. However, the lack of digital systems (and
hence lack of transparency) allows LCOs to significantly under-report subscriber numbers. Current
estimates are that LCOs declare only 20% of their actual subscriber volumes for revenue-sharing and
tax purposes. Digitisation will create complete transparency and end this discrepancy.
MSOs will reap the greatest benefits ... and bear most of the challenges
In terms of subscribers, MSOs will get a share of revenue from a significantly larger volume of
subscribers (as LCOs will be unable to under-report). In terms of ARPU, they will see an
upside because of:
• subscribers consuming and paying for value-add services, such as high-definition channels
and VoD
• The opportunity to bundle broadband to some digital customers.
The former is expected to increase ARPU rates from INR150 per month to about INR180 per
month. Broadband bundling could increase this to INR220.
The gain in subscription revenue will be partially offset by MSOs earning lower carriage revenue from
broadcasters. Additionally, as MSOs pay content costs to broadcasters (calculated as a proportion of
the subscription revenue that MSOs earn), this cost will grow in line with any increase in subscription
revenue.
Overall, MSOs will be in a much healthier financial position: revenue per -subscriber is expected to
increase fourfold (excluding the potential upside from broadband bundling), and operating margins
are also expected to show healthy improvement.
However, MSOs will also bear most of the execution challenge associated with meeting the
aggressive digitisation deadlines. The financial pressures associated with digitisation could
drive consolidation among the smaller MSOs, which have limited access to capital. Furthermore,
about 20% of analogue cable-TV subscribers are expected to churn to DTH (instead of migrating to
digital cable) to avoid paying additional costs for set-top boxes. If MSOs fail to execute the digitisation
process successfully, then the churn from analogue cable to DTH could be even higher.
DTH satellite players could benefit from cable TV churn
DTH satellite TV players are therefore a potential beneficiary of mandatory digitisation of cable TV:
the 20% of analogue cable-TV homes that are expected to churn from analogue cable represent a
significant potential increase in DTH subscriber numbers. Additionally, DTH players are hoping that
they can follow digital cable's lead, and increase their ARPU in line with the increased fee charged for
digital cable products.

Government policy has moved the unregulated cable television business from the grey area to one
where everything is in black and white-except, of course, the images. Come June 30, 2012 and
households will have to have their home entertainment streaming in via the set-top box. The local
cable operators can no longer just wire up your TV with a strand from the spider's web on the roof.
The programmes have to be mandatorily routed through a set-top box. Quality of both video and
audio on TV will improve with digitisation, but it still will not meet the standards set by hi-def
programming provided by channels on direct-to-home services.

So should you choose to ignore the cablewallah and opt instead for DTH, here is distilled information
on which company offers what. Read carefully and decide. And while you are at it, you might want to
learn that "true HD" is programming that is created in Full HD 1080P resolution (broadcast usually in
1080i). In contrast, many purported "HD" channels provide fare upscaled from standard definition
and, therefore, are poorer in both image and sound qualities than true HD.

SUN DIRECT
TOTAL CHANNELS PROVIDED: 178
COST OF BASIC PACK: Rs 560 for World Pack for 3 months, Rs 1,990 for 5 months in southern states.
TRUE HD CHANNELS: 9
DVR: Not offered yet
COST OF HD STB: Rs 6,000
MOBILE AND INTERNET READY: No
OTHERS: Sun Direct was among the first to offer HD programming. In addition to the true HD
channels, it also broadcasts some regional channels in HD.

VIDEOCON d2h
TOTAL CHANNELS PROVIDED: 366
COST OF BASIC PACK: Rs 160 + tax in North (Super Gold Pack), Rs 134 + tax in South (South Silver
Pack)
TRUE HD CHANNELS: 19
DVR: Yes, 160 GB, 200 hours of recording (estimated).
COST OF HD DVR: Rs 4,490
COST OF HD STB: RS 1,890
MOBILE AND INTERNET READY: No
OTHERS: Offering among the most economic options, Videocon d2h also has the most number of
true HD channels. It was also the first to come up with a DVR with 3D recording capability.

DISHTV
TOTAL CHANNELS PROVIDED: 280
COST OF BASIC PACK: Rs 385 (HD World Pack), Rs 560 (HD Royal Pack)
TRUE HD CHANNELS: 6
DVR: Yes
COST OF HD DVR: Rs 2,915
MOBILE AND INTERNET READY: Yes
OTHERS: Among the first to launch DTH services in India, it provides an enviable number of channels
and has a special service in which its channels can be accessed in a car. People, however, have
complained about its lackadaisical customer service.

TATASKY
TOTAL CHANNELS PROVIDED: 200+
COST OF BASIC PACK: Rs 180 (Dhamal Mixpack); Rs 155 in South (South Sports)
TRUE HD CHANNELS: 9
DVR: Yes, 500 GB capacity, 625 hours of recording (estimated).
COST OF HD DVR: Rs 5,940
COST OF HD STB: Rs 2,840
MOBILE AND INTERNET READY: Yes
OTHERS: Tatasky is reputed to have the best customer service among DTH companies. Of late,
however, perhaps due to the growth of its subscriber base, its customer service is not as efficient as
it used to be.

AIRTEL DIGITAL
CHANNELS PROVIDED: 236
COST OF BASIC PACK: Rs 158+ taxes in North (Value Sports), Rs 129 + taxes in South (South Super
Value)
TRUE HD CHANNELS: 14
DVR: Yes, 350 GB capacity, 550 hours of recording (estimated).
COST OF HD DVR: Rs 5,990
COST OF HD STB: Rs 2,890
MOBILE AND INTERNET READY: Yes
OTHERS: Good customer care service. Also offers in-car access.

RELIANCE DIGITAL
CHANNELS PROVIDED: 249
COST OF BASIC PACK: Rs 202 in North and South (Silver Value Pack)
TRUE HD CHANNELS: 8
DVR: Yes, 160 GB, 200 hours of recording (estimated).
COST OF HD DVR: Rs 4,990
COST OF HD STB: Rs 2,890
MOBILE AND INTERNET READY: No
OTHERS: In our experience, our calls to customer care were not attended to.

Over the last three years, the direct-to-home (DTH) satellite industry has come on strongly
worldwide. It has grown from a niche delivery mechanism into a mainstream business. The spread of
subscription-based DTH satellite TV promises to enhance choices for many households in developing
countries.

With the Government throwing open the DTH sector in the country,a handful of players have come
up with grandiose plans to enter the market. Given the stiff level of competition this premium
services will face from the existing multi-channel cable network, possible entrants need to clearly
grasp a few of the winning rules of the game.

HOW PLAYERS CAN MAKE MONEY

A DTH offer comprises six elements.

  Content: The movies,news channels,sporting events,and/or general entertainment features
that constitute an offer to consumers.
 Space: Ownership or access to sufficient transponders in the right orbital slot to broadcast an
offer to a specific area.

 Ground: The ability to distribute, install and service dishes and set-top boxes(otherwise
known as customer premises equipment, or CPE), combined with access to relevant
technology and manufacturing capabilities.

 Subscriber management: Ability to acquire and deactivate subscribers,bill and collect from
them, activate pay-per-view movies and perform customer service.

 Financing: The provision of credit to customer seeking to buy or lease CPE.

 Government relation: Ability to navigate government procedures and regulations to obtain

permits and so on.

So diverse are these requirements,that no existing player in any market will be able to fulfill all of
them on its own. This, the industry will be populated by consortia and it is unlikely that more than
one or two DTH consortia will be able to achieve break-even.

STRATEGIC AND SUCCESS FACTORS

Exploit Bottlenecks: In this market,content and transponder capacity are scarce and controlled by a
few players.

With content, access to unique local language material is critical. In a market like India,all a DTH
player may need to do is repackage existing channels that are not universally available. In sports,
some players have won an advantage through long-term rights purchases. Broadcasting rights to
cricket in India, for example,belongs to ESPN for the next five years. It also controls the right to
football for West Bengal(the most popular league) for ten years.

The second obvious bottleneck is in transponder capacity. A modest DTH offering is likely to require a
minimum of 10 to 15 transponders-almost a dedicated satellite. The number of satellite that can
broadcast to a particular region is limited by physics.

Move First: In the DTH industry, a credible and well managed first-mover service has a tremendous
advantage over others. In India, a first mover may effectively shut out competition.

Exploit Market Niche: In some markets, the segment of consumers who desire highly specific
content may be large enough to form the core subscribership of a DTH service. An example of this
could be again cricket in our country.

Any DTH consortium must decide how it will deal with a number of strategic choices that will
determine its success:

 Build an appropriate content offer: This is the single most crucial choice a DTH company will
make. In a remote town with no access to television, for example,even a DTH bouquet of just
two channels might seem attractive.Transponder costs are also a factor in an appropriate
content offer. It is the bouquet size that determine how many transponders are
needed,creating a tradeoff between the cost of transponders and the richness of the
offering.
  Leverage killer content: A subscription service could use its rights more effectively. It might
secure the exclusive right to broadcast a sporting event live, even if it is shown on free TV
later.

 Offer superior services: Cable companies are frequently criticized for installation delays,
billing errors and surly staff and the nature of cable plant makes signals prone to disruption.
Staff and customer service issues relating to CPE installation and maintenance may yield a
fine of differentiation above and beyond picture quality.

Where to Place bets

Another strategic choice consortia must make is which markets to make bets in. A few rules of the
thumb are:

 Number of TV households: the number of TV households and its rate of growth determines
how easy it will be to break even and how quickly, if at all, a developing market will become
attractive.
 TV advertising and its growth: Ad revenue are also available to a DTH service provider, so
the existence of a robust or growing ad market is important.

 Technical barriers to access TV: Even if DTH offers are likely to be thin on the ground,it is
possible for a company to own a piece of the chain that links a service to subscribers.Until
recently, Sky had a monopoly on the UK encryption standard, Videocrypt and could
effectively dictate the terms of DTH competition, This was because it had a large installed
base of set-top boxes using this standard.

 Ownership of key content: The availability of sports and film rights is a crucial determinant
of market attractiveness. In India, such rights are divided among many separate players. In
such a case, no rights owner is likely to be strong enough to play kingmaker.

 Position in a market: The most important asset is arguably an ability to play a unique role in
the DTH value chain. This advantage may reside in business that have little or no obvious
connection with DTH. A company that has pioneered a business offering credit for consumer
durables in a developing country, for instance, might be well placed to supply finance to
purchasers of CPE.

CONCLUSION

A few things are assured in the DTH industry even in the face of paradigm shifts. First, the value of
transponders is likely to fall as compression allows more and more content to go through the same
satellite, and as more satellite are launched. Second, as bandwidth explodes, so will demand for
content. Obscure sports and the like will become more valuable; conversely, much of the content
that is currently valuable will face downward pricing pressure. Niche content providers will emerge.

The industry is likely to be characterized first by a period of fragmentation and then by an increasing
concentration of global consortia as unprofitable participants fold. What is clearer than ever is that
satellite TV is here to stay and will play role in bringing television to mass around the world
Digital TV revolution and its Impact

What is Digital Television?

Digital TV broadcast videos and content in digital format through satellites. It comes with a Set Top
Box (STB), Antenna and Remote Control. Set Top Box is the device which is the device which
transmits the digital signals into content and makes it watchable on the television set. Antenna helps
in catching signals from the satellite and transfers those signals to the STB so that it can be viewed by
the users.

The Digital Revolution

Digital TV has been emerged as a major business sector as many countries have started opting for
100 percent digitization and this has also opened doors for many DTH (Direct To Home) operators to
enter the market. India is also one of such countries which are targeted to achieve 100 percent
digitization and Government has already taken its first step by mandate digitization in the four
metros, i.e. Delhi, Kolkata, Mumbai and Chennai. This new policy has helped many leading network
providers to capture more shares into the market by offering their DTH services.

Impact Of Digitization

The Digital Revolution will impact the subscribers, network providers as well as MSOs (Multiple
System Operator) in some or the other ways. On one hand it is beneficial but on the other hand it
might have some negative impact.

Benefits: Digitization will provide great benefits to the users, operators and MSOs.

DTH Services will provide better picture viewing experience as it displays content in digital format.
Further, HD Set Top Boxes also displays pictures in high definition and offers sharp images with
extreme clear pictures.

Digital television will allow users to view maximum number of channels i.e., approx 300 to 400 and
can select packages of their choice.
DTH subscribers can also choose the best plan according to their preference from various DTH plans.
So, they have wider options to choose and even they can make their own packs.

Digital TV recharge is a beneficial service started by the operators. In this, the users can recharge
their account for different time periods i.e. for a month, for six months and for a year. DTH recharge
online also helps users to avoid hassles of personally visiting the operators or local cable operators
store to recharge.

With DTH connection, users can also record and store their favorite programs, sports and cricket
matches and watch them whenever they want.

Disadvantages:

Cable TV digitization will affect the pockets of subscribers as they have to install an STB that will cost
approx 800 to 1500. The DTH plans and packages are also costly as the basic pack is starting at Rs.
100.which will display basic channels. For getting access to various main entertainment and movies
channels, subscribers have to choose a pack ranging between Rs. 100 to Rs. 500.