Sector : Media and Entertainment Industry: Direct-To-Home (DTH)

BY SAHIL NARULA SHRUTI BUDHIRAJA

History Of The Industry

In 1959, launch of doordarshan Indian national

television In 1991, influx of foreign channels and domestic channels In 1992, cable TV industry started In 1993, govt. passed the cable TV networks regulation act In 2003, first private DTH license was awarded to dish TV In 2010, no of players in DTH industry increased to 7

History
Too many cable operators in the country and the

channels had a difficult time in getting its returns as the existing system was a non-addressable the United Front Government had issued a ban on use of ku band transmission the ban got lifted finally in 2001 and TRAI issued the guidelines for operating DTH. Countrys first private DTH license was awarded to Dish TV in 2003 which started operations in 2004

About DTH
DTH stands for direct to home television.

A wireless digital audio/video service is delivered

through satellite Idea was first proposed in 1996 Govt. imposed a ban in 1997 Passed approval in 2000 but the signals can be transmitted through Indian satellite only.

The DTH category is expected to grow by 680% or so in the next 7 or 8 years!

40
36.2 37.6

35
30.4

33.8

30
Subscribers (Millions)

26.1

25
20.9

20 15 10 5 0
0.06 2003 0.18 2004 0.75 2005 4.8 1.925 9.8 15

Source : MPA report , March 2007 Year

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Introduction
Current Market Size is estimated at Rs. 610 billion Expected to reach Rs. 1,05,200-crore by 2013, at a CAGR of 19% India would overtake Japan as Asia's largest DTH by next year and
be the Asia's leading cable market by 2010 and the most profitable pay-tv market by 2015.

Maximum growth expected in Television and Film segments More than 300 national and regional TV channels Close to 1000 films made every year Liberal FDI policies across all the segments of the industry Government focusing on regulations to give further impetus to the
industry.

DTH industry overview

India has total watching population close to 133

million Out of which, 68%(90 million) has access to cable or satellite Market share of DTH is 11 in comparison to terrestrial and cable High growth potential in DTH market

Current players
DD direct+ of prasar bharti, comprising of 33 FTA

channels and 12 all India radio channels. Dish TV of zee group Tata sky- the join venture between Tata and Rupert Murdoch's sky TV.
Sun direct of sun network Reliance blue magic from reliance ADAG.

Bharti telemedia.
Videocon industries

Company logos Launch date Subscribers may10 (million) Ownership Channel tieups Services Investment ($) million

Dish TV

Tata sky

Sun TV

Reliance big TV

Airtel

Videocon

October 03 7.3

August 06 4.8

January 08 4.3

August 08 2.2

October 08 3.0

april09 5.15

Public 234 16 400

Private 165 17 600

Public 219 1 600

Division of r.com 198 37 400

Division of bharti 189 20 400

Division of Videocon 183 4 100

Market share
2007 lesser competition
5% 11% 19% 28% 18% 70% disht tv tata sky 8% 16% disht tv

2010 increased competition

25%

tata sky
sun direct big tv airtel videocon

sun direct

Porters five competitive force

Threat of new entrance HIGH 7 DTH players

Bargaining power of suppliers VERY HIGH

Inter firm rivalry VERY HIGH Price wars Non price wars

Bargaining power of buyers HIGH

Threat of substitutes VERY HIGH

 Coutomer will continue to have a high bargaining

power until DTH platforms try to diffentiate them as superior players with better content and quality Threat of new entrants-

 historical and current performance and list of major

players for the sector. economic, technological and legal environments. In case you feel that other environments are more detrimental to your sector, you are free to select such environments 2In addition- please use Porters 5 forces model to analyse the completion analysis for the sector. 3Suggested Time distribution could be environment analysis- 3.5 minutes and competition analysis 1.5 minutes. This time allocation is indicative only and you are free to balance it.

Threat of substitutes
Local Cable Operators, Inter-Net which is bringing many facilities like live TV channels, along with the net browsing, Theaters, radio stations, I pods.

Terrestrial Television Cable TV operators Conditional access system IPTV Online TV

Threat of substitutes
DTH gives stiff competition from the terrestrial,

cable & IPTV. As per the industry estimates, there are 130 million TV homes of which 71 million are served by cable and around 6 million served by DTH with the remaining taken by terrestrial transmission. As IPTV is a new entrant there is not much data on its subscriber base.

Bargaining power of suppliers

DTH industry relies on three major suppliers.

Customer premise equipment (CPE) Comparing of the satellite Dish, Set Top Box with the necessary Access Card, the Ku band transponders are obtaining satellites and content. With India set to overtake Japan as Asias largest DTH by next year, the bargaining power of India DTH operators with CPE suppliers have been steadily increasing.

Bargaining power of buyers

With enough operations to choose both from the

point of alternate mediums like cable, IPTV and terrestrial broadcast and from the point of increasing DTH operators, the consumer is at his will to decide. Customers will continue to have a high bargaining power until DTH platforms try to differentiate them as superior players with better content and clarity.

Rivalry among existing firms

With 3 operational players and 4 players in the queue, inter firm

rivalry is quite high. The competition from state owned DD-Direct to private players in negligible from the content point of view as the number of channels offered by DD-Direct is very limited. However, DD-Direct does not change any monthly subscription charges. Between Dish TV is Tata Sky there is an intense rivalry exhibited by price war and discount schemes offered to new connections. Being the first mover, dish TV had price advantage in both the STB offers superiors DVD quality Video to its advanced STB. While Dish TV is planning to spend Rs. 850crs over the next 3 years, the rival TataSky is willing to spend Rr.2000crs over the medium term. The companies have also set ambitious targets with Dish TV aiming to reach 5 million subscribers in the next 18 to 20 months while Tata sky aiming to reach 8million subscribers in the next 18 to 20 months while Tata sky aiming for 8 million subscribers by 2012.

Threat of new entrants

With already 7 players space in the DTH space,

threat of new entrants is low. There is already enough competition which will discourage new firms to enter this business. While getting a licensee is relatively easy, the barriers to entry are high when it comes to pricing of CPE and getting the required transponder. There is a definite, first mover advantage.

Effects of increase in DTH market

Competition level among the players increasing for 2005 to 2010. Each player is trying to overtake the other in terms of

Market share Price Service quality Content quality Quantity Technology

Increased completion on non priced parameters like

installation, customer care and VAS

Challenges faced by the industry

Policy and regulation

Non availability of transponders

Weak financials Quality of service issues

Economic environment

Social environment

Legal

Swot analysis

STRENGHT Growing number of player and competitive advantage. Supply creates its own demand. Brand name Service and flexibility. WEAKNESS Skilled labor Satellite technology Signals Viewer migration. Uncertainty in viewer ship.

 OPPORTUNITY

Technology Distribution Innovation Value adding

THREAT Economic downturn. Climate Radio Cinema halls Broad casting of channels New entrants