Competition may trigger price war in DTH market

Competition may trigger price war in DTH market

Author | exchange4media News Service | Saturday, May 21,2005 8:00 AM

Competition may trigger price war in DTH market

It will finally boil down to who offers the best deal at the cheapest rate. The war for subscribers is set to begin in the next one year, with at least four operators — Essel Group's Dish TV, Prasar Bharati's DD Direct, Tatas-Star Group's Space TV and Sun Direct — offering direct-to-home (DTH) services.

This is unlike the US where there are just two operators - EchoStar and DirecTV or the UK that is dominated by BskyB. "India is a large market with high media consumption. So even as content may be a differentiator, the real battle will be fought on pricing of the set-top-boxes (STBs) and monthly subscription fees," said Mr Sameer Manchanda, Joint Managing Director, Broadcast News Ltd.

This is evident from the fact that Prasar Bharati has managed to install about 28 lakh DTH boxes in over five months, while Dish TV has started offering innovative schemes. A consumer can get over 77 channels free for a year by acquiring a DTH box for Rs 3,990.

According to a research report by SSKI Securities, competition in the DTH market would lead to heavy subsidisation of STBs by the players, and thereby affordability of the medium.

"We believe this ruling will significantly alter distribution equations within the industry," it said. As the Telecom Regulatory Authority of India has clearly stated that channels must be provided to all platforms, pricing of STBs and channel bouquets would be the main differentiator.

Industry analysts said that so far, subsidisation of STBs has been very low. "The Star-Tata combine has an advantage over peers as it can draw on BSkyB's experience of marketing and heavily subsidising STBs. BSkyB had pumped in £2 billion in the venture before it broke even. Our understanding of global drivers for DTH services is an aggressive subscriber acquisition driven by STB subsidies, premium and differentiated content, as well as intelligent packaging and affordability," said Mr Nikhil Vora, Vice President- Research, SSKI Securities.

A senior official in Prasar Bharati said the growth of DTH could have an impact on the cable industry. "In the case of Doordarshan, most of the households that have acquired DTH STBs did not have cable connections."

However, several subscribers of Dish TV also have a cable connection. "This is really a transition phase and consumers can always make a choice between the two," said an Essel Group official.

The total DTH market size in India is estimated at Rs 200 crore in the first year reaching out to four million homes. Currently, there are about 40 million cable households, which will go up to 80-90 million in 10 years.

The DTH market is expected to be 15 per cent of this. DTH players are also expected to invest heavily in marketing and advertising their services.

Tags: e4m

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