India is all poised to become the largest pay-TV market in Asia by 2012, a study by the research firm Frost & Sullivan has found. “We expect India’s revenue to grow from $3.5 billion in 2005 to $10.31 billion in 2012, making India the largest pay-TV market in Asia,” the study said.
“India’s CAGR stands at 16.7 per cent over the period. Satellite DTH is expected to drive ARPU and subscriber growth. Cable TV is a mature market segment and will witness minor losses in terms of customers as satellite services become more affordable. Revenue growth will peak late 2007 to 2008 when Tata Sky is fully deployed and TRAI enforces content sharing. Interestingly, India is one of the few markets where advertising revenues take up a larger share than subscription revenues,” the study said.
However, the research found that India will lag behind other markets as far as DTH revenue is concerned, despite a 27.97 per cent CAGR. Revenues generated by satellite DTH in 2005 was $238 million and is expected to grow to $1.34 billion by 2012.
“Although satellite subscription prices are competitive with the cable operators, the initial equipment cost has proved to be a stumbling block. CPE (customer-premise equipment) packages priced at about $125 have limited potential customers to those in areas not covered by cable or willing to pay the substantial cost of equipment for higher quality and selection of content,” said James Lye Yan Xian, Research Analyst, ICT Practice Frost & Sullivan Asia Pacific.
While CPE and installation prices of satellite DTH are expected to come down, average subscription is expected to increase as more content and pay-per-view is introduced. “However, the range of subscription options will widen as the satellite service providers aim to capture more of mass market with basic packages while relying on the top-end segment to provide high margins,” Xian said.
The research found that Japan would continue to be the largest DTH market in the region due to its sophisticated infrastructure, high income per capita and deep penetration. India and China are likely to have the largest potential markets in the future. “At present, India appears more attractive to investors due to a liberalising market and huge local media scene. China’s pay-TV future still lies in the hand of the government, and its willingness to relax regulations on content accessible to its citizens,” the study stated.
Elaborating the opportunities in DTH, the research said, “The future for satellite DTH providers is convergence. Introducing triple-pay services will create new revenue streams for the service providers, as well as further strengthen their hold on households. High cost of terminals is still a barrier in many lower-income markets, but with increasing production and universal service obligation subsidies, costs to the consumer are dropping to a level where uptake will rise substantially.”
The study forecast that in the Asia Pacific region pay-TV revenues are expected to grow from $19.2 billion in 2005 to $45.2 billion by 2012 representing a CAGR of 12.98 per cent. Satellite DTH revenues will grow from $9.24 billion in 2005 to $20.91 billion in 2012 at a CAGR of 12.38 per cent. Satellite DTH market share is expected to grow in regions such as India where the technology will do well due to poor infrastructure build out. Meanwhile, mature markets like Japan will eventually move to IPTV and fibre technologies.
Regarding the pricing trends in the region, the study said, “In markets such as India and China, satellite DTH ARPU remains low at $5 and $10, respectively. This low pricing has promoted a large upsurge of pay-TV subscribers. However, for satellite DTH, pricing of VSAT equipment is still a hurdle to its entry in the market. It is imperative for providers to achieve such scale that terminals be brought down to an affordable price. Hence, service providers will have to offer lease options or subsidies. Nevertheless, DishTV in India has attracted over two million customers despite the high cost of terminals. This number, however, does pale in face of the over 70 million cable subscribers in India.