India to become largest DTH market by 2012: MPA study

India’s DTH industry is likely to continue to grow quickly, research by Media Partners Asia (MPA) shows. Three Indian companies – Sun TV, Zee and STAR India – dominate the top 10 profit rankings for Asian pay-TV broadcasters.

India to become largest DTH market by 2012: MPA study

Latest research by Media Partners Asia (MPA) suggests that India will overtake USA as the largest global DTH market by 2012. The same research also suggested that India will become the top pay-TV advertising market in Asia by 2017.

According to MPA, India's fast growing, six-player direct-to-home satellite (DTH) sector will overtake the US next year as the largest in the world with an active subscriber base of close to 42 million versus a projected customer base of 35 million in the US, where two dominant and profitable groups compete in the market.

The local cable and satellite advertising market will surpass China by 2017 to lead the Asia Pacific region with $5.6 billion in net revenues. Three Indian companies – Sun TV, Zee and STAR India – dominate the top 10 profit rankings for Asian pay-TV broadcasters, but distribution platforms are yet to feature in the operator mix due to limited profitability.

At the same time, the research sounded a note of caution, pointing out that the margins of the India pay-TV industry value chain are amongst the lowest of any emerging market due to cost inflation, competitive pressures, regulation and a reliance on legacy analog cable networks. Margin pressure will remain in the medium term, but improve in the long-term as operating leverage improves.

Vivek Couto, Executive Director, MPA, remarked, “India remains Asia’s largest pay-TV market opportunity in which revenue, cost and capital expenditures are growing at an alarming rate due to various dynamics, including macro growth, competition and digitisation. Encouragingly, revenue growth is trending at optimum levels due to a strong economy, a buoyant advertising market, and the rapid growth of DTH. Yet, such is the extent of competition, cost and fragmentation that profit margins remain low, even for market leaders. We expect margins and value chain economics to improve in the long term, through digitisation of cable networks, rising subscriber scale, improved cost control and strong advertising growth. Pricing power for pay-TV services will still be modest however, as ARPU growth will remain under pressure due to competitive and regulatory dynamics.”

The decision of the Ministry of I&B to digitise cable networks across India by December 2014 will be a key driver, and so a lot of the projections are dependant on political will, but if this holds, then total pay TV subscribers are expected to reach 190 million by 2020. According to MPA, DTH will be the driver for HD growth in India.

Leading Asia Pacific Broadcasters

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