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The Meltdown: Competitive tactics help; slowdown fails to dampen DTH spirit

11-November-2008
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The Meltdown: Competitive tactics help; slowdown fails to dampen DTH spirit

The direct-to-home (DTH) rollout in India is happening on schedule, global economic meltdown or not. The increasing competition, more players entering the field, introduction of personal video recorder service, etc. are areas to watch out for.

In the backdrop of intensifying battle in the DTH space, industry players look to stay on top through numerous tie-ups. The latest such tie-up is Reliance ADAG’s Big TV, which has tied up with LG Electronics. As per this tie-up Big TV is now offering DTH connections with three months’ subscription for Rs 700 with LG TV sets.

Tata Sky, too, had tied up with Samsung, offering its DTH connection with every Samsung LCD and a 4-DVD (Malayalam) movie pack with every DVD player during the promotion period for Onam. DishTV, too, had a similar pact with LG.

exchange4media spoke with some industry players whether such partnerships with television manufacturing companies helped further boost the DTH space or whether they just remained festive offers? Also, how well is this sector coping with the economic slowdown?

On whether such tactics worked for the industry, Salil Kapoor, COO, DishTV, said, “What Big TV has done with LG is not new. We had also done the same with LG and Tata Sky with Samsung during Onam. Unfortunately, the results of these tie-ups were not so good.”

He explained, “The problem arises when the customer does not activate the set-top box as the entire subsidy given on that connection goes to waste and it becomes difficult to track such sales. Thus, such tie-ups are not very encouraging in the industry. In the long run, it is good for any company to sell it directly to the consumer and activate the box at the same time.”

Vikram Mehra, CMO, Tata Sky, said, “Partnerships with television manufacturers does work to some extent as it is also a kind of promotional activity that benefits the organisation.”

Effects of economic slowdown on DTH industry
It is but inevitable to gauge the effects of the global economic on the DTH industry as well. Along with almost every sector, the media industry, too, has not remained untouched by the meltdown.

Currently, there are 130 million TV households in the country, while there are only 7-8 million DTH households. So far, DTH players are optimistic about growth amid the slowdown.

DishTV’s Kapoor maintained, “The global slowdown has not impacted the DTH sector at all, in fact, it has benefited them. This is the only industry that will be growing faster even during the slowdown because it is not just about the sale of television sets, but the sale of DTH service to existing TV owners as well. During times of slowdown, one would want to spend less and cut down on travel expenses, which may also include going to theatres, thus making television viewing the cheapest form of entertainment. Therefore, we are foreseeing a growth in this sector rather than a slowdown.”

“Initially there might be some adjustments in the ad spends, but since we are in the growth industry, therefore, I don’t think it should impact that much, though there is a possibility,” he added.

On similar lines, Tata Sky’s Mehra said, “The DTH industry has not felt the pinch of the economic slowdown more or less because we are the cheapest form of pay television. In fact, the consumers are largely comfortable with the DTH service, particularly in these tough times. Therefore, I find no slowdown in this space. In fact, October has been extremely good for us.”

Sanjay Behl, Head - Brand and Marketing, Big TV, told exchange4media, “The DTH space is unlikely to feel any impact of the slowdown as this industry provides more value-based service. For this reason, I see no dramatic impact on this industry.”

A word of caution for the industry from the industry
DishTV’s Kapoor observed, “DTH players need to be cautious about retention in the industry, which is the biggest challenge. A lot of money is being spent on subsidy in order to retain the customers. You need to have some good strategies and solutions to retain them.”

While the DTH industry remains upbeat, media agencies seem to be divided on the impact of the slowdown on this industry. There are some who feel it is too early to comment on the impact.

Shubha George, Managing Director – India, Mediaedge:cia, noted, “Television is the key entertainment mode for middle class India. When other forms of entertainment get more expensive, home entertainment will fortify. With DTH providing a better quality home entertainment, and increased competition in the space keeping prices affordable, I will agree that this space will be less affected by the overall consumer caution. The challenge will be more in the area of how the DTH service providers are able to manage their economies of scale so that they can continue to be affordable to consumers.”

Harish Shriyan, Joint MD, OMD, said, “At this stage, it would be too early to say whether or not the economic slowdown has had any impact on the DTH space as people would want to watch good quality entertainment.”

Also read:

IRS 2008 R2: Understanding Indian DTH Market from IRS Window

Retrofit: Direct-to-Home, on the indirect route

Sun Direct launches DTH service in Delhi and NCR

Airtel Digital TV – coming to a screen near you on October 9

Reliance ADAG’s Big TV commences DTH service

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