Tata Sky and Dish TV India (Dish TV) are two of the world’s biggest success stories when it comes to global satellite pay-TV over the last few years. We talk to two of the biggest influencers in Indian pay-TV and broadcasting: Harit Nagpal, CEO of Tata Sky, and Anil Dua, group CEO of Dish TV India, about whether the market remains in robust shape.
Harit Nagpal has been the CEO of Tata Sky for around eight years, and has been the main architect in the pay-TV operator’s stunning success. He believes the operator has been growing faster than anyone else while admitting it could have done better; though, compared to others, it has outperformed the market. Nagpal believes there is still much growth to be had for the operator.
“There is still room to grow. There are 50 million DTH households in India, there are 100 million cable TV households in India, there are 100 million homes without a TV in India, there are opportunities to convert cable to DTH, and there are opportunities to get these new households,” he says. “We will look to upsell existing customers to higher packages. We are leaders in the content distribution market by a country mile and have enough room to grow.”
Dua says he believes that India is still a very dynamic market with opportunities to grow subscribers and boosting the Average Revenue Per User (ARPU) as well. The company is an even stronger position now that it merged with long-time rival Videocon, which strengthens its market position still further.
“Our ARPUs have risen because of the value-added services that we are providing, as well as upgrades to HD channels. Forty-four percent of the subscribers we acquired were in HD in Q1 and that has taken our high definition base to 17 percent of our net base. So, this all has led to an increase in ARPU. We have plans in place to boost it further in the coming quarters,” he says.
Dua is confident the market opportunity is still strong for the likes of Dish TV. “In India, with rural macroeconomics undergoing a dramatic improvement, the satellite dish demand is set to increase as more households get first-time access to satellite TV and digitalization on the ground becomes a reality. In cities, the customers can continue to see content through the satellite dish along with online viewing via the Dish Hybrid boxes. We expect a robust growth in our business in India over the next 4-5 years,” he adds.
Competitive Landscape
Dish TV has big plans when it comes to Over the Top (OTT). Dua confirms that the operator will soon be launching its own OTT services and hybrid boxes through which its customers can watch online content on their TV to bring the best of both worlds to its customers.
“We are also planning to introduce a hybrid set top box through which you can watch online content on your TV through your set-top box, even if you don't have a smart TV. So, we are working toward utilizing modern technology to revolutionize the television viewing experience of our customers. We believe the coming years are going to be very exciting for the DTH industry as we gear up to cater to the requirement of ever-dynamic Indian consumer through a plethora of products and services. As we embrace new-age technology and provide better solutions to the customers, the DTH industry will continue to grow in India,” Dua says.
In terms of seeing OTT as a threat to the satellite industry, Dua is not concerned. “Television is an irreplaceable part of the Indian household as it serves four to six family members while promoting family leisure time. Content over apps are individually consumed and is therefore supplementing family TV viewing. Not only is DTH pricing considerably lower when you compare to it to OTT, but it also offers a wide variety of content in multiple languages thereby catering to consumers of all ages, geographies, gender, communities etc. Going forward, we would like to see non-TV households coming into the fold and also digitization picking up the pace. The viewership for linear channels and online video consumption will both coexist,” he adds.
Nagpal says the Indian pay-TV market is characterized by two growth strands for the company: the opportunity to take customers away from cable, as well as the ability to attract new subscribers. India, given its lack of terrestrial infrastructure is still a perfect market for satellite and Nagpal sees this continuing long into the future, given what people can pay for TV services.
“In the U.K., you probably have around 90 percent of homes with wired broadband services available, maybe 80 percent. In India, we don’t have 10 percent homes with wired broadband. For India, this is going to be a long way away. For IPTV to happen, people are going to need wired broadband coming into their homes. That is not going to happen for a lot of homes in a hurry. Satellite will be the predominant form of pay-TV for a long, long time in India,” Nagpal says. “Satellite bandwidth is much cheaper for people to afford in India. Even if wired broadband is made available to people, it is still relatively expensive. In the U.K., you pay 60-70 pounds a month for satellite pay-TV. In India, you pay 2-3 pounds a month for a satellite TV connection. Adding broadband is not affordable for the masses, with broadcast being a more affordable medium than broadband.”
Limited Appetite for OTT Services
While Netflix and Amazon are starting to make significant inroads in established TV markets around the world, Nagpal believes that in India, there is a limited appetite for such services. “There are a certain number of homes in the cities that have wired broadband and people that can afford to pay for it. That number is small but it is starting to grow. If it is 2 million today, it will grow to 4 million quite quickly. So, offering Netflix and Amazon Prime is relevant to these homes. In India, people won’t give up their subscription to pay-TV for Netflix or Amazon Prime. It will act as a supplement; it is a combination of the two that works,” he says.
Dua says streaming apps are filling in the need for individuals and on-the-move consumption and also believes this is supplementing television in the Indian household. “New platforms and apps are growing. Watching content through online streaming is an additional individual habit and not a substitute for family TV viewing. For instance, paid/premium OTT services remain in only 2-3 percent of the total consumer universe. Paid services are growing, but slowly because of high monthly subscription which is quite significant in comparison to cable and DTH rates which is almost half in some cases,” he says. “Content over apps is primarily individual consumption over mobile devices. With availability of high speed internet at lower costs, the average time and long format videos will increase and bring the big screen more and more in the picture. This is an opportunity for platforms like ours which embrace technology and leverage satellite and IP to give the best to the customers at the lowest cost.”
Satellite Capacity and 4K
Tata Sky is a big acquirer of satellite capacity, and Nagpal admits the operator is likely to need more in the near future. “We are currently using two satellites with 12 transponders each. We can always do with more capacity. We expect to sign more deals for capacity. We have already stated our capacity requirements to the Department of Space and we are waiting for their answers. As and when we hear from them, we can move forward,” he adds.
Dua says Dish TV has adequate satellite capacity at present for its dual platforms of Dish TV and d2H. Post-acquisition and merger with Videocon d2H, the entire capacity of ST-2 satellite has been added to the operational pool of Dish TV. Dish TV already has capacity on the SES-8 and GSAT-15 satellites. He adds that there are also strategic implementations underway which will serve regional parts of India much better, and to this end, satellite capacity will continue to be reassigned toward these new growth regions and markets.
While the demand for satellite capacity is undoubtedly on the increase, it seems as though 4K (like 3D-TV) is not living up to the early hype. In fact, Nagpal believes it is now unlikely to ever happen in India.
“Can you show me a broadcaster broadcasting in 4K and if you can I will get you a 4K box. How many 4K channels do you have? Show me a country outside of South Korea that has more than one, 24/7 4K channel. We are a carrier. I don’t think 4K will happen in the broadcast world, full stop. We started talking about it five years ago. So, if you are not able to have one country with more than one, full-time 4K channel then I don’t think it will happen. If it was to happen, it would have done so by now,” he says.
Dua, on the other hand, takes a different view regarding 4K and still believes it might happen. “The 4K ecosystem is expected to first take off for sports and movies once there is a critical mass of 4K/Ultra-HD TVs. We have had the capability for a 4K channel (in d2H brand) as well as the STBs which support 4K/Ultra-HD. When the market for 4K picks up, we will start providing the same. We have satellite capacity available for the same. However globally the 4K channels have been only a handful, and so we expect it to happen gradually here as well,” he adds.
Market Dynamics
The market in India is still a rich one for pay-TV even if the ARPUs are particularly low. Nagpal believes there could be growth here, but it is all relative.
“ARPUs will grow, but they will not grow the way we have seen in major western markets. So, we could go from $4 to $6 but it is also relative. We are seeing ARPU growth from existing subscribers, but the new subscribers are coming from lower income segments of the population. They are bringing down the ARPU, but every individual subscriber is growing their ARPU, but it is the new subscribers and their impact on the overall mix that is pushing the platform ARPU down while it is helping increase the revenue.”
There are also a number of players in the Indian pay-TV market which make it ferociously competitive. However, events in the last 12 months seem to indicate that the market is likely to see a period of stability over the next few years.
“There have been changes in the last 12 months in the Indian DTH market. There were six DTH operators. One has closed, and two have merged, so we are now down to four. So, the industry has seen consolidation in the last year,” Nagpal adds.
Dua says market dynamics in India are positive, and points to a number of factors for optimism. “According to a recent research report, TV penetration in India reached 64 percent with total number of TV viewing households being 197 million. Rural TV penetration crossed the 50 percent mark with 99 million TV households. Secondly, there has been a visible shift in households upgrading to HD. More and more customers are now opting for HD. Thirdly, the Indian regulator, TRAI’s new tariff regulations will pave the way for a two-way partnership between distributors and broadcasters. Finally, we have seen a number of tech innovations, such as voice-integrated tools, and hybrid set-top boxes will propel the industry toward a new era of customer-centric entertainment offerings. This will be mutually beneficial for customers as well as the companies,” he says.
Analyst View on Tata Sky
Aravind Venugopal, Vice President AT Media Partners Asia, is a big fan of Tata Sky and highlights their innovative approach to doing business. He believes it is a shining example of an operator growing its core business in difficult market conditions.
“Tata Sky are still managing to grow their subscriber base, and in fact account for a vast majority of net adds in Indian pay TV. They are still putting out new products. But, if you look at Indonesia which has 250 million people, and approximately 60 million households, satellite was the predominant way to distribute pay-TV content. But even with low broadband penetration, satellite has not grown there to the levels seen in India because of a number of factors like prevalence of free TV, price-based competition among pay TV operators, and the growth of broadband and double play bundles. In fact, satellite-only providers have lost subscribers in recent years” Venugopal says.
He says in India, on the other hand, you have a market where while broadband penetration is 13 to 14 percent, and that satellite pay-TV is still growing. He praises Tata Sky’s innovative approach to the market.
“Tata Sky is working with Think Analytics on a recommendations engine, for example. This is a great example of innovation. They are launching their own hybrid OTT box and have services like Netflix integrated into the box. There will be on-demand options also. There are very few pay TV operators in Indonesia that are putting out innovate products and services at this point, and that’s resulting in consumers shifting both their spend and eyeballs to alternative platforms. A lot of the operators are still lagging behind quite woefully,” he adds. VS