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DTH market: Big names homing in

At seven million subscribers, the DTH market in India is still very small. But some of the biggest names are preparing for the big battles — and the bigger payoffs — ahead.

, ET Bureau|
Jan 07, 2009, 03.49 AM IST
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It���s the kind of skirmish that brings back memories of the heydays of the cola wars. Airtel Digital launches a teaser campaign on TV; virtually overnight Reliance BIG hijacks the creative concept and counters Airtel with a TV campaign of its own. Tata Sky lines up plans to announce its intention of offering its platform for ad sales; Dish TV quickly puts together a press conference and makes public its ad sales pitch. And in a throwback to the fierce telecom battles, everyone���s already started playing an aggressive price war ��� even though most players will say that direct-to-home (DTH) is a growing pie and there���s plenty of room for everyone.

The DTH market in India stands at roughly seven million subscribers, which is less than 10% of the 85 million C&S homes in the country. However , industry estimates predict DTH to touch 25 million subscribers by 2012, and that���s the number that every DTH brand has set its sights on. So apart from Tata Sky, Dish TV, Airtel Digital and Reliance BIG, southern heavyweight Sun TV has entered the fray with Direct, while Videocon is planning to enter the market in early 2009. The mad scramble for eyeballs has already resulted in some high decibel advertising and a promotional blitzkrieg. Prasoon Joshi, executive chairman, McCann Erickson India, the agency handling the Sun Direct account, acknowledges the competition in the DTH arena. ���It���s a cut throat business as it���s an emerging category and all players want top-of-mind recall,��� he says.

One way of ensuring top-of-mind is through the competitive pricing of packages. For instance, Sun Direct, the 80:20 JV between the Maran family and the Astro Group of Malaysia, has a campaign on air that clearly demonstrates the brand���s decision to go price first. Playing the price card is a good first-past-the-door tactic early in the game, especially in a category like DTH, where it���s always harder to get subscribers to switch between brands. Unlike in, say, mobile telephony , where subscribers are at liberty to shuffle between two or even three service operators by switching SIM cards, in DTH, the onus of having to change set-top boxes and get refunds works as a deterrent against brand promiscuity.

While pricing may be a good opening gambit, the key to long-term sustainability will be strong product and package differentiation. This becomes even more imperative because DTH as a business operates on long gestation periods and demands deep pockets. Ruling out the possibility of making money in the first year or two, Tony D���Silva , COO, Sun Direct DTH Services , says: ���In the long run DTH players will make money on the number of channels their customers subscribe to. Customers may start with a basic package, but they���ll always want more.��� There may be a kernel of truth in that, given the subscriber segmentation strategy that Tata Sky has adopted with the launch of Tata Sky+. ���The top end of the market was looking for the best functionality and service , and to tap that segment we launched Tata Sky+, ��� explains Vikram Kaushik, CEO, Tata Sky. ���The middle market was targeted through a greater array of choice and value-added services , while the bottom end was addressed with affordable pricing.���

The competition to accumulate subscribers and capture market share is intense. BIG TV, which launched last August, claims to have gained half a million customers within the first two months of launch. Says Sanjay Behl, group head ��� brand & marketing , Reliance Communications: ���We are targeting a 35% share among the players who are entering the market with us, and looking at the initial numbers, that looks possible.��� Airtel DTH, on the other hand, is focusing on geographical reach; in the first phase it has targeted 62 cities, which is set to go up to 257 towns within six months of launch. ���We expect to gain 20% market share of net new additions to the category in year one,��� says Atul Bindal, president, telemedia services, Bharti Airtel.

Distribution will be extremely critical for all players, particularly in the post-sales period. Many potential subscribers, particularly in rural areas , are wary of subscribing to DTH, given the poor post-sales record of some of the existing players ��� in the absence of a good after-sales network, subscribers in rural parts are known to use the services and goodwill of local cable operators to fix niggling problems with their DTH dishes and set-top boxes. ���It is easy to reach firsttime buyers through a network of 30,000 to 40,000 retailers, but when it comes to recharge coupons for DTH, it becomes difficult for consumers . BIG will look at being present at places where anybody can get us, be it the grocer or paanwala,��� says a senior official at BIG TV. In a bid to tap rural markets, BIG claims it will look for potential partnerships with echaupals , post offices and even fertiliser companies. Sun Direct is also looking at non-conventional channels for distribution, which includes retail outlets, rural self-help groups and people in homogenous businesses . Says D���Silva , ���We are creating a set of trained professionals in DTH hardware servicing to support our distribution , post-sales services, installation and activation teams. We promote Sun Direct in all heavy footfall areas, where we demonstrate the product and explain add-on packages.���

While round one of the DTH war is about aggregation of captive eyeballs (and that���s pivotal for round two), round two will have to be about aggregation of content. Or rather, unique content. For the success of one DTH brand over another will be determined by the speed with which it moves from being just a platform for TV content to being an easily-customisable , contentled medium. Already, the ���showcase��� strategies of players like Tata Sky and Dish TV ��� which, for instance, recently aired Oye Lucky! Lucky Oye! on a pay-to-view model with great success ��� points to how things will shape up in the future.
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