More crowding in the DTH skies | india | Hindustan Times
Today in New Delhi, India
Sep 25, 2017-Monday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

More crowding in the DTH skies

Reliance ADAG's direct-to-home (DTH) venture branded as 'Bluemagic', will be launching, reports Saurabh Turakhia.

india Updated: Feb 15, 2007 23:12 IST

The DTH space is about to become a little more crowded. Reliance ADAG's direct-to-home (DTH) venture branded as 'Bluemagic', will be launching some time after July this year and will be the third operator offering DTH television services. The company obtained a letter of intent (LoI) in September, last year. But can the broadcasting market sustain so many players?

"Bluemagic may begin operations by the third quarter of this year - sometime between July 2007 and September 2007," confirmed Sunil Khanna, President, Direct to Home of Reliance ADAG.

Khanna is optimistic about the DTH business: "We see a huge opportunity in the segment with the number of channels increasing, bandwidth conflict with CAS and the government taking initiatives for digitalization." He added that this is causing a significant structural change and addressability is becoming a norm. 

Khanna refused to divulge other details saying: "it was too early". He however said that Bluemagic would strive to become a remain a major player in the industry.

Besides Dish TV and Tata Sky, there will be an additional 3 players - Reliance's Bluemagic, Bharti Airtel's and Sun DTH - over the next 18 months.

Then there is Doordarshan's free DTH service DD-Direct that has enrolled over 2.5 million subscribers through an aggressive rural strategy. Will all these 6 players be able to sustain a viable business venture?

Dinyar Contractor, Editor and Executive Publisher, Satellite and Cable TV Magazine are not very bullish, "Worldwide, wherever cable TV has existed before introduction of DTH, the latter has had to struggle and in some cases, even experience bankruptcy." Contractor refers to examples in US and Germany where DTH players have gone bankrupt and again new players tried to establish some hold, but not quite successfully. UK is the only market where DTH has an edge over cable television.

Traditionally, most markets have been able to support not more than 2 DTH players. Even in the US, it is just two platforms - DirectTV and EchoStar.

Arun Kapoor, CEO of Dish TV said: Of the 71 million cable television households, less than 3 million have DTH. Those who are prepared to spend hundreds of crores for promotion and marketing will succeed. New satellites are getting launched this year, so capacities and transponders are not an issue anymore."

A senior TRAI official also saw tremendous potential for DTH in India. He feels that while the current players have effective pricing for the metros and urban areas, aggressive pricing will be needed to address the rural market. He also said that there are quite a few rural households that are reasonably well to do and do not have a television set or set top box. These are potential DTH subscribers, he said.

Contractor said he did not have any details about Bluemagic's offering, but said it was likely that, like in the telecom space, Reliance would pitch for the bulk market with low subscription rates.

However as far as pricing is concerned, the source mentioned that DTH services are not viable below Rs 500 per subscriber and hence Bluemagic may be expected to offer its services at Rs 500. Close to Rs 200 crores have gone into the DTH venture of Reliance.

Interestingly, Sun as well as Bharti Airtel have their DTH projects lined up. However, industry observers believe that while Sun may make its entry this year, Bharti Airtel will take at least another one and a half years.

As of now, India has 70 million cable television households of a total of 120 million television households. In addition to the 50 million non cable television households, quite a few economically sound rural households without terrestrial television or a set top box may add up as potential DTH customers. Dish TV and Tata Sky have already got close to 3.5 million subscribers between them. Sources say that Bluemagic was targeting 2 million subscribers of the balance share.

It is certainly going to be tough for the new DTH players. Contractor says that the only hope for survival for the new players is to adopt a niche strategy or target specific regions. Doing so will reduce the number of transponders, each of which may require close to Rs 5 crores annually. Typically, a transponder can manage 15 channels or so. So instead of having 200 channels, in order to get cost efficiency, it may make sense to show 30-40 specific channels.

If a DTH subscriber shifts to another operator, the earlier set top box stands useless. So, while those with deep pockets will replace the set top box free of charge in order to get more subscribers, the ones running on tighter budgets will have to address this issue differently, considering that investment in set top boxes by a consumer is close to Rs 3000.