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‘At current tax structure, we will continue to bleed’
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In two years, Sun Direct boasts of a subscriber base of 4.53 million, of which 80% are in the south, only 20% in the north, making it the number 2 DTH player in the country after Zee’s Dish TV. But while the numbers are looking up, chief operating officer Tony D’Silva isn’t celebrating yet. For starters, he says the tax structure is skewed against the DTH player and points out that some rationalisation is required. D’Silva says the business is a big struggle and that the industry is continuously bleeding because of high costs and other factors like lack of differentiation in content. In a freewheeling chat with FE, D’Silva explains what ails the fast growing DTH industry and why most of the six players won’t break even in the next six years. Excerpts:

You must be quite happy with your numbers, reaching the No. 2 slot in two years?

Yes, especially if you take into account that a majority of our subscription hails from the south though we are a pan-Indian company. We launched in December 2007 and in two years we have been the fastest growing platform in Asia.

How did you manage to get that kind of reach in a short time?

When we launched the business we took pains to understand customer viewership patterns and realised that the mass population is regional-centric. We realised the volumes will come from the region. For example, the north Indian GECs (general entertainment channels) are hardly watched in the south. As a Chennai-based DTH player, we offered regional packages, one for each state in the south; and for other non-region channels we offered them a la carte to consumers. So, you pay only for what you watch. Then again, because of this regional thrust, we also could be economically priced and that helped us get the numbers. Our platform strategy is to be mass-based, we are thinking regional but going national, launching all over India last year.

But you also would want to get the top-end viewers, the ones with spending power?

We are going to launch a bundle of six-seven high definition channels to cater to the top-end customers. We are waiting for additional transponder capacity to launch this.

The DTH industry appears to be growing at a fast pace, are revenues keeping pace?

The industry is growing on two parameters: quality of service and signal quality. But there are a lot of issues hampering growth and making the process difficult. For example, the tax structure—we spend almost 45-50% of our revenues on taxes, some rationalisation is required. The industry is continuing to bleed. We hope that someone will see us bleeding and do something. We must start looking at DTH differently, we must look at it as a platform of digitalisation. The customer is the same, the distribution platform is different, so all entities offering entertainment like cable TV, DTH, digital cable etc must be treated on par, must operate on a level playing field. At the current taxation structure, no one will be able to break even in the next six years.

There are also issues regarding content…

Yes, to differentiate is a problem. We are looking at various options to increase our revenue per user. We hope to go in for value-added services like movie on demand, gaming and other international shows to increase revenues.

Do you really have the lowest churn among the DTH players?

Yes, it’s less than 3% while the industry average is 15-20%.

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