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Column: Adding value to DTH
The direct-to-home industry in India is growing fast but the numbers are not quite adding up to revenues for the players—not yet. Every player will tell you that India’s DTH market is small and that’s why the potential for growth is immense. According to entertainment industry estimates, India’s TV viewership is the second largest in the world, with the country adding 14 million new TVs a year. Of the 130 million TV households we already have, 97 million are cable & satellite (C&S) homes and growing at 25-30% annually.

The DTH players together boast a market share of 14-15 million subscribers, and the subscriber base is likely to swell to 35-40 million by 2012. But a number of issues, from unsustainable pricing models, low margins, high taxes, are making it a huge struggle for the players. The average return-per-user from DTH subscribers varies from Rs 150-200. If a package costs Rs 100, a DTH player has to pay 10% to the government, 40-60% to the broadcaster and has only 30% to tackle costs, which include transponder costs (Rs 80 lakh a year), infrastructure, advertising, marketing, distribution and acquiring new technology costs. And yet, a DTH player cannot raise prices too, not for the basic package at least, because the industry hasn’t yet got the volumes.

One way out is to allow DTH players to launch more value-added services—we have seen some of it happening, but Indian consumers are price conscious and revenues from other streams (pay-per-view, advertising) may not be enough to cut back losses, at this initial stage of growth. All this, at a time when cable TV—first off the block to get 100-odd channels in Indian homes—is cleaning up its act too, digitalising, beaming local content, improving quality. Though DTH has been growing on two parameters—quality of service and signal quality—and has seen subscribers flocking to the platform, fact is all the players are bleeding and are unlikely to break even soon. The Trai is looking into DTH players’ demands, particularly a more rational tax structure, so that the nascent industry can shape up.

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