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Its first two million customers took 18 months to come on board. The next two million has taken eight months – something that Videocon d2h announced early this month. What’s more that the newest entrant in India’s highly competitive DTH market managed to add the highest number of 747,000 subscribers in the first quarter of FY 2010-11.

So it’s easy to understand why the d2H brass is in a celebratory mood. Videocon admits the scale of the initial exuberance has taken even the management by surprise. “We had very high expectations from this venture, but didn’t foresee we would grow soon in this highly competitive market,” says Anil Khera, CEO, Videocon d2H.

The DTH player is now the fifth largest in terms of subscriptions and fourth largest in terms of revenue with average revenue per user of Rs 210. The ARPU is a shade better than Tata Sky’s Rs 200 on a subscription base of seven million and much better than market leader Dish TV’s Rs 150 (11 million subscribers).

The ARPU numbers for d2H is indeed creditable, considering that India’s fledgling DTH market has set a scorching pace of growth in subscriber additions, and has as many as six players. This has resulted in hyper competition and low ARPU.

But the potential is enormous. DTH accounts for roughly 34 million of India’s 134 million TV homes at present, but according to projections made by Media Partners Asia, the Indian DTH market will overtake the US’s with both gross and net (paying customers) subscribers crossing the 42-million mark by 2012. “The combined strength of Dish TV, Tata Sky, Sun Direct, Reliance Big, Airtel Digital and Videocon D2H will overtake the US’s Direct TV and Dish Network, translating into a 20 percent lead over the American DTH market of 35 million users next year,” says the report.

That’s good news, but can the latest entrant continue its initial dream run? Saurabh Dhoot, director, Videocon D2H, thinks it would. “When we started off, we wanted customers to have wholesome entertainment experience at home. Quality and service are important, but innovation is the key,” he says.

But there are many who are not that convinced. The head of a rival DTH player says the initial hype is fine, but d2H simply does not have the gunpowder for the long haul and will remain a bit player. Others say when the initial buyer curiosity dies down, Videocon will face a tough time. “The more subscribers they acquire, the more difficulty it would face on ARPUs,” another competitor adds. It’s true to some extent as Reliance Big TV and Airtel Digital also started with a huge promise, but haven’t been able to live up to that hype.

In Videocon’s defence, it could be said that the initial figures of both Reliance as well as Airtel were nothing compared to its subscription and ARPU numbers.

So what made the difference? Dhoot says unlike its peers – Tata Sky focused more on urban markets and Dish TV eyed the rural markets for growth – Videocon wants to be a pan-India product across all income groups. “Our product needs to transcend from the highest income to the lowest income household. We have different packs and the packaging is also done differently,” he says.

The company has region-specific packages with various pricing points. For instance, in the southern part of the country, along with a set top box for Rs 1690 , customers get free subscription of southern channel packs for three to six months. The exact duration of the free subscription depends on the type of package chosen.

Dhoot explains for a customer living in cities, quality of content, and not pricing, is the main criteria. “The idea is to give consumers more than what he expects. This is the reason we have the highest number of high-definition channels on our platform and we were the first to offer 3D services,” he adds. Videocon has tied up with several production houses to provide content in 3D.

The company is also betting big on HD for increasing its subscriber base and has 15 HD channels – the highest number on any DTH platform.

The company also uses the latest technology, MPEG4 and DBS2, on its platform, which allows more channels on its bandwidth. The other player using the technology is Airtel Digital TV. Videocon has over 300 channels on its platform with the largest number of regional channels.

Khera says a major advantage for d2H is the massive retail network set up by its parent company for its consumer durables business. Through this, the company can push the DTH offering and/or bundle it up with television sets. For several of its televisions and DVD players, the company has provided DTH cards or in-built set top boxes, respectively. Also, unlike other DTH operators, the set top boxes are made in-house, making them more cost effective than competition. Presently, most players source their set top boxes from China or Korea and pay an additional 5-10 per cent import duty.

Analysts say this could be d2H’s trump card. The world’s first integrated entertainment device in the DTH market leverages the group’s strengths in manufacturing and offers a new value proposition that competition may find difficult to match.

Source: Business Standard

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