[Satellite News – 3-28-08] Indian direct-to-home operator Dish TV expects to have about 5 million subscribers a year from now as it seeks to grab a foothold in a growing Indian direct-to-home (DTH) market, Dish CEO Arun Kapoor told Satellite News.
    India is set to be one of the most competitive markets for DTH services with numerous players looking for a piece of the pie. “The total TV households equals 115 million,” said Kapoor. “Total cable and satellite households equals 75 [million] to 80 million. In India, there is low TV penetration coupled with burgeoning TV sales of almost 14 million sets annually. We believe DTH is a far superior technology in terms of viewing and in terms of an interactive experience. We are seeing a number of new players enter the market, which will result in much higher levels of money spent on education and will drive conversion.”
    Dish currently adds 20,0000 to 25,000 gross subscribers a week and likely will reach 5 million subscribers by the end of its 2009 fiscal year (March 2009), said Kapoor. “In 2011, there is likely to be around 27 million DTH subscribers,” he said. “We expect to have 8 million subscribers by then, which represents a 30 percent market share. In 2015, there will be 61 million DTH subscribers in total, of which, we hope to have 16 million subscribers, which represents a 26 percent market share.”
    While India represents a huge growth opportunity for satellite, there are many obstacles, according to the Cable And Satellite Broadcasting Association of Asia. “Development of the DTH industry has been retarded by limits on platform operators’ ability to use international satellites,” the organization said in its report, “A Digital Vision: India in 2012.” “Restrictions also include prohibition of local advertising on foreign news channels and a mandate that sports rights of a broad range of events be shared with the public broadcaster (which places its unencrypted signals on an Asia-wide satellite platform, damaging markets across the continent.)”
    Kapoor also shares these concerns. “Content exclusivity is not allowed, but the days are not far off when this will become a reality and we would be able to beam channels of our choice based on the public perception, their likes and dislikes and the pricing will also be driven according to quality of content and won’t be a plain vanilla offering,” he said. “There are two other things also holding back this industry. Firstly, you have high levels of taxation, such as licence fee, entertainment tax, service tax and [value-added tax] on hardware items sold to customers. Secondly, there have also been delays in implementation of conditional access systems across more cities.”
    These challenges have not scared off many challengers, with the strongest coming from Tata Sky, which gained 1 million subscribers in its first year of operation. However, Kapoor believes the operator has only had a mixed performance. “Tata Sky did well till March last year,” he said. “Thereafter they have slowed down. Overall, their performance is satisfactory, nothing remarkable. Dish TV is also adding a million subscribers each year. So the market has almost doubled, but Dish TV still retains almost 69 percent market share.”
    But these challengers, which also include Sun TV, Reliance and Bharti, “will help drive market expansion and introduction of best practices across the industry,” said Kapoor. “So this is a good thing. The DTH market is expected to reach 27 million households in 2011 and 61 million in 2015. [It] is big enough to sustain profitability, as well as a number of players. ARPU (average revenues per user) will increase despite competition. However, subscriber acquisition costs are likely to go up.”
    This will be important for any of the DTH companies that wish to survive, as current ARPU remain relatively low compared to other markets, said Kapoor. “India, due to low cable pricing, is an intrinsically low ARPU market — perhaps the lowest in the world. Our current average ARPU equals $3.50. Incremental ARPU equals $5.30. We expect average ARPU in 2008 to be $4.50. This is likely to grow at 12 percent per annum through a combination of organic price increases as we introduce more channels and through increased revenue through value added services like Interactive services, movies, and games.”