Will DTH take off?

Anybody who wants to join the DTH bandwagon has to pay a hefty price to hop. But somehow, Indian viewers take a little longer in accepting the changes and hence the returns for this investment too will take more time than necessary. One requires to make an initial investment of Rs. 10 crores to get the license for 10 years, produce a bank guarantee of Rs. 40 crores and has to share 10 per cent of the revenue with the government on annual basis

In India, early ’90s revealed DTH technology, where as late as 90’s saw News Corp cancelling its ISKY B DTH project for India because there was no sign of this facility taking off in the country. It was also the gloom period for overall Asian DTH because of the recession that had made pay TV a less attractive business proportion. Very few takers were there to move in. Instead, broadcasters preferred to sit back and adopt the policy of wait and watch. Slowly, as the Asian markets started showing a little greenery, players like Indovision and Sky PerfecTV service took hold and today, they have a major market in far eastern countries. India took a little longer then other Asian countries to give a nod for DTH, but a month back, Information and Broadcasting Minister, Mrs. Sushma Swaraj gave the much-awaited consent for DTH facility.

Keeping in mind that DTH satellite operators are fighting hard to remain at the forefront of Asia’s pay-TV industry, Indian government too has allowed DTH to get a foothold in the country. If we take a close look at the Asian market for DTH, then Sky Perfect Communications has 23 percent of the total market share in Japan, Astro (MBNS) holds almost 85 percent of Malaysian DTH market share, United Broadcasting Corp in Thailand hold 23 percent market share while Pacific Digital Media in Taiwan is fighting for a better grip with just one percent market share of DTH. It proves that better marketing and a lucrative package can get the operator a bigger chunk of the viewer’s market pie.

However, in India, DTH rules are a little more difficult than what the broadcasters were anticipating. Anybody who wants to join the DTH bandwagon has to pay a hefty price to hop. But somehow, Indian viewers take a little longer in accepting the changes and hence the returns for this investment too will take more time than necessary. One requires to make an initial investment of Rs. 10 crores to get the license for 10 years, produce a bank guarantee of Rs. 40 crores and has to share 10 per cent of the revenue with the government on annual basis.

This scheme is not so impossible if parties holding the same interest could join hands and form a bouquet together. They could have worked out a feasible scheme, both for the viewers and themselves. However government decided to put a sectoral cap with the exception of print media. For satellite media, the sectoral cap is 20 per cent, which means that in terms of joint ventures, the permission is given only for 20 per cent stake to broadcasters and cable operators. In the case of a channel like Zee, where one owns both the businesses, then they can get a stake only in the name of one business. The government has also decided not to allow two satellite channel companies to join hands, simply to stall the monopoly of few big guns. Zee and Sterling were deciding to form one platform and had also invited Rupert Murdoch and others to join, but this directive by the I and B ministry aborted their proposed ideas. As for foreign direct investment, it can be only upto 20 per cent which is good.
However, the overall foreign investment can go upto as high as 49 per cent. This has put the brakes on the DTH race that had started in a hurry, after a long wait for clearance.

Now, to look at the viewer’s point of view. For a set top box, the viewer has to invest almost Rs. 15,000 in addition to the monthly subscription fees, which we all know will higher then what they are paying to their cable operators now. Big broadcasters can under-price the boxes, but how many and why? Government directives are clear to provide open boxes. This automatically puts the viewer in a winning position and he can easily switch loyalty by buying the smart card of another broadcaster if he feels so. We have learnt from experience that there is no channel loyalty. Another idea is to deliver DTH to the head ends on the top of apartment buildings but it will be restrictive to certain cities where people stay in high-rise multi- apartment buildings.

Now what do the big broadcasters do to get to the DTH platform? Whoever gets into this will later have an edge over others. But there isn’t place for more then two or three to share the spoils of DTH within the country. Take a look at other countries including USA. Eventually, not more then two have survived the race in that country. USA has two players DIRECTV and Echo Star. In Japan, DIRECTV had to die a premature death because there was no space for two broadcasters.

The scheme is good and lucrative for the entertainment industry and more so
for the viewers, but it has many issues left to be resolved. The only question is that by whom and when will this facility start off.

Pradeep Dixit
CEO, ETC Channel