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MUMBAI:India’s direct-to-home (DTH) satellite pay-
TV sector remains a growth oriented industry
with significant potential for strategic and financial
investors, according to a new report published by Media Partners Asia (MPA).The report, entitled ‘India DTH Market Overview–
Key Dynamics & Future Outlook’, forecasts that
India’s DTH pay-TV sector will generate
revenues of $ 4.04 billion by 2018, a CAGR of
19 per cent from $ 1.71 billion in 2013 and
by 2023 the sector will generate revenues of $
5.6 billion. In an earlier report, MPA had said
that the DTH active subscriber base will
increase from 37 million in 2013 to 60 million
by 2018 and 70 million by 2023. This implies a
39 per cent share of the overall market by
2023 and a 56 per cent share of the digital
pay-TV market.
DTH operators have been working together to
improve the overall economics for the
business by reducing the amount of free
viewing offered to new subscribers and
recalculating the incentives dealers receive for
renewing subscriptions.
ARPU growth, according to the report, will be
partially limited as DTH expands nationally,
with low-income homes coming into the mix,
although MPA sees a greater contribution from
high- ARPU HD subscribers. According to the
report, HD represented 6.9 per cent of the
total active DTH base in 2013; which MPA
expects to grow to 16.1 per cent by 2018 and
to 20.1 per cent by 2023. MPA sees total DTH
ARPUs expanding from $ 4.0 per month in
2013 to $ 5.7 by 2018.
Digital TV (DTV) has started to gain widespread
acceptance across consumer households in
India, driven largely by the growth of DTH
satellite pay-TV platforms. Data from MPA
indicates that DTV penetration, including digital
cable and digital free and pay DTH platforms,
has grown from less than 1 per cent in 2006
to 46 per cent as of 31 December 2013.
The six DTH pay-TV operators in the market
have in aggregate contributed to 23 per cent
penetration as of 31 December 2013,
providing a level of market leadership due to
superior capitalisation and a stronger
consumer focus built around product strength
and innovation, including tiering, HDTV and
DVR services.
“DTH operators have been working together to
improve the overall economics for the
business by reducing the amount of free
viewing offered to new subscribers and
recalculating the incentives dealers receive for
renewing subscriptions. ARPU growth will be
partially limited as DTH expands nationally,
with low-income homes coming into the mix,
although we also see a greater contribution
from high-ARPU HD subs. HD represented 6.9
per cent of the total active DTH base in 2013;
we expect this to grow to 16.1 per cent by
2018, and to 20.1 per cent by 2023,” said
MPA India VP Mihir Shah.
Key market trend highlights of the report:
• Rational focus: Operators are increasingly
focused on growing profits as opposed to
solely increasing volume, often at the expense
of profitability. As a result, operators have
increased their basic prices, while at the same
time reducing the trade margin arbitrage by Rs
200-250 to minimise rotational churn.
Although subscriber additions post October
2011 have witnessed some slowdown.
According to MPA both the quality of
subscribers and ARPUs will continue to
improve going forward.
• DTV mandate: MPA believes that the
implementation of mandatory cable digitisation
by the government will be an important
catalyst for growth in the DTH sector. DTH
operators are relatively well positioned due to
the strength of their B2C businesses (as
opposed to B2B approaches amongst cable
MSOs) and their experience and investment in
tiering, subscriber management and billing and
sales and marketing. In addition, as part of its
reforms, the government has now permitted
international companies to own up to 74 per
cent of cable and DTH platforms.
• HD penetration : As per MPA’s report, HD
penetration will grow significantly in the
future, rising from less than 7 per cent of
active DTH subscribers currently to over 20
per cent by 2020. MPA’s estimates are based
on benchmarks in the US, UK, Latin America
and Southeast Asia. In the UK, incumbent DTH
operator BSkyB currently has more than 50
per cent of its subscriber base adopting HD.
Malaysia’s Astro has also demonstrated
laudable rates with 49 per cent penetration at
present on its DTH platform. Increase in HD
channel offering is critical for growth in HD
penetration. However for some of the mature
global operators, MPA sees HD penetration as
a percentage of total subscribers capping out
at 60-65 per cent.
• Upside capped by tax and regulation: A
~30 per cent drain of gross DTH subscription
revenues – comprising a 12 per cent service
tax, 8-10 per cent entertainment tax and a 10
per cent license fee – continues to hamper the
industry’s ability to improve profitability.
Although industry stakeholders are lobbying
the government to change the license fee
terms and make deductions based on adjusted
gross revenue, these are yet to be finalised. A
further cap on future industry upside comes in
the form of spectrum issues resulting from the
absence of an open skies policy that would
allow DTH operators to directly source
transponder capacity from foreign satellite
operators, as opposed to the current system of
going through the Indian Space Research
Organisation’s (ISRO’s) commercial arm Antrix.
• Consumer proposition, technology key to
future subscriber additions : Ramping up
subscriber additions as analog cable
subscribers turn to digital will largely depend
on the consumer proposition offered by the
DTH and cable operators. Gaining an increased
share of new subscribers will hinge on
designing and marketing innovative and simple
packaging structures, bearing in mind that
analog cable subscribers are used to an all-
you-can-eat single package structure.
Technology will also be key, as compression
standards and middleware deployed by
operators will play a crucial role, though not
immediately visible, in differentiating service
offerings and providing HD and value added
services (VAS) such as interactive services, 3D
and VoD. DTH sector in India to grow sales at 19 per cent CAGR between 2013-18: MPA | Indian Television Dot Com
TV sector remains a growth oriented industry
with significant potential for strategic and financial
investors, according to a new report published by Media Partners Asia (MPA).The report, entitled ‘India DTH Market Overview–
Key Dynamics & Future Outlook’, forecasts that
India’s DTH pay-TV sector will generate
revenues of $ 4.04 billion by 2018, a CAGR of
19 per cent from $ 1.71 billion in 2013 and
by 2023 the sector will generate revenues of $
5.6 billion. In an earlier report, MPA had said
that the DTH active subscriber base will
increase from 37 million in 2013 to 60 million
by 2018 and 70 million by 2023. This implies a
39 per cent share of the overall market by
2023 and a 56 per cent share of the digital
pay-TV market.
DTH operators have been working together to
improve the overall economics for the
business by reducing the amount of free
viewing offered to new subscribers and
recalculating the incentives dealers receive for
renewing subscriptions.
ARPU growth, according to the report, will be
partially limited as DTH expands nationally,
with low-income homes coming into the mix,
although MPA sees a greater contribution from
high- ARPU HD subscribers. According to the
report, HD represented 6.9 per cent of the
total active DTH base in 2013; which MPA
expects to grow to 16.1 per cent by 2018 and
to 20.1 per cent by 2023. MPA sees total DTH
ARPUs expanding from $ 4.0 per month in
2013 to $ 5.7 by 2018.
Digital TV (DTV) has started to gain widespread
acceptance across consumer households in
India, driven largely by the growth of DTH
satellite pay-TV platforms. Data from MPA
indicates that DTV penetration, including digital
cable and digital free and pay DTH platforms,
has grown from less than 1 per cent in 2006
to 46 per cent as of 31 December 2013.
The six DTH pay-TV operators in the market
have in aggregate contributed to 23 per cent
penetration as of 31 December 2013,
providing a level of market leadership due to
superior capitalisation and a stronger
consumer focus built around product strength
and innovation, including tiering, HDTV and
DVR services.
“DTH operators have been working together to
improve the overall economics for the
business by reducing the amount of free
viewing offered to new subscribers and
recalculating the incentives dealers receive for
renewing subscriptions. ARPU growth will be
partially limited as DTH expands nationally,
with low-income homes coming into the mix,
although we also see a greater contribution
from high-ARPU HD subs. HD represented 6.9
per cent of the total active DTH base in 2013;
we expect this to grow to 16.1 per cent by
2018, and to 20.1 per cent by 2023,” said
MPA India VP Mihir Shah.
Key market trend highlights of the report:
• Rational focus: Operators are increasingly
focused on growing profits as opposed to
solely increasing volume, often at the expense
of profitability. As a result, operators have
increased their basic prices, while at the same
time reducing the trade margin arbitrage by Rs
200-250 to minimise rotational churn.
Although subscriber additions post October
2011 have witnessed some slowdown.
According to MPA both the quality of
subscribers and ARPUs will continue to
improve going forward.
• DTV mandate: MPA believes that the
implementation of mandatory cable digitisation
by the government will be an important
catalyst for growth in the DTH sector. DTH
operators are relatively well positioned due to
the strength of their B2C businesses (as
opposed to B2B approaches amongst cable
MSOs) and their experience and investment in
tiering, subscriber management and billing and
sales and marketing. In addition, as part of its
reforms, the government has now permitted
international companies to own up to 74 per
cent of cable and DTH platforms.
• HD penetration : As per MPA’s report, HD
penetration will grow significantly in the
future, rising from less than 7 per cent of
active DTH subscribers currently to over 20
per cent by 2020. MPA’s estimates are based
on benchmarks in the US, UK, Latin America
and Southeast Asia. In the UK, incumbent DTH
operator BSkyB currently has more than 50
per cent of its subscriber base adopting HD.
Malaysia’s Astro has also demonstrated
laudable rates with 49 per cent penetration at
present on its DTH platform. Increase in HD
channel offering is critical for growth in HD
penetration. However for some of the mature
global operators, MPA sees HD penetration as
a percentage of total subscribers capping out
at 60-65 per cent.
• Upside capped by tax and regulation: A
~30 per cent drain of gross DTH subscription
revenues – comprising a 12 per cent service
tax, 8-10 per cent entertainment tax and a 10
per cent license fee – continues to hamper the
industry’s ability to improve profitability.
Although industry stakeholders are lobbying
the government to change the license fee
terms and make deductions based on adjusted
gross revenue, these are yet to be finalised. A
further cap on future industry upside comes in
the form of spectrum issues resulting from the
absence of an open skies policy that would
allow DTH operators to directly source
transponder capacity from foreign satellite
operators, as opposed to the current system of
going through the Indian Space Research
Organisation’s (ISRO’s) commercial arm Antrix.
• Consumer proposition, technology key to
future subscriber additions : Ramping up
subscriber additions as analog cable
subscribers turn to digital will largely depend
on the consumer proposition offered by the
DTH and cable operators. Gaining an increased
share of new subscribers will hinge on
designing and marketing innovative and simple
packaging structures, bearing in mind that
analog cable subscribers are used to an all-
you-can-eat single package structure.
Technology will also be key, as compression
standards and middleware deployed by
operators will play a crucial role, though not
immediately visible, in differentiating service
offerings and providing HD and value added
services (VAS) such as interactive services, 3D
and VoD. DTH sector in India to grow sales at 19 per cent CAGR between 2013-18: MPA | Indian Television Dot Com
