DTH service providers bet on high definition viewers for more profits

Bapun Raz

Staff member
Community Manager
3 Nov 2010
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Mumbai: Direct-to-home (DTH) operators in India have jumped onto the High Definition (HD)
bandwagon to cash in on the ongoing ICC Cricket
World Cup. Major DTH service providers like Dish TV,
Tata Sky, Reliance Digital TV (RDTV), Airtel Digital TV
and Videocon d2h have launched HD set-top
boxes (STBs), offering their customers a bouquet of sports channels, special sports packs and other
value-added services. While Dish and RDTV expect
a 15-20% rise in DTH subscription during the
cricket season, Videocon has set itself a target of
40-50% increase in subscriber acquisition. According to industry estimates, the total DTH
subscriber base stood at 30 million in December
2010, and is expected to grow to nearly 40 million
by March 2012. Out of 140 million TV households in
India, 4-5 million have HD-enabled TV sets, of
which only 10% have opted for a HD DTH connection. However, the World Cup excitement
will push subscribers to opt for HD, say service
providers. Sugato Banerjee, CMO, Airtel Digital TV, says, “Major sporting events are huge drivers of DTH
subscription. We witnessed a 25-30% spurt in
subscription during the FIFA World Cup in 2010.
With the cricket World Cup and IPL happening
back-to-back , there will be a surge in demand for
high-definition viewing. We’ve tied up with official broadcaster ESPN for bringing live HD content to
viewers.” The company has also struck a deal with TV maker Sony to offer consumers a free Airtel HD
connection with the purchase of every Sony Bravia
TV set. Priced at a premium, more than 100% higher than
standard definition (SD) STBs, these HD boxes offer
superior quality viewing, surround sound and
digital video recorder functionality. A standard STB
costs R1,000 to R1,500, while HD boxes cost
R2,500 - 4,000. “HD provides a great opportunity to increase average revenues per user (ARPUs). The
industry operates at an ARPU of R180-200, which
will rise by 20% owing to higher STB cost,” adds Banerjee. Sanjay Behl, CEO of RDTV, says, “Subscribers are definitely in for superlative viewing experience
during the World Cup. We’ve inked a deal with ESPN Star Sports to offer HD cricket coverage without ad
breaks.” It has also tied up with Onida for special offers and launched a day & night support service
for its subscribers. While Dish TV offers 30 HD channels across genres
to counter claims of limited availability of HD
content, Videocon d2h offers sports channels like
ESPN, Star Sports, Star Cricket, and Neo Cricket in its
Gold Sports pack. Tata Sky’s interactive service Actve Sports enables viewers to choose multiple
camera angles to watch a match. Vikram Mehra,
CMO, Tata Sky says, “In a country where cricket is religion, we provide fans with a unique, economical
and effective way of enjoying the stadium
experience from the comfort of their homes.”

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The noise around HD options by both direct-to-home (DTH) players and TV manufacturers has reached a crescendo and is likely to continue with the upcoming IPL. While DTH players and television manufacturers are putting their weight behind sporting events shot in HD, production houses and channels are preparing for an HD environment to gather a critical mass. HD-viewing will have to start with large events that can be shot with fewer production equipments before full-fledged HD production picks up. “HD in DTH came into the market with the 2010 FIFA World Cup. Till more channels come into the fray, HD will primarily work in value-added services (VAS) and sporting events,” says Tata Sky Chief Marketing Officer Vikram Mehra. Ernst & Young Media and Entertainment Practice Partner Ashok Rajgopal seconds that argument: “Initially, HD content will be large format events such as sporting tournaments, music concerts and international content shown by English-language channels.” How big is the market? Television manufacturers are expecting no less than 35-45 per cent of their annual sales of flat-panel TVs during the World Cup and IPL season this year. Of the 3.2 million flat panel TVs sold in India last year, full-HD TVs (1080p) account for 15-20 per cent while the rest are HD-ready (1080i/720p) and do not offer as great a viewing experience as the former. India DTH services bet on HD viewers for more profits The numbers are still very small. About 15-20 per cent of new subscribers of DTH services in the metros are opting for HD STBs. The numbers are almost identical for HD flat panel TV sales. The industry is actually betting on the future. Samsung India Deputy MD Ravinder Zutshi says, “The demand for HD TVs has been going up because consumers want to be ready for the future when buying a new TV. HD will become the standard in the days to come and consumers don’t like to change/upgrade big-ticket items so often.” KPMG’s Executive Director (media & entertainment) Jehil Thakkar says, “HD viewing will have to transcend the affordability issue to bring in more volumes. For now, it will remain another new technology for the early adopters to try out. Since early adopters are likely to be from the higher end of the market with a taste for niche channels, HD programming is first seen in these. Sports, infotainment content have often led the way in HD in most countries. Once, more audiences prefer HD- viewing, general entertainment channels will jump onto the bandwagon.” Thakkar also gives the industry four-five years more to make HD the new normal. With storage of entertainment content gradually moving online, the compatibility of HD devices with the internet will also play a role in the future. In a 2010 report, Nielsen had found that while 56 per cent of US households had an HD TV, more than 80 per cent of the viewing remained a standard definition experience because of the lack of HD content or an HD TV. However, India might leapfrog this trend too, given that even mass content providers such as general entertainment channels and Bollywood studios are investing in HD
content. From the looks of it, being future-ready is the crux of the matter – both for marketers and for consumer.

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