- 7 Oct 2013
- Reaction score
When you first meet him, what strikes you most about him is his candour. Indeed, Tata Sky managing director & CEO Harit Nagpal has got a reputation of speaking his mind. He was not afraid to come out in the media and make an appeal to ISRO when it delayed delivering him his transponders on GSAT-10 which would have allowed him to ramp up the offerings the Tata group, News Corp and Temasek joint venture could deliver to its customers. When the appeal got no response, he did not let it dampen him. Instead he chose to upgrade Tata Sky's set top boxes from MPEG-2 to MPEG-4 at no cost to them.
He was also quite open at the Indian Digital Operators Summit organised by Indiantelevision.com and Media Partners Asia when he invited his rivals and other players from the cable TV ecosystem to come in and study the best practices that Tata Sky has put in place. "The time has come for all of us to collaborate and grow the digital ecosystem," he had said. "And my doors are open to anyone who wants to see how we do what we do."
That offer still stands, says Nagpal, who believes that Tata Sky has some processes which compare with the finest practices globally. Especially its single-minded focus on the customer and the experiences it provides them. Nagpal strongly believes in delighting the customer and his supplier-partners as well. "In this way, we will all grow together," he says.
Nagpal presides over the DTH Operators Association of India and has a CV which explains his dervish like focus on the consumer. A chemical engineering graduate with an MBA from FMS, Delhi, he has nearly 28 years of work experience with stints at Shoppers Stop, Pepsi, Marico and Lakme in various leadership positions in fields like Sales, Exports, Operations and Marketing. Before joining Tata Sky in August 2010 he was the group marketing director of Vodafone plc, working out of London.
In a conversation with indiantelevision.com's Seema Singh and Vishaka Chakrapani, Nagpal talks about the efforts which are needed to keep Tata Sky's 11 million subscribers happy, the company's decade-long journey and how it's dealing with the national digitisation rollout.
How was the year 2013 for Tata Sky and for the DTH industry? What will year 2014 bring for Tata Sky and the industry?
2013 was what we had been waiting for years. It was strange that in a country like India where everything is regulated, there was one full unregulated industry that required government intervention. People developed cold feet when the process of digitisation began but after the first round took place both the industry and government were confident that it has to be and can be done.
DTH gained hugely in the process. We don't create a new customer; instead, we convert an analogue customer to DTH. Very rarely we have fresh customers coming to DTH. On a steady basis, this industry picks approximately three million customers every year. Also, every year DTH converts around four per cent of the 100 million cable TV viewers into DTH homes. In the cities that got digitised in 2013, DTH gained nearly 30-35 per cent of cable converts.
So while we were converting around four per cent cable TV customers into DTH subscribers per year, with digitisation, we have moved it up to 35 per cent in a month. Now did we gain or lose, it's for you to decide. The biggest advantage of DTH is that consumers can choose their pack and pay for it.
At Tata Sky, we've had a very good year, in terms of total turnover, profits, growth rate, churn, average revenue per user (ARPU) etc. In every aspect, we are leading.
The new year will have newer services and technology being introduced.
What differentiates Tata Sky from other DTH players?
There's hardly any scope for differentiation here. With content being common and everyone having access to similar technology, there is no exclusivity. The only differentiation is through the service we offer. Stakeholders are judged on: a) how they manage customers without causing much trouble for them and (b) how they help customers recover as soon as possible, in case of any issue.
I have always believed that there is room for innovation. We started with standard definition (SD), high definition (HD), DVR, video on demand (VOD), 'Catch up TV' and now have moved to 'Everywhere TV'. We believe in introducing one service every year. The service initially starts with being accepted by leading edge customers, which then percolates to others.
How do you decide on the new services? Also, how do you ensure that it is accepted by the consumer?
Customers tell us what they are seeking. We just have to go back to them and seek their pain points and then find solutions for that. We don't start with technology and find customers. We try to seek their needs and then tailor services.
The television sets in Indian homes are getting better, and so we have to ensure that we match the screens at home. Giving digital signals to cable TV homes was the first step, the second was HD. Even for this transformation, it was the customer that gave us the cue, since they were looking for better quality.
The recorder was introduced when we saw that people were expected to be in front of the TV when the show was being broadcast, it was becoming impossible for them to plan their day around the show. The answer to this was the recorder.
When we saw it was causing inconvenience for customers to physically get a DVD from market and watch it, we launched VOD and followed it up with 'Do it yourself' films.
Catch up TV came in response to customers wanting to watch something that had already been aired. Our latest addition was 'Everywhere TV'. We found out that more and more people were spending time outside and were consuming videos on mobile screens. So we thought of connecting Tata Sky to the handsets. Through this, a decent broadband or 3G connection could help people consume content through 'Everywhere TV.'
How much a does a consumer pay for subscribing to 'Everywhere TV'? How do you divide the revenue share? Do you think people would want to subscribe to 'Everywhere TV'?
If a consumer can buy a Rs 50,000 phone, he would not mind paying Rs 60 per month for 'Everywhere TV'. The Rs 60 is divided equally among all stakeholders. So while one-third goes as taxes, the broadcasters take one third and we keep the rest. So, we would make around Rs 20 for the infrastructure we've invested.
The need on which the product is based tells me it will do well. The first launch is restricted to iOS, but we will be launching soon on Android as well. We are happy with the numbers we got in the first three weeks of the launch of the service.
Everyone is consuming videos today. And with the video consumption going up, prices are coming down. Even mobile phone operators want people to consume videos on phone. Everywhere TV is one way of increasing consumption and as networks start getting filled it is possible for mobile operators to drop prices. Our job is to create the product and make it affordable.
How are the multiple services helping the company?
The services are helping us increase the ARPUs without any price rise. When you are penetrating deeper into a market, your next customer is bound to give you less. The only way you can increase it is by making him consume more of what he wants to and make him pay for it.
By offering more services and choice of packs, we have been able to ensure that our subscribers stick to us. The fact that we have growing ARPUs, we must be doing something right, by launching multiple services.
Have you been able to fulfill the need for more capacity with MPEG4 boxes? By when will the seeding of the MPEG4 boxes be complete?
MPEG4 boxes have ensured that there is no real content shortage now. We started seeding MPEG 4 boxes this year and with that we have been able to fill the gaps. We had to leave Kerala and Tamil Nadu, because of capacity constraint. With the MPEG4 boxes, we have been able to go back to Kerala with 19 channels.
It will take close to two years for us to complete the whole replacement process. We have 12 transponders and with these MPEG4 boxes, we are fine in the short to medium term.
Recently the aggregator IndiaCast had a face-off with Dish TV over 'on-request channels'. How does Tata Sky manage the relationships with the stakeholders involved?
We have great relations with our content providers. We have long and protracted negotiations with them. However, that rarely leads to a breakdown of relations and we reach a reasonable and reasoned out number to renew our contracts. If we make more money we would like to share it with the partners.
2014 may see disappearance of aggregators? Do you think it will affect the DTH players?
No, it will not. I have been hearing news on these lines, but it doesn't affect us much. If it comes into force, instead of negotiating with one player, we will have to negotiate with several players. But that is easy. These negotiations do not happen every day, these are contracts signed for three to four years.
Apprehension is that if all this will result in cost hike. But I don't see any cost issue. In fact, with aggregation we are forced to buy certain channels, which our customers don't want. If TRAI decides to remove the role of aggregators then I may not take all the channels. I can save that bandwidth for products that my customer wants. Currently, what is happening is more and more bandwidth is getting clogged because of the channels that broadcasters wants to push and not what customers want to watch.
In the long run, it is all about what the customer wants.
Are the DTH players pinching customers from each other?
At this stage there are no such plans. With 70 per cent still being analogue cable TV homes, we have enough scope from the analogue cable TV homes. We can tap that.
Do you think India is still far away from US standards? Can we think of a time when DTH will totally replace cable TV?
I think we are already there. Any technology launched in the US is also available here. There are some services that are slightly better there but that's dependent on quality of broadband. The day that gets better, the service experience will get better. There are infrastructural constraints that keep us from providing certain services that are present in the US. But, one has to start somewhere.
Cable is getting digitised and so it'll be there in the industry. I don't think India will be an only DTH country. The industry improves only when more operators try to do new things. Life starts with fragmentation and moves to consolidation. I don't think there'll be consolidation in this business. Yes, the number of subscribers moving from cable to DTH is larger than reverse. But that doesn't mean the cable will disappear.
How has the response of interior towns been to DTH penetration?
More than 60 per cent of our new customers are not from the top 20 cities. Once a service reaches them, they respond more positively than a person in the city. Most places we are going today are places with the presence of cable. There is certainly a kind of saturation we are reaching in top cities. Not like we are not getting numbers but there are certain limitations.
More customers are available in the interiors. A good amount of growth is coming from basic services in interiors and high end in top cities. A customer, who came to us seven years ago, picked up our innovations each year. We are hopeful that someone in the interiors will also get onto our recording facility in a few years.
To what extent has packaging been explored in India? How do you package channels for your consumers? Is it easy for consumers to add or remove channels from their pack?
There was a time we were creating packs that customer didn't even understand. In India, people don't watch metals (bronze, silver, gold packs), they watch genres. Hindi news and Hindi soaps is something that everyone watches. What we do is that we put these in the base pack and then top it with a bit of music and other genres. We, then give two language channels because in most homes two languages are spoken apart from Hindi and English. Customers have a choice of adding other genres like English movies, kids, music, knowledge, etc on top of the base pack.
We have services by which if a person who is not getting a channel he needs, can just SMS it to us and instantly the channel will be switched on. It's instantaneous. Customers take a pack and then add on a la carte. So they take a base pack and then add channels to it. That's where our revenues are growing. Our ARPUs are growing because we are making it easy for our consumers to buy more content.