DTH eyes cable market
The fight for the market between cable networks and DTH
(direct to home) providers is poised to take a bitter turn with major DTH providers in India cutting down their monthly subscription rates. The current DTH subscription rate is at par with the monthly cable charges. By dropping their monthly subscription prices to amounts ranging from Rs 182 to 249 ($3.7-5.1), DTH operators are directly targeting existing cable users.
Leading DTH operator, Dish TV, is now offering 125 channels for a subscription value as low as Rs 100 ($2) per month. The idea is clear - manipulate satellite TV viewers to shift from cable networks to DTH. These desperate measures indicate that in spite of spectacular growth, the DTH sector is weighed down by pressing problems. One of the problems is very low ARPU (average revenue per user).
DTH was launched with lots of promises four years back. The sound and picture quality would be far superior, it was claimed. Additional services such as video on demand, music on demand, and multiple viewing options were also promised. The most important was that DTH subscribers would be saved from being victims to the eternal squabbles between channel owners and cable operators. Pay channel owners would hike the channel rate every six or eight months on the pretext that cable operators were under declaring their subscription figures. Cable operators on the other hand, alleged that pay channel owners were including unpopular channels in their channel bouquet depriving viewers of prime content.
As a result, when DTH arrived it was seen as a boon for television viewers. However, DTH is at the cross roads today. Although DTH registered a compound annual growth rate of over 30 per cent, the growth has been primarily in new areas. In other words, it did not make much of a dent in the cable sector considering the fact that a large section of DTH subscribers came from areas where there was no cable network, in first place.
Four years after DTH began operations, cable networks remained the dominant mode of satellite TV distribution. Of the 120 million homes watching private satellite television, 75 million are cable TV subscribers. The fact that only one million subscribers receive digital cable service indicates that the bulk of cable TV subscribers use the traditional analog mode.
DTH has its own drawbacks. The Ku-band through which it functions experiences problems during heavy rainfalls and storms. The add-on services also failed to reach the hyped up expectations. One of the biggest myths exploded was the initial belief that DTH would be cheaper. In the initial phases, the monthly subscription rates of DTH service packages that offered all pay channels were as high as that of cable if not more. The fact that an amount of about Rs 3000 ($62) would have to be invested for the set top boxes deterred cable TV subscribers from moving over to DTH.
Cable networks also had a peculiar advantage. Most big networks ran their own TV channel (ground channel) providing hundred percent local content, especially news. The local flavour added to the popularity of the cable networks. Today, as DTH service providers are embroiled in a price war, cable networks have to device a clear cut strategy to stave off the DTH threat. Former director of Siliguri based Cable Combine Communication, the largest cable network in northern region of West Bengal, Goutam Basu feels that the significant cut in DTH subscription rates would have an impact on the cable industry as well.
“It is a bitter situation and one with the better strategy and surviving skills would remain”, said Basu. “If cable networks have to survive in the long run, digitalisation is a must”, he added.
Analysts estimate that DTH, which is out and out digital, will have around 20 million subscribers by 2013. At the present rate of digitalisation, digital cable is estimated to have around 5 million subscribers in the same year.
Going digital is clearly the only way out for cable networks to retain their dominant position in the long run. As for DTH, the digital factor is its greatest advantage.Source: IT Examiner