The growth of average revenue per user (ARPU) in the Direct To Home (DTH) sector continues, even as digital cable is still struggling to roll out channel packages. As per the FICCI- KPMG 2015 report, due to sustained increase in ARPU, the sector had a healthy revenue growth despite a muted subscriber addition in 2014.
In 2014, DTH operators saw an increase of around 12 to 15 per cent in ARPUs. While some of the ARPU increase was driven by DTH operators’ ability to continue to push price hikes (there was a price increase in April 2014 of an approximate eight to nine per cent), the more promising trend is that DTH operators were able to increase collections from customers by providing additional services such as High Definition (HD) channels, premium channels and other value added services (VAS).
As phase III and IV of digitisation draws near, the battle will be closely contested by MSOs and DTH operators. In phase I and II, DTH operators managed to gain 20 to 30 per cent of the subscriber base converting to digital. Two factors, namely an inherent technology advantage and stronger balance sheets, will give DTH players the bonus advantage to take on MSOs, especially the smaller players, in the year ahead. However, in order to gain a bigger piece of the pie, they will have to re-jig their channel packages, in sparsely populated areas so that it becomes affordable for subscribers in Phase III and IV.
Dish TV’s sub-brand Zing is all set to tackle digital cable players at the regional level. The brand addresses various linguistic needs of subscribers and offers regional specific channels as part of all available packs, while the other channels can be added based on the customer’s choice. It has been launched West Bengal, Tripura, Odisha, Maharashtra, Telangana and Andhra Pradesh.
When one compares Zing’s package prices, they are cheaper than those of digital cable. For example, the base package of Zing costs Rs 99 per month versus Rs 220 per month for digital cable. Its mid level package carries a price tag of Rs 249 versus Rs 270 per month for digital cable. Besides the content, even the advertising and other marketing activities are done in the regional languages, while customer support services will be at the local level through trade partners, similar to the cable TV model.
While digital cable operators are still grappling with securing their business model right, DTH operators have focused on increasing monetisation by providing additional value to their subscribers either through innovative services or STBs, such as those with unlimited recording and technology revolution like 4K.
According to the report, there are four million HD subscribers, accounting for 10 per cent of all DTH subscribers, while 15 to 20 per cent of incremental subscribers in 2014 were HD subscribers. HD adoption continues to drive ARPU growth for DTH players with the average ARPU of a HD subscriber at an approximate 1.5 to 2x the ARPU of a non-HD subscriber.
Compared to 6.5 million units of panel television sets (LCD, LED and plasma TVs) sold in 2013 in India, eight million units were expected to be sold in 2014, of which 55 per cent was expected to have been HD panel TV sales. The share of HD and 4K TV sales is expected to further increase over the next five years, reaching 80 per cent by 2019. While HD adoption will continue to be a key growth driver for DTH ARPUs over the next few years, adoption of 4K STBs is expected to pick up in India, though lack of 4K content can be a major problem.
Currently only Videocon d2h and Tata Sky offer 4K services. Live sports action is expected to be one of the enablers of HD adoption, with the recently concluded ICC Cricket World Cup 2015, likely to be a key trigger in 2015.
All major DTH operators namely Tata Sky, Dish TV, Videocon D2H and Airtel Digital have launched ‘TV Everywhere’ apps on mobiles and tablets through, which subscribers can watch live TV, catch up TV and video on demand (VoD) for an additional monthly fee. While there are several players along the media value chain who have launched online platforms for on-demand content to capture the surging viewer base, DTH operators have a key advantage in monetising these viewers through their ‘TV Everywhere’ apps, given their already existing payment relationships with subscribers.
