The loss meter is ticking for the direct-to-home (DTH) players. Market leader Dish TV, part of Subhash Chandra’s Essel Group, has run up losses of Rs 413 crore in 2007-08 compared to Rs 250 crore the year before. And, according to some media reports, Tata Sky racked up a loss of Rs 1,100 crore during the last financial year (compared to a loss of Rs 886 crore in 2006-07).Down south, it’s no different for Sun TV, which entered the DTH fray last year with Sun Direct (a joint venture with Astro All Asia Networks plc). According to a research report by Citi Investment Research, Sun Direct is expected to lose about Rs 200 crore every year till 2010.
And even as the losses of existing players mount, there are two big players—Bharti Airtel and Reliance ADAG (Anil Dhirubhai Ambani Group)—that are set to enter the DTH fray. Why? We’ll come to that in a bit but, meanwhile, what’s behind the DTH losses? Put simply, competition. The DTH players are acquiring customers by subsidising the set top boxes and the dish antennas.
So, Sun Direct has an offer of Rs 1,999 that offers the set top box (STB) and dish for free. Dish TV has announced a much-contested offer (disputed earlier by Tata Sky as a deceptive claim) where the STB was in-built as free for an upfront subscription fee of Rs 3,990 for 12 months for 151 channels; subscribers would also get 67 movies-ondemand for free. To make matters worse for the incumbents, Big TV, from Reliance Communications, is test marketing its DTH scheme at Rs 1,000, including a monthly price of Rs 325 that has Rs 100 worth of free “pay per view” content. Not to be beaten, Tata Sky also has a promotional offer on air.
If the losses are mounting and likely to get worse, why get into DTH at all? The opportunity, all said and done, is just too big to ignore. Of 219 million households in the country, 119 million households own TVs. Of these, 70 million are cable and satellite homes, and 7.5 million DTH subscribers. A Macquarie Research report predicts that DTH subscriber base will reach 53 million homes by 2014-15. “DTH is clearly a platform that has the potential for a wider reach, while IPTV (Internet Protocol Television) is still meant for a niche audience in the top metros,” says Atul Bindal, President, Bharti Airtel. Just the same, “we are readying ourselves at both ends and will be able to launch them shortly,” adds Bindal.
In terms of revenues, the DTH industry is estimated to pull in Rs 27,000 crore a year. “The scope for reaching out into new markets and to existing cable viewers is enormous, though it will take the players four to six years to break even,” says Rajesh Jain, National Industry Director, ICE, KPMG. Meanwhile, the DTH players have already started exploring innovative advertising revenue models to cover their cost of reaching consumers. “We are thinking of ways to monetise our advantage by offering broadcasters additional streams to interact with viewers through our interactive platforms,” says Jawahar Goel, Additional Vice Chairman, Essel Group of Industries. Agrees Vikram Kaushik, MD& CEO, Tata Sky: “This is a huge opportunity for advertisers as there is SEC A and B class target audience available that can be addressed demographically.”
Perhaps, but as things stand, the sea of red on the balance sheets of Tata Sky and Dish TV seems set to swell.