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A DISSERTATION ON

INDIAN DTH SATELLITE TV SERVICES: A COMPARATIVE STUDY OF VARIOUS DTH SATELLITE TV PLAYERS WITH CABLE TV IN GHAZIABAD REGION

Submitted for partial fulfillment of the Requirement of the Degree MASTER OF BUSINESS ADMINISTRATION (MBA- 2010-2012)

BY ANKIT KUMAR UPADHYAY ROLL NO. 100251015

UNDER THE GUIDANCE OF

DR. MOHD. RUMZI TAUSIF


ASST. PROF. SCHOOL OF BUSINESS STUDIES SHARDA UNIVERSITY GR.NOIDA (U.P.)

1.1 INTRODUCTION:
In earlier days there was only one TV channel in India the Doordarshan, Channel doordarshan was owned and operated by government of India. In those eras every home which had a TV set used to have its own antenna to capture the signals. The Cable Television Ordinance Law was passed in January 1995. This enabled cable operators to feed channels and later on private companies were allowed to air their own channels and this led to the explosive growth in number of TV channels and number of cable operators. The growth of TV channels & cable operators created a big industry and market opportunities. Until few years back there were as many as 1,00,000 cable operators across India. However the services provided by cable operators were poor. The strikes, increase in tariff plan, selective broadcast and poor services were major cause of dissatisfaction among the customers. This has created an opportunity for DTH, which serves an immediate threat to the high-end cable networks. Some of the key players in the industry are DishTV by Zee group, TataSky joint venture of Tata & Star TV, Big TV by Anil Dhirubhai Ambani Group, Digital TV by Bharti Tele media, SUN Direct from the promoters of Sun TV. There are some other companies who are contemplating to start their own DTH like Videocon. The Indian market was till now dominated by the presence of local cable TV operators and had complete monopoly over it. DTH opened an option for Indian Consumers to opt for the satellite service to obtain television channels direct to their homes without any intermediaries. It also provided several value added services to enhance their television watching experience. Still, as DTH is still a relatively new category and most people were hesitant to experiment with it. While Indian consumers were not completely satisfied with their cable services, they did not feel the need to switch over to any other means of entertainment. It was therefore imperative for companies such as Tata Sky, Dish TV, Reliance BIG TV, SUN Direct, AIRTEL Digital TV, DD Direct+ & Videocon d2h to educate the consumers about the advantages of the service and in turn create an urge to invest in it. There is an immense opportunity for DTH in the Indian market. The opportunity in India almost 10 times that in developed countries like the US and Europe. For every channel there is a scope for broadcasting it in at least ten different languages. So every channel multiplied by ten that is the kind of scope for DTH in the country. The way DTH reaches a consumer's home is different from the way cable TV does. In DTH, TV channels would be transmitted from the satellite to a small dish antenna mounted on the window or rooftop of the subscriber's home. So the broadcaster directly connects to the user. The middlemen like local cable operators are not there in the picture. DTH can also reach the remotest of areas since it does away with the intermediate step of a cable operator and the wires (cables) that come from the cable operator to your house. As we explained above, in DTH signals directly come from the satellite to your DTH dish. DTH offers better quality picture than cable TV. This is because cable TV in India is analog. Despite digital transmission and reception, the cable transmission is still analog. DTH offers stereophonic sound effects. It can also reach remote areas where terrestrial transmission and cable TV have failed to penetrate. Apart from enhanced picture quality, DTH has also allows for interactive TV services such as movie-on-demand, Internet access, video conferencing and e-mail. But the thing that DTH has going for it is that the powerful broadcasting companies like Star, Zee, etc are pushing for it.

In DTH, the payments will be made directly by the subscriber to the satellite company offering the service. A big problem that broadcasters face in India is the issue of underreporting of subscribers by cable operators. Consider the cable operators pyramid. Right at the top is the broadcaster. Next comes the Multi Service Cable Operator (MSOs) like Siticable, InCable, etc. Below them are the Access Cable Operators (ACOs) or your local cable guy who actually lays the wires to your house. The local cable operators or the ACOs then allegedly under-report the number of subscribers they have bagged because they have to pay the MSOs something like Rs 30-45 per household. Showing a lesser number of households benefits ACOs. With no way to actually cross check, the MSOs and the broadcasters lose a lot. Broadcasters do not earn much in subscription fees and are mostly dependent on advertisement revenue to cover their costs, which is not sustainable and does not offer high growth in revenues for broadcasters. The way out of this is to use a set-top box so that it will be clear how many households are actually using cable or going for DTH where broadcasters directly connect to consumers and can actually grow revenues with a growth in the subscriber base. Today, broadcasters believe that the market is ripe for DTH. The prices of the dish and the settop box have come down significantly. Overall investments required in putting up a DTH infrastructure has dropped and customers are also reaping the benefits of more attractive tariffs. The major thing that DTH operators are betting on is that the service is coming at a time when the government is pushing for CAS (conditional access system), which will make cable television more expensive, narrowing the tariff gap between DTH and cable. DTH faces stiff competition from the terrestrial, cable and IPTV. As per the industry estimates, there are 130 million TV homes of which 85 million are served by cable and around 16 million by DTH with the remaining taken by terrestrial transmission.

1.2 OBJECTIVES OF THE STUDY:


services. There are so many reasons behind this switching over. People sometimes think that both network operators give various channels but it is the picture quality which differentiates those. Sometime pay only for those channels which you need is also a reason for that switch over. So here we want to study the reason behind the switching over of multi channel users from cable TV to DTH TV.

Ghaziabad region. All factors not influence more the people to that switch over, there we want to make a series of factors on the basis of influencing power of the factors by applying statistical tools. arket. IPTV, cell phone TV these are the substitute of the DTH satellite TV which are now introduce themselves in the market. Here we want to analyze the position of those substitutes in the market.

Analyzing the environmental analysis we try to analyze the market of the TV networks which are quite helpful to find out opportunities of Indian DTH services. How the present DTH players capture the opportunities to stay in the growth.

1.3 METHODOLOGY:
SAMPLE & POPULATION: The sample size is , which is sufficient to do the analysis more effectively. As a general rule of thumb 300 data is more enough to analyze, however in the present study the total sample size is .The target population of the survey constitutes the TV households in Ghaziabad region. I take the Ghaziabad area to collect the primary data from households as this is the most growing area in NCR region. DATA: Here mainly primary data collected from the TV households in Ghaziabad region by filled up the questionnaire. AREA COVERED: The area targeted here is Ghaziabad region which is the more growing area in NRC region in the scenes of population, industrial growth & economical growth also. The data have collected randomly from this region. I mainly covered Sahibabad area, Vasundhara area, Ghaziabad market area and Sastri nagar area to collect the data. QUESTINNAIRE: The questionnaire is well designed and close ended type, so that people easily filled the questionnaire according to their perception. People always flexible to give their answer objectively. So here open ended question is more effective as the target population is households. TOOLS & TECHNIQUES: Descriptive statistics used here to analyze frequency of the DTH TV satellite and cable TV and have used Factor analysis also to analyze the various influencing factors of DTH TV services which influenced people to switch over from DTH TV to Cable TV. SOFTWARE: SPSS & EXCEL used here to analyze the primary data. SPSS is very useful here to effectively analyze the data and get effective result which is reliable enough as sample size is sufficient to analyze.

1.4 SCOPE OF THE STUDY:


The study is mainly all about the comparison between DTH TV & Cable TV services and analysis various factors which influenced people to switch over from cable TV to DTH TV. So we analyze the factors which influenced people more to switch over and the study also said about the substitutes/ threats of DTH services such as IPTV, Online TV so that company make new strategy in future to face the new competition. From this study we know the perception of the households towards various DTH TV players, cable TV so that they use it in company's strategy to make them prepare for that competitive market. Various DTH players also use new technology to give more facility to the customers to avoid extra competition in the market. The market share of various TV network suppliers helps them to analyze their business so that they capture the opportunities & also the market share of various DTH players give them information to placed them in the market situation. All of this information helps players to carry DTH industry in a good position and helps to analyze future strategy. From this study people also take advantage to choose the suitable TV network providers by analyzing the market environment.

1.5 LIMITATION OF THE STUDY:


Only Ghaziabad region will consider as research area. Only Ghaziabad area not sufficient enough to analyze the market of DTH satellite services, there we should also consider the other region for this analysis. Ghaziabad is now growing area in NCR region but there is rural area, small cities which we have to consider to getting back effective result from the analysis. There are various payment systems of cable TV operators in various areas. Depending on area whether it is big town or small city or any industrial area or any rural area there are various payment system of cable TV operators. So here we cant consider all these system so that we analyze effectively. People are more sensitive towards price which they have to pay monthly so that plays an important role here for the buying behavior of the customer. So by considering only one region payment system we cant say anything more about the buying behavior of the consumer. Future analysis of DTH satellite TV will be based on those data which collected from Ghaziabad only.

2.1. REVIEW OF THE STUDY


Sandeep Varma and Doris John published a Case study: DTH vs. Cable TV: sky Wars in India in the year 2006. Home entertainment in India had come a long way from the days when there was only one national channel, Doordarshan, to the age of satellite television and, now, the latest development called DTH (Direct to Home) technology. With the Government of India having set the end of 2006 as the deadline to introduce CAS (Conditional Access System), in selected metros and later all over India, the scene would become more competitive. Cable operators have started pressurizing the Indian Government to speed up the process of changing the analog technology to digital. Once cable is digitized, cable operators would also be in a position to provide programs in high quality as like DTH. Apart from DTH, new emerging technological advancements in TV viewing like Internet Protocol Television (IPTV) and Cell Phone TV would also compete among themselves to get their share of the market in the Indian home entertainment industry. The Indian customer would have more options in terms of TV entertainment and the main deciding factor would be service support. The case allows for discussion on the present scenario of home entertainment in India. They highlight the various technological advancements that happened in the field of TV broadcasting and also throw light on various service providers and their services. They discuss the emerging technologies in home entertainment in India. Industry analyst Sivasundaram Umapathy published his literature industry analysis- DTH industry in India in 2007. In this paper he analyzed the challenges and opportunities present for the DTH industry within the Indian contest. We would look at the history of Indian broadcasting followed by looking at the current DTH market. An environment analysis done using the Potters five forces model and and the various challenges faced by the industry identified. Finally we look at the possible suggestions taking a long term view. With the existing regulatory restrictions, Increasing content cost and lack of transponders, DTH terrain too steps to climb. With content differentiation not happening in the near future, companies have to differentiate only the service and cost levels. The increasing consumer awareness and expectations also make it difficult to satisfy the consumer. Todays consumer is sensitive to price as well as the quality. Apart from the volumes business, a prudent DTH operator should also take a serious look at the substitutes and complements. He should diversify and create his presence in the entire spectrum of broadcasting and telecommunication services. The final winner cannot be a pure DTH player but a convergent player who offers all in one to the value-conscious, price sensitive Indian consumer. Researchers from Gartner [2007] believes that IPTV will struggle in India for following reasons: Cable TV users pay almost half of what digital subscribers pay Low broadband penetration will inhibit IPTV uptake. 2007 is a critical year for pay TV, with CAS being mandated in a phased manner, and more players are moving into DTH, which is growing. IPTV will be priced at the same price as digital cable or DTH, so no price differentiation

As the numbers of broadband users are increasing in urban and semi urban cities IPTV can pose serious threat to DTH player in long run. The Indian Readership Survey 2008 R2 findings have shown that the Dish TV is the largest player with over 3.1 million subscribers, followed by DD Direct, Tata Sky and Sun Direct, which has a predominance in the southern zone. Indian entertainment and media outlook 2009 published in 2009 where they discussed about all the entertainment industry. In 2008, there is a significant churn of subscribers from cable in favour of DTH, as the latter subsidizes hardware, reduces installation costs and introduces value packs. Aggressive marketing and promotions also helped DTH lap up subscribers in 2008 which reached ~11.5 million at the end of the year from ~3.5 million in the beginning of 2008. 2008 also witnessed a technology-war amongst DTH players. With new players Bharti Airtels Digital TV and Reliances DTH service Big TV launched in 2008, a technology war erupted between these new players and the older players, Dish TV and Tata Sky use of technology in the set-top-boxes. The older DTH players claimed that the latest MPEG-4 technology, as used by the new DTH players, violates existing guidelines for DTH operations citing reasons of inter operability. In the view of the older DTH players, the new DTH players are required to offer commercial inter-operability with the existing MPEG-2 set top boxes being used by the older DTH players. The matter is currently under dispute with BIS . RNCOS industry Research Solutions published new report as Indian DTH Market Forecast to 2012 in 2009. In their report they said that the DTH service market in India has emerged as one of the most lucrative markets which have successfully resisted the impacts of the current economic slowdown. The slowdown has certainly proved a boon for the Indian DTH industry as people have now started to cut on their entertainment expenditure and instead of viewing movies at theatres, they are preferring to stay at home with their television sets. The industry is anticipated to add nearly 5 Lakh subscribers per month during 2009 and the numbers are forecasted to surge further at a CAGR of around 30% through 2012. "With over 130 Million TV homes, India offers large room for growth in DTH services as the technology can be used to offer DTH services in remote location, where setting up of cable networks seems impossible, or is highly expensive", says a Sr. analyst at RNCOS. It is forecasted that DTH will capture over 21% of TV homes in India by 2012, up from around 10% now. Their report, "Indian DTH Market Forecast to 2012, provides thorough analysis of the current market performance and the future outlook of DTH services market in India. It gives detailed analysis of the success factors and also helps in determining what all are the issues or the hurdles in front of the burgeoning DTH services market in the country. The study also explains the reason for why all the incumbent players have been investing huge amounts into the promotion and marketing of DTH services in the country, despite the current economic slowdown. This research provides extensive research and rational analysis of the DTH market in India. It will help clients to understand the underlying potential of DTH services in the Indian television

industry. Various factors which will drive the future growth of the DTH market in India have been thoroughly analyzed in the report. The report will also help in gaining insight into the prevailing key trends and developments that are contributing positively towards the growth of the market.

3.1. INDIAN CABLE TV SERVICES


The history of Indian Television dates back to the launch of Doordarshan, the countrys national television network in 1959 when the transmission was in black & white. The 9th Asian games which were held in 1982 in the countrys capital New Delhi heralded the mark of colour television broadcast in India. In 1991, Indian economy was liberalized from the license raj and major initiatives like inviting FDI, deregulation of domestic businesses emerged. This led to the influx of foreign channels like Star TV and creation of domestic satellite channels like Sun TV and Zee TV. This virtually destroyed the monopoly held by Doordarshan. In 1992, the cable TV industry started which changed the way the average Indian watches the television. Every city in India had a new breed of entrepreneurs called as cablewallahs or Local Cable Operators (LCO) taking in charge of distribution. Since this was a disorganized sector carrying new channels on the existing infrastructure required new investments which the operators were reluctant to make. This led to the emergence of a new breed of firms called as Multi System Operators (MSO) who had heavy financial muscles to make capital investments and liaised between the cable operators and the channels. MSOs provide the feed to the local operators for a fee. In 1995, government felt the need of regulation in Cable TV and passed the Cable TV network (Regulation) Act. This was also the time when the state owned Doordarshan and All India Radio came under a new holding called as Prasar Bharati to give them enough autonomy. The LCOs reported a lower number of connections where as the broadcasters demanded a higher rate. MSOs were finding it difficult to operate under these conditions. This led to an amendment of the Cable TV networks(Regulation)Act in 2002 to provide Conditional Access System (CAS). With CAS, the last mile distribution could be addressable with accuracy and digitalization of broadcast was also possible. CAS was rolled out in 2003 staring from Chennai and later to parts of Delhi, Mumbai and Kolkata. INDIAN DTH SATELLITE TV SERVICES: DTH stands for Direct-To-Home television. DTH is defined as the reception of satellite programmes with a personal dish in an individual home. DTH does away with the need for the local cable operator and puts the broadcaster directly in touch with the consumer. Only cable operators can receive satellite programmes and they then distribute them to individual homes. DTH services were first proposed in India in 1996. But they did not pass approval because there were concerns over national security and a cultural invasion. In 1997, the government even imposed a ban when the Rupert Murdoch-owned Indian Sky Broadcasting (ISkyB) was about to launch its DTH services in India. Finally in 2000, DTH was allowed. The new policy requires all operators to set up earth stations in India within 12 months of getting a license. DTH licenses in India will cost $2.14 million and will be valid for 10 years. The companies offering DTH service will have to have an Indian chief and foreign equity has been capped at 49 per cent. There is no

limit on the number of companies that can apply for the DTH license. On the DTH front, TRAI issued the guidelines for operating DTH. Countrys first DTH license was awarded to Dish TV in 2003 which started operations in 2004. Prasar Bharati also started its product DD-Direct+. In 2007, TRAI proposed a new initiative by name Headend-In-The-Sky (HITS) model as an alternative to the existing cable distribution. Instead of the MSOs providing the bundle, there will be a single HITS operator who will prepare the bundle of channels and beam it to the Headend in the satellite. With the average Indian getting younger, and hence more likely to spend on nonessentials, the entertainment industry has the potential to grow explosively in the future. Now the industry is ready to enter a second stage of growth powered by the twin engines of technology (availability of quality infrastructure and the accelerated penetration of digital connectivity) and an enabling regulatory environment. WORKING OF DTH Direct To Home (DTH) is a distribution platform for multichannel TV programmes on Ku brand (high frequency of 11.7 to 14.55 Gigahertz) by using a satellite system which transmits signals directly to subscriber premises. The term predates DBS satellite and is often used in reference to services carried by lower power satellite which required larger dishes. Following are the simplified steps on how DTH works:

1. Broadcoster Sends the signals 2. The satellite receives the signals at Ku Band 3. The Dish Antenna at subscribers home receives the signals 4. The set top box decodes the signal and sends it to TV set

CURRENT SCENERIO OF DTH SATELLITE TV SERVICES: In the current context of the global financial meltdown, the Direct to Home (DTH) industry in India is in the throes of multifarious challenges and opportunities. The big game is all about shaping up grandiose plans to master the winning rules to garner as much portion of the Indian DTH pie as possible by a handful of players. Since the DTH space denotes big value, akin to the space occupied by television and telephony, inter-firm rivalries have thrown up price wars, discount schemes, procurement of transponders, ambitious targets for improving the subscription base, popular bouquet of channels, set top boxes with superior quality of videos, improving content, etc as a desperate means to entice the Indian viewer. A neat 20 per cent annual growth is being witnessed in the DTH sector in India with over 16 million households having digital payTV. According to Harsh Bijoor, a brand consultant, Since Dish TV, the biggest market player on the Indian soil, has not scraped even five per cent of the pie, there is plenty left for other players to eat. In the early 2008, five major players, Zees Dish TV, Tata Sky, Reliance ADAG, Sun Direct and Bharti Telemedia formed an umbrella body DTH Operators Association of India (DOAI). Dish TV is the largest DTH provider with a subscriber base of around 5 million, Tata Sky, a DTH joint-venture Company between Star (owned by Rupert Murdoch) and the Tata Group (20:80), now has around 3.4 million connections and the forecast for 2012 is that it will further increase to eight million, Sun Direct, the 80:20 JV between the Maran family and the Astro Group of Malaysia, over 2.3 million, Big Tv about 1.2 million and Airtel Digital Tv about 0.3 million subscribers (Source: Business Standard, May 1, 2009). According to sources, DD Direct Plus has a subscriber base of about 3-4 million subscribers, mostly in the remote corners of the country not connected by terrestrial or cable television. DTH operations in India could be enhanced if the dearth of satellite capacity is removed by increasing the number of available Ku-band transponders that at present is 12 on Insat 4A, which in turn would mean more channels for viewing. Tax burdens on DTH are another area of complaint for operators. Around 40 per cent of revenues are siphoned off to pay taxes and license fee and another 12 per cent for services imposed by the Central government. Apart from this, there are entertainment taxes that differ from state to state.

STRUCTURE OF THE DTH INDUSTRY: The structure of the DTH industry in India can be categorized as an Oligopoly. The word Oligopoly is derived from the Greek for few (entities with the right to) sell. An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). An oligopoly is a market dominated by a few large suppliers. The degree of market concentration is very high. Firms within an oligopoly produce branded products and there are also barriers to entry.

Key characteristics of Oligopoly are following: Few larger supplier dominates the market Interdependence between firms Each firm produces branded products Significant entry barriers into the market in the long run which allows firms to make supernormal profits Each oligopolist is aware of the actions of the others.

ANALYSIS OF THE INDIAN DTH INDUSTRY Indian DTH industry is still at nascent stage. In the year 2003 DD Direct+ was launched since DD Direct+ is non commercial and free DTH service hence we would focus our discussion on private players in the industry. As of now DishTV, TataSky, BigTV, AirTel Digitel TV, Sun Direct are in the industry. There are some other players like Videocon, who want to join this high lucrative industry. Since there are only 3 major players and the market concentration is very high Indian DTH industry is oligopolistic.

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