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Introduction DTH Industry in India Structure of the Indian DTH industry Substitute goods/products for the products of DTH Industry Complement goods for the products of the firm Changes in substitutes and complements over time Entry Barriers in DTH industry Recent entries in the industry References

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DTH INDUSTRY IN INDIA

which serves an immediate threat to the high-end cable networks.00. 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.INTRODUCTION Direct To Home (DTH) is a distribution platform for multichannel TV programmes on Ku band (high frequency of 11.000 cable operators across India. increase in tariff plan. . selective broadcast and poor services were major cause of dissatisfaction among the customers. Channel doordarshan was owned and operated by government of India. Untill few years back there were as many as 1. The Cable Television Ordinance Law was paased in January 1995. The satellite receives the signals at Ku Band 3.7 to 14. In those era every home which had a TV set used to have its own antenna to capture the signals.The strikes. The set top box decodes DTH Industry in India In earlier days there was only one TV channel in India the “Doordarshan”. Broadcoster Sends the signals 2. The Dish Antenna at subscriber’s home receives the signals 4. Following are the simplified steps on how DTH works: 1. The growth of TV channels & cable operators created a big industry and market opportunities.55 Gigahertz) by using a satellite system which transmits signals directly to subscriber premises The term predates DBS satellites and is often used in reference to services carried by lower power satellites which required larger dishes. However the services provided by cable operators were poor. This has created an opportunity for DTH.

TataSky joint venture of Tata & Star TV. AirTel Digitel TV. Since there are only 3 major players and the market concentration is very high Indian DTH industry is oligopolistic. In the year 2003 DD Direct+ was launched since DD Direct+ is non commericial and free DTH service ( www.Some of the key player in the industry are DishTV by Zee group. Firms within an oligopoly produce branded products and there are also barriers to entry. For every channel there is a scope for broadcasting it in at least ten different languages. Structure of the Indian DTH industry The structure of the DTH industry in India can be categorized as an “Oligopoly”. So every channel multiplied by ten.org) hence we would focous our discussion on private players in the industry.There are some other companies who are comtemplating to start their own DTH like Videocon. An oligopoly is a market dominated by a few large suppliers. Analysis of Indian DTH industry: Indian DTH industry is still at nascent stage. who want to join this highlu lucrative industry. Digital TV by Bharati Telemedia. The opportunity in India almost 10 times that in developed countries like the US and Europe. 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. As of now DishTV. The degree of market concentration is very high. The word Oligopoly is derived from the Greek for few (entities with the right to) sell. There are some other players like Videocon. TataSky.com& www. Sun Direct are in the industry.financialexpress. An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). that is the kind of scope for DTH in the country. SUN Direct from the promoters of Sun TV. BigTV. Big TV by Anil Dhirubhai Ambani Group. .wkipedia. There is an immense opportunity for DTH in the Indian market.

HHI s defined as the sum of the squares of the market shares of 50 largest firms (or summed over all the firms if there are fewer than 50) within the industry. weighted by market share. when the market shares are expressed as percentages. In the case of Indian DTH Industry the HHI index can be computed by squaring the market share of each player and adding them i. The higher the HHI Index the more oligopolistic is the industry In mathematical term it is defined as following : n H = ∑ si2 i=1 Where si is the market share of firm i in the market. and n is the number of firms. AirTel Digital TV ) Promoter Zee group Tata Sons & Star TV Anil Dhirubhai Abani Group Sun by SUN TV AirTel by Bharati telemedia Market Share 53% 30% 15% 2% Another way of confirming it is by using the index Herfindahl. 2 2 2 2 H = 53 + 30 + 15 + 2 H = 85399 Since this value of H is petty high it indicates that the market is oligopolistic.DTH Industry Market Share 2008* Brand Dish TV TataSky Big TV Others (Sun Direct. the result is proportional to the average market share. also known as Herfindahl-Hirschman Index or HHI.e. is a measure of the size of firms in relationship to the industry and an indicator of the amount of competition among them. Substitute goods/products for the products of DTH Industry . The Herfindahl index.

IPTV. CAS is very much similar to DTH as far as the power to the user is concerned.Substitute goods : Refers to a good which is to some extent interchangeable with another good. Doordarshan is the world's largest terrestrial broadcaster with over 1400 terrestrial TV transmitters located throughout the country covering approx.000 cable operators.00. they charge installation fee and monthly rental for the services provided. The cable TV operators came in to the business and connect urban & rural home to the private channels. the government liberated its markets. opening them up to cable television. a public service broadcaster nominated by the Government of India.9 million. It enjoyed the monopoly and has been very successful for some time however offlate it is continuously losing interest of audience because of stiff competition from private channels. The transmission signals are encrypted and viewers need to buy a set-top box to receive and decrypt the signal. CAS required the subscriber to buy set-top-boxes. Cable TV Operators: In 1992. Cable and Satellite households are 68 million.Infact DTH industry is trying to eat the market share of cable TV operators. Cable TV providers also provide CAS services. It faces direct and stiff competition from various service provider which sends TV signals to homes. The total number of TV owning households in India is estimated at 117 million. Cable TV operators poses a serious threat and stiff competition to DTH Industry. DTH is a new entrant in channel broadcasting & entertainment industry. Conditional Access System(CAS): Conditional Access system was introduced metro cities of India to provide the subcribber the choice channel he/she wishes to view. is a digital mode of transmitting TV channels through a set-top box (STB). In economics term it means that when the price of one good increases. The total subscriber base of DTH has crossed 8. It is one of the largest broadcasting organizations in the world in terms of the infrastructure of studios and transmitters. however due to stiff competition and the introduction of other alternatives like DTH. Online TV the number of cable operators have come down to 60. CAS. Doordarshan was the only player in industry providing news and entertainment. The implementation of CAS was focused only on the big cities of India. At times there were 1. Terrestrial Television: Doordarshan is the public television broadcaster of India and a division of Prasar Bharati. CAS or conditional access system. This led to astronomical growth of number of TV channels and created a huge demand of cable TV operators. . Out of this. 88% of India's geographical area.000. Cable TV operators are present in almost all cities and towns of India. This represents a 54% penetration of TV in Indian households. These operators even telecast local and regional channels. demand for the other good increases.

indiatvonline. which may include delivery by a broadband connection. The Indian DTH industry is still in nascent state. allocation of territories. Given the nature of DTH industry (high volume) there will definitely come a time when the industry will go through M&A followed by catelizing. Cartel members may agree on such matters as price fixing. 2007 is a critical year for pay TV. 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. OnLine TV: The world wide web is changing lot of things. including Bharat Sanchar Nigam Ltd and Reliance Communication are planning to launch IPTV in a big way.IPTV: IPTV describes a system where a digital television service is delivered using the Internet Protocol over a network infrastructure. Online TV though is a niche industry as of now but with increased penetration of broadband connection. There are already websites like: http://www. and the division of profits or combination of these. IPTV is technically far superior than any other alternative.com/ http://www. the way data & information are stored. It is in growth stage and so far no cartel has developed. its cross elasticity of demand is negative. A number of other operators. if goods A and B were complements. so no price differentiation As the number of broadband users are increasing in urban and semi urban cities IPTV can pose serious threat to DTH player in long run. where there is a small number of sellers and usually involve homogeneous products. which is growing. Cartel: A cartel is a formal (explicit) agreement among firms. allocation of customers. Complement goods for the products of the firm Complement good: Complement good is a good which is consumed with another good. Web 2. and shared has changed dramatically. with CAS being mandated in a phased manner.0 offers users to watch TV programs online. This means that.com/ Apart from these website TV channels are also streaming live videos of their programs. bid rigging. IPTV will be priced at the same prie as digital cable or DTH. Cartels usually occur in an oligopolistic industry. more of .tvdekho. total industry output. market shares. and more players are moving into DTH. establishment of common sales agencies. it can pose significant challenge to DTH industry.

However inspite of its best effort Doordarshan is struggling to regain its old glory. Currently Doordarshan offers 19 channels in various languages. TV sales and DTH sales: DTH & Cable industry are complimentary goods for TV Sales and vice versa.This is also termed joint demand.ppt ] Changes in substitutes and complements over time The DTH industry is a growning industry. . [Source : TAM Panel Expansion Jan 2007 FINAL.good A being bought would result in more of good B also being bought. An increase in sales/market penetration of either of them lead to increased sales/market penetration of other. The substibute for this industry are following: Doordarshan DD Direct+ CableTV & CAS IPTV Online TV Changes in Doordarshan: The government of India and prasar bharti in general have realized the importance of TV channels and have improved the quality of programs and doordarshan is in the process of transforming itself as multi channel provider. The slide given below illustrates the complemantary relationship between two goods.

lack of regulatory framework and redress avenues were some of the issues that were to be addressed by implementation of CAS It was decided by the government that CAS would be first introduced in the four metros. arbitrary pricing and increase in prices. Now the TV sets are coming with advanced technology. The idea of CAS was mooted in 2001.8 lakh in the same month last year. where until very recently it had managed to attract very few subscribers. It has been in place in Chennai since September 2003. Changes in Online TV: There are plenty of sites which are streaming TV programes online. However the reach of IPTV is limited to metros only. The following entry barriers exist in DTH industry 1.. poor service delivery by Cable Television Operators (CTOs). monopolies in each area. For a new entrant to succeed it has to ensure that it builds customer base soon other wise it will not be possible to make profit. The initial cost of setup for the company itself is very high. The growth in sales of TV sets would definitely lead to higher sales of DTH. High initial setup cost of satellite. Entry Barriers in DTH industry The DTH industry is a high tech industry and it require lot of capital investment. bundling of channels. It has been rolled out recently in the other three metros of Delhi. Changes in Complement: Television sets are complimentary good for DTH industry. it requires tranponders and other high tech equipment. Changes in CAS: The substitute CAS (Conditional Acces System) has changed significantly. LCD TV etc.6 lakh set sales against 3. For example Plasma TV. . Consumer electronics and tv manufacturers association (CETMA) television sales clocked 21 per cent growth in august this year with 4. DD direct+ mostly offers channels of Doordarshan. However DD Direct+ is also interested in commercializing the operations. 2. Poor reception of certain channels. IPTV is available in all areas of Delhi as well. IPTV can be bundled with services like Telephony. DTH is a lowmargin and high volume industry: DTH thogh is a lucrative business however it is a low margin and high volume industry. due to a furore over charge hikes by channels and subsequently by cable operators. Changes in IPTV: MTNL launched IPTV on 21 October year 2006 and BSNL in Kokata has been offering IPTV from August 2007.Changes in DD Direct+: DD Direct+ is free DTH service and offers 51 TV channels and 24 radio channels. transponder and other higtech equipment : The initial cost of setup for broadcaster is hugh so this acts as a big entry barrier. if it happen and if DD Direct+ is aggressive than it will be a very serious threat to private DTH providers. The online TV offers the flexibility to the viewer to watch the program as and when they want rather than when the program is aired. Mumbai and Kolkata. As of now online TV are not threat but this can definitely pose problem for DTH in future. VoIP(Voice Over Internet Protocol) & IPTV and this can be a very serious threat to DTH.

One to ensure that it is providing better customer service than local cable operators and on the other hand it has to provide better customer service than existing DTH service provider. . resulting in an annual compounded growth rate of 6. So providing the right content to the right consumer will also play a crtical role in success of new entrant. Differentiation through content: There are hundreds of TV channels in India and as per the industry reports there are close to 150+ channels waiting for approval. Even achieveing the break even period is comparatively high. this take the numbers to 400 different TV channels. Pricing has to be competitive versus cable: For a new entrant to be successful it is going be very difficult as they entrant will to compete with local cable operators as well as existing DTH service provider. The DTH industry is currently pegged at 2. As Indian consumer are habitual of calling the cablewalah whenever there is some issue.5% p. Customer Service: The quality of customer service will be a key differentiator.a. 8.Sun DTH by promoers of SUN TV and Digital TV from Bharati telemedia. Out of this. DTH industry in India offers immense potential of growth.3.6 million subscribers. 7. Multicultural & Multilingual Gepgraphy: India being a multicultural. High Cost of content: The cost of content is high in this industry and poses a serious challenge for the service provider. 9. 6. differentiation through content is must. Cable and Satellite households are 68 million. The Dish TV from Zee which was launched in 2003 will reach break even in 2009(6 years ) and TataSky launched in 2006 hopes to break even in 5-7 years. Recent entries in the industry The DTH industry in India is still at nascent stage and recently three companies have entered in the industry Big TV from ADAG(Anil Dhirubhai Ambani Group). This long break even period is a significant barrier for new entrant. 5. Cost of a set top boxes: The cost of setup box installed in a homes is stil very high and the cost of a set top box is a significant entry barrier. There are already established players in the market and the price war has already started. Television households are estimated to grow to 165 million in 2011. 4. Higher number of subscriber can bring down the cost incrementaly. Long gestation and break even period: It takes lot of time to for a new entrant to stabilize and grow in this industry.A new entrant will face challenges in two fronts.multrilingual society it is very important for the new entrant to ensure that it maintains a fine balance between the regional and nation flavour.It is one of the fastest growing DTH market in world. This represents a 54% penetration of TV in Indian households. Economic drivers of this decision for BIG TV by ADAG The total number of TV owning households in India is estimated at 120 million.

000. seeks to capture 40% of the current DTH market in the next 12 months.100 billion in 2011.000 crore by 2012.000 retail windows to reach to customers whereas Big TV had 1. DTH subscribers are expected to touch 27 million in 2011 and 61 million in 2015. Big TV will reach 6.15.400 and 3. Both Dish TV and Tata Sky had 35. This. research reports reveal that in wherever digitisation has happened and CAS has been made mandatory. Big TV hopes to capture the market by offering more than its rivals. In terms of sheer numbers.500 towns. . However. comprising less than 5% of the domestic television market. Due to the continued buoyancy in the Indian economy and an annual growth rate of over 9%. which is expected to grow to about Rs 1. Economic impact of the decision: BIG TV DTH was the largest retail rollout of a home entertainment Service in India. the size of the Indian media and entertainment industry was in the tune of Rs 50.00. which is targeting five million customers to begin with. Currently. the country's gross domestic product is touching US$ One trillion.The DTH Industry revenue is expected to grow at 80% compounded per annum over the next 5 years and will be in the range of Rs.000 crore. 25% of the audience has shifted from cable to DTH. While both Dish TV and Tata Sky initially launched their services in 4.500 towns respectively. Big TV. In 2007. coupled with increasing penetration of TVs. will give a boost to the demand for better quality products like DTH. there are 120 million television homes out of which 80 million are cable and satellite (C&S) homes and a measly six million pay-TV DTH homes.

wikipedia. References: [1] http://en.indiantelevision.%20Discussion%20&%20Analysis.com/small-business-encyclopedia/industry-life-cycle [12] http://en.net/economics/content/topics/monopoly/oligopoly_notes. achieved the 1 million subscriber mark.htm [18] http://www. This has helped BIG TV to capture the share of 15 per cent in just 3 months in the fast-evolving Indian DTH sector.org/wiki/Herfindahl_index [5] http://en.in/mtnl-launches-indias-first-iptv-in.com/20021118/opinion2.in/Static/pdf/Mgmt.com/articleshow/323215483. within 90 days of its launch.ficci-frames.scatmag.apnadth.com/special/sperep1.indiatimes.atimes. This is very significant considering the fact it took years for DishTV & TataSky to reach the same number of subscribers.htm [7] http://www.com/technical [15] http://timesofindia.com/Archive/2003/synopsis03/dth. BIG TV poses very serious challenge to DishTV & Sky TV. AirTel Digital TV was launched on 9 th October but they could not become as big as BIG TV.expresscomputeronline.labnol.org/india/corporate/reliance-adag-joins-the-dth-bandwagon/93/ [17] http://www.BIG TV.com/tamindia [14] http://www.htm [8] http://teck.org/wiki/Complementary_good [13] http://www.org/wiki/Doordarshan [6] http://www.com/entry/419-iptv-will-struggle-in-india-says-gartner/ [10] http://tutor2u.htm [11] http://www.tamindia.contentsutra.pdf [4] http://en.com/tech_ovr.com/atimes/South_Asia/IH30Df01.wikipedia.org/wiki/Oligopoly [2] http://www.enotes.cms [16] http://www.shtml [3] http://www.dishtv.html [9] http://www.html . It has become the 3rd largest player in very short time and is positioned to challenge DishTV and TataSky.wikipedia.wikipedia.

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