When the subscribers think of the TV and broadcasting industry, the few companies that pop into the minds of people are the DTH service providers like Tata Sky and Dish TV. There is no doubt that the industry is structured in such a way that the DTH operators are given more preference as compared to the cable operators. In fact, the dent which came as the part of the erosion of subscribers from the industry, as highlighted by the KPMG Media and Entertainment industry report, was also delivered to the cable operators more rather than the DTH operators. The industry lost around 12-15 million subscribers in the last year, and this was made up by the loss of cable operators, whose subscriber base went from 91 million homes to 83 million in FY19, whereas, the DTH operators grew their subscriber base from 62 million to 67 million in the same time period.
DTH Operators Being Helped by New Trai Tariff Regime
It is also worth noting that powered by the new tariff regime, the DTH operators also enjoyed an advantage on the revenue front as well. Although the active subscriber base shrunk overall, the ARPU went up in the third and fourth phases because of the Network Capacity Fee (NCF) of Rs 130 plus taxes. The ARPUs were much lower before the new tariff regime, so in the later period, the industry enjoyed better ARPU, which translated to a yearly growth of 8.1% despite loss in subscribers.
According to Girish Menon, Partner & Head, Media and Entertainment Practice, KPMG, remarked about the situation of DTH operators saying, “They have done better than cable. DTH has always been about packs, whereas cable subscribers for the first time are figuring out how to use packs." He also highlighted that it is because of the consumer-centric business model of the DTH operators that they have a competitive advantage over other cable operators.
DTH Operators Bringing New Services With Core Offerings
He also highlighted that to construct a moat around their business which is lately being threatened by the coming of fibre-to-the-home (FTTH) and other technologies, and the DTH companies are innovating on their part. For example, Tata Sky has come up with its Binge service by partnering up with content providers like Hotstar, Sun NXT, and more. Other DTH platforms like DTH and D2h have also their Watcho app. The coming of Reliance JioFiber in the industry might also further increase problems for the DTH operators. The Mukesh Ambani led telecom operator is also offering a 4K TV and Set-Top Box with its offering as well, which is something that will hurt the DTH operators in the long run.
Menon of KPMG has also said that the DTH operators could be on the path of reinventing themselves and might be rolling out their own content in some time like Tata Sky is dong. There is also the consolidation in the industry to look forward to, with Dish TV merging with Airtel Digital TV in the coming months.
