Professional Documents
Culture Documents
Industry Analysis ON Direct To Home (DTH)
Industry Analysis ON Direct To Home (DTH)
ON
DIRECT TO HOME (DTH)
CONTENTS
Chapter
1. Introduction
2. Product lines and consumer behavior
3. Growth of the industry
4. Technology of production and distribution
5. Marketing
6. Innovation
7. Strategies and competition in the industry
8. Business environment
9. Critical success factors
Appendices
Chapter-1
Introduction
INTRODUCTION
Overview of the Industry
The history of Indian television dates back to the launch of doordarshan, Indias national
TV network in 1959. The transmission was in black & white. The 9 th Asian games which
were held in 1982 in the countrys capital New Delhi heralded the mark of color TV
broadcasting in India. In 1991, Indian economy was liberalized from the License Raj and
major initiatives like inviting foreign direct investments, deregulation of domestic
business emerged. This lead to the in flux 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 lead to
revolution.
Every city in the India had a complex web of co-axial cables running through the streets
with a new breed of entrepreneurs called as cablewallahs or Local Cable Operators
(LCO) taking in charge of distribution. The film industry was shocked by this sudden
growth and there were even organized protests for calling off the Cable TV industry.
There were simply too many cable operators in the country and the channels had a
difficult time in getting its returns as the existing system was a non-addressable and the
operators could simply give a reduced number of subscribers to amass profit. This lead to
the emergency of a new breed of firms called as Multi System Operators (MSO) who had
heavy financial muscles to make capital investments. . The MSO industry became highly
monopolistic which warrants government participation to ensure competition.
Later on, the United Front Government had issued a ban on use of ku band transmission.
After a change of government, the ban got lifted finally in 2001 and TRAI issued the
guidelines for operating DTH. Countrys first private DTH license was awarded to Dish
TV in 2003 which started operations in 2004. Prasar Bharati also started its product DDDirect+.
DTH Digital TV system receives signals directly from satellite through the dish, decodes
it with the Set-Top Box and then sends stunningly clear picture and sound to TV which is
the business under taken by some companies by observing the rate of growth and scope
for business & opportunity in the Indian market which has 120 million viewers of TV.
With the Indian economy growing at a GDP growth rate of 7.4%, there is a sense of
growth prevailing every where. The average Indians disposable income and purchasing
has risen to never before levels. The Indian entertainment and media industry is not far
behind. It is currently estimated at a worth of Rs.450 billion with a CAGR of 18% over
the next 5 years. Terms which were alien to Indians like capital DTH, digital cables,
IPTV are suddenly finding presence in the countrys journals.
In 2007, TRAI proposed a new initiative by name Head end-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 Headed in the satellite. The LCOs can receive this digitalized bundle and
deliver to the individual homes. With HITS, country wide implementation of CAS
becomes instantaneous and cost-effective. This benefits both the broadcasters and the
customers by ensuring Addressability, Better quality of service and increased number of
channels. Another emerging trend is the IPTV which is yet to be regulated and one can
expect lot of action in this sector.
According to a report on Direct to home (DTH) service, it predicts that India would
overtake Japan as Asias largest DTH by 2010 and be the Asias leading cable market by
2010 and the most profitable pay-TV market by 20015.
List of players in the industry
Tata Sky joined venture between Tata and Rupert Murdochs Sky TV.
DD Direct+ is a free Direct to Home (DTH) service that provides satellite television and
audio programming to households and businesses in the Indian subcontinent. Owned by
parent company Doordarshan, DD Direct Plus was launched on December 16, 2004. Now
chairman of DD plus+ is Shri Arun Bhatnagar and CEO is B S Lalli under the ministry of
information and broadcasting.
Dish TV
Dish TV is the first private DTH satellite television provider in India, using MPEG2 digital compression technology, transmitting using NSS Satellite at 95.0. Dish TV's
managing director and Head of Business is Jawahar Goel who is also the promoter of
Essel Group and is also the President of Indian Broadcasting Foundation and Mr.
Subhash Chandra is the Chairman of Dish TV. Dish TV is a division of Zee Network
Enterprise (Essel Group Venture). EGV has national and global presence with business
interests in media programming, broadcasting & distribution, speciality packaging and
entertainment. Zee Network incorporated dishtv to modernize TV viewing. By
digitalizing Indian entertainment, this enterprise brought best television viewing
technology to the living room. It not only transmits high quality programmes through
satellite; but also gives a complete control of selecting channels and paying
DTH service was launched back in 2004 by launching of Dish TV by Essel Group's
Enterprises. Dish TV is on the same satellite where DD Direct+ is. Dish TV started its
service in Pakistan with the collaboration of Budget Communication. Dish TV was only
DTH operator in India to carry the two Turner channels, Turner Classic Movies and
Boomerang. Both the channels were removed from the platform due to unknown reasons
in March 2009. Dish TV uses NSS-6 to broadcast its programmes. NSS-6 was launched
on 17 December, 2002 by European-based satellite provider, New Skies. Dish TV hopped
on to NSS-6 from an INSAT satellite in July 2004. The change in the satellite was to
increase the channel offering as NSS 6 offered more transponder capacity.
Tata Sky
Tata Sky is a DTH satellite television provider in India, using MPEG-2 digital
compression technology, transmitting using INSAT 4A at 83.0. Tata sky is incorporated
in 2004; Tata Sky is a JV between the TATA Group and STAR. Tata Sky DTH endeavors
to offer Indian viewers a world-class television viewing experience through its satellite
television service. Vikram Kaushik is present CEO of Tata Sky Ltd. The TATA Group is
one of India's largest and most respected business conglomerates. It comprises 93
operating companies in seven business sectors and diversified group: information systems
and communications, engineering, materials, services, energy, consumer products and
chemicals. The TATA Group has operations in more than 40 countries across six
continents and its companies export products and services to 140 nations.
The Group and its enterprises have been steadfast and distinctive in its adherence to
business ethics and their commitment to corporate social responsibility. This is a legacy
that has earned the Group the trust of many millions of stakeholders in measure few
business houses anywhere in the world can match. The SKY brand, owned by the UKbased British Sky Broadcasting Group, brings to Tata Sky the reputation of more than 20
years experience of satellite broadcasting. SKY is well known for the innovative products
and services launched by BSky, such as DTH broadcasting in 1989, digital satellite
broadcasting in 1998, interactive television services in 1999 and the SKY+ personal
video recorder in 2001. Tata Sky joins an international group of DTH businesses that
includes platforms as far apart as the UK and Italy in Europe, and Mexico and Brazil in
Latin America. Tata Sky Ltd is the First Indian DTH provider to be awarded the ISO
27001:2005 accreditation, the ultimate benchmark for information security. The
assessment for the certification was conducted by Intertek Systems Certification, the
management systems registration business unit of Intertek Group plc and is accredited by
several internationally-recognized accreditation bodies worldwide.
In October 2008, Tata Sky announced launching of DVR service Tata Sky+ which
allowed 45 hours of recording in a MPEG-4 compatible Set Top Box. The remote is
provided with playback control keys and is being sold with special offers for existing
subscribers. Tata Sky was selected as a SUPER BRAND for the year 2009-2010 by an
independent and voluntary council of experts known as Super brands Council. It is the
only Indian DTH to have won this distinction.
Sun Direct
Sun Direct is a DTH satellite television provider in India, using MPEG-4 digital
compression technology, transmitting using INSAT 4B at 93.5E. It is the country's first
MPEG 4 technology DTH service provider. Sun Direct is a DTH service in India
headquartered in Chennai, Tamil Nadu. Sun Direct TV was registered in February 16,
2005. However, the failed launch of INSAT 4C resulted in a lack of transponders,
delaying the launch. The service was finally launched on December 2007 after
availability of transponders from INSAT 4CR. Because of the lowest pricing of any DTH
in India Sun Direct spread rapidly all over the country. On December Sun Direct was
launched in Mumbai and announced its pan India launch. By 2009 it became leading
DTH provider with 3 million subscribers. This makes it 4th largest DTH service provider
of India. In April 2009 Sun Direct officially launched its High-Definition service in India.
Sun Direct uses the latest MPEG-4 based technology to increase broadcast capacity.
Sun Direct provide next-generation services in fast-growing and emerging markets
quickly and efficiently. Sun Direct selected Oracle based on its convergent multi-service
capabilities and proven real-time scalability allowing it to consolidate billing operations,
enables powerful new service offerings and improves visibility into customer information
across services.
BIG TV
Reliance BIG TV is a DTH satellite television provider in India based in Navi Mumbai,
using MPEG-4 digital compression technology, transmitting using MEASAT-3 91.5east.
It is the 5th DTH service launched in India. Reliance BIG TV limited is a part of
Reliance Communications Ltd., a subsidiary of Reliance Anil Dhirubhai Ambani Group
founded by the Late Dhirubhai Ambani, the Indian business tycoon and owned by his son
Anil Ambani. BIG TV started operations from 19 August 2008 with the slogan "TV ho
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Tho BIG Ho" ("If you have a TV, make it BIG"). It currently offers close to 200 channels
and many interactive ones, 32 cinema halls (i.e. Pay Per View Cinema Channels) as well
as many Radio channels. The company plans to increase the number of channels in the
near future to 400 and begin High Definition (HD) broadcast. It is the first Pan-India
DTH provider that uses MPEG-4 for broadcasting. There are also plans to introduce
services like i-Stock, i-News and other such interactive services in the future.
Reliance BIG TV was launched on August 19, 2008 with the sole aim of providing the
consumer with quality and enriched home entertainment service at value-driven pricing.
Reliance BIG TV's launch in August was probably the biggest roll-out in home
entertainment ever and deployed the most advanced MPEG4 technology that enabled
them to deliver best quality digital audio-video to the consumer. It also got prepared for
the future when Hi-Definition TV will be launched in India because only MPEG4
technology can support HD TV and not MPEG2 which is used by the earlier entrants in
the DTH industry.
Reliance BIG TV's retailer network is spread across 100,000 outlets in 6,500 towns in
India. This was literally unheard of in the DTH industry. They had effectively outstripped the competition here. When it came to pricing packaging, their introductory
offer stood at Rs. 1,490/- with 3 to 6 months of free subscription. They also introduced 32
Pay-Per-View Movie Channels, the highest by any DTH player.
Airtel digital TV
Bharti Airtel Limited is the flagship company of Bharti Enterprises and is Indias largest
integrated and the first private telecom services provider with a footprint in all the 23
telecom circles. As India's leading telecommunications company, the Airtel brand has
played the role of a major catalyst in India's reforms, contributing to its economic
resurgence. Airtel since its inception has been at the forefront of technology and has
steered the course of the telecom sector in the country with its world class products and
services.
10
Airtel Digital TV is a DTH (Direct to Home) service from Bharti Airtel. It uses MPEG-4
digital compression with DVB-S2 technology, transmitting using INSAT 4CR 74E
Airtel digital launched on 8 October, 2008 with a 360 degree mega campaign 'Come
Home to the Magic. Since then it has launched 2 other campaigns: Stars come home
(March 2009) and DTH Picture Clarity (August 2009) has increased its channel base to
183+ channels. Airtel digital TV is now amongst the fastest growing DTH brands in the
country and is available across 5000+ towns in India. It has also been ranked as the best
DTH service by Living Digital magazine.
Airtel chief Sunil Mittal said that Airtel digital TV and other DTH players have a bright
future in Indian market as the people are getting more attracted towards DTH because of
its quality and affordability.
Videocon d2h
Videocon d2h is a DTH satellite television provider in India based in Mumbai, using
MPEG-4 with DVB S2 digital compression technology
Videocon Leasing & Industrial Finance Limited was incorporated on 4th September,
1986 as Adhigam Trading Private Limited. In terms of the necessary resolutions
Passed under Sec. 21 of the Companies Act, 1956, the name of the Company was
changed to Videocon Leasing & Industrial Finance Limited on 14th February, 1991. The
Company received a fresh certificate of incorporation from the Registrar of Companies,
Gujarat at Ahmedabad on 14thFebruary, 1991.
Videocon d2h launched May 1, 2009. it came with a very good strategy for selling both
of its electronic products like TVs DVDs along with the new set top box. This is
offering direct to TV with out any set top box also. Only the antenna is enough, it also
came with DVD which is connected directly to the TV or antenna is connected to DVD
which gives a best quality of out put.
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Chapter-2
12
Set-Top-Box.
Head-Antenna.
Cable
DVD
Remote
Product description
SET-TOP-BOX:
The set top box comprises of the MPEG-2 OR MPEG-4 with DVB2 technology.
Head-antenna:
Antenna which receives signals directly from satellites,
Cable:
Cable connects antenna to the set up box
DVD:
One of the recent entrants into DTH industry is vediocon. This came with set top box
with DVD
ACCESS CARD:
The access card is another important thing in the set top box setup
Where the access card will receive the signals directly from satellite trough head top
antenna
LCD TV:
Some companies are offering the whole set of LCD TV with DTH connection
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14
Chapter-3
15
16
The pattern of growth is very difficult to determine because a business cycle takes place
in long term. But this industry is having very short period for making or observing a
business cycle.
The analysis that can be made is though the economic cycles is not continues and it was
in boom then when the industry started and now just the economy is in recovering stage
from the recession. Interesting factor is that all the industries are hit seriously buy the
rescission but DTH industry has reported growth continuously but only it has slowdown
the rate of its growth. Now the industry is growing at 20% for every annum.
Growth Determinants
Demand constraints and SCAR are the factors which effects the growth of the industry.
Growth determinant and high TV sales increase the chance for more sales of set top box
which will effect the growth. When the facilities of the products increase it acts as a
growth determinant.
The entertainment channels and the news channels players increase the growth to opt the
DTH. Some of the DTH players are bringing innovative plans like live shopping, broad
band, and etc will act as growth determinants.
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Chapter-4
18
19
There can also be synergies between products such that offering a complete range of
products gives the consumer a more desirable product offering than a single product
would. Economies of scope can also operate through distribution efficiencies. It can be
more efficient to ship a range of products to any given location than to ship a single type
of product to that location.
Value added
Many players are using this DTH as the basis and giving many value added services to
the customers. Some of the players are giving best valued services to the customers like
Airtel gives live-news, home shopping, live gaming, broad band, horoscope, radio, and
etc. Tata sky is giving recording for more than 4 hours, and came with a differential
strategy of Tata sky+ with other facilities. Big TV is giving live with Big movies, Dish
TV is giving live TV on the wheels, and many other value additions.
Logistics
Logistics is still a nascent and fragmented industry in India. It is estimated that while
outsourced logistics accounts for 54% of total logistics spending in India, organized
players have only 10% of the pie.
DTH industry follows a good logistics which is as similar to the logistics which are used
buy automobile industry, for the effective management of the DTH industry.
Labor
Labours are included in every activity of the business, most of the people working are not
daily labours, they are employed and paid monthly in the form of salary. DTH requires
skilled labor like management executives, administrators, software engineers, sales
executives and attorneys.
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Chapter-5
Marketing
21
Marketing
Market segmentation, marketing strategies, marketing practices and marketing concepts
specific to the industry
Indian TV channel broadcast 15.7-mn advertisement every year, which totals to 362-mn
seconds of TV advertisement every year.
TV viewer ship has declined by 5% since 2001. TV broadcasters are expected to go hike
in advertisement rate this year by 16-18%. Market segmentation in DTH industry mainly
concentrates on women who dont like missing their daily soap and news more ever
women are able to learn English speaking which is a very special feature of DTH. DTH
also concentrates on children also by providing them games, dictionary, some discovery
videos specially inbuilt, maths, science and social knowledge. It also focuses on old
people as it has updated videos of various holy and religious places.
DTH uses different marketing strategies for promotion and sales of its product. It gives
advertisements with their brand ambassadors which attract customers, door to door
selling, on the phone selling, discount and offer sales, packages, etc
Marketing practices is a continuous process as the competition keeps increasing among
the players in the industry. Each player is investing lots of money in promoting there
brands. Many players are making advertisement with movie actor and actress as brand
ambassadors for their products because DTH is mainly considered with entertainment.
Some of the companies like Tata sky is having Super Star Amir khan as brand
ambassador and Airtel is having many film stars like kareena kapoor, A.R.Rehaman, saif
ali khan, etc. Dish TV is also having Super Star Sharuk khan as the brand ambassador.
Sun direct also uses southern actress for their brand promotion. Marketing practices are
the decisions taken by the manufacturing company to increase sales, expand themselves
into many areas etc. Successful marketing practices bring sale up, while unsuccessful
marketing practices have no impact on sale or negatively impact sale.Marketing concepts
specific to the industry is primarily targeted at a niche segment who buy the TV sets from
the electronic retail chains.
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Chapter-6
Innovation
23
Innovation
Types of innovation, concepts of innovation relevant to the industry, source of innovation,
rate of innovation and economies of scale.
The concept of innovation in DTH industry is INCREMENTAL innovation; every thing
that is done is due to constant research of many marketing and analysts to bring many
innovations to the existing products in the DTH industry. Incremental innovation is the
apt innovation which is suitable and all the DTH players are concentrating up on.
This innovation makes the business to grow continuously and brings advantages to the
customers using the products and the service.
There are many sources of innovation for this industry as mentioned in the above, the
technology and the people are the main sources for the innovation. Customers opinions
and their needs can be served by providing a service which is matching to their needs and
requirements. In this days every company setups its own R&D in its own company with
very intelligent people for meeting the expectation op the customer.
Digital TV, the DTH service from Airtel, has announced Indias first skin integration
innovation on its EPG screen in partnership with Yahoo. Yahoo takes forward its latest
brand campaign YOU in this first of its kind partnership where an online portal will use
DTH as a medium to promote itself.
The Electronic Programming Guide screen on Airtel digital TV is now completely
integrated with Yahoo Indias homepage. Customers will find a message Fill your home
page with all the things that make YOU when they log onto to the EPG screen. A
prompting Red Button will take them to a dedicated landing page that elaborates the
offerings on Yahoo Indias new home page. The YOU campaign enables users to
customized the home page as per their liking and empowers them with the choice to
integrate social applications such as Facebook with their Yahoo homepage. This whole
idea was conceived by NetworkPlay, right from design elements to execution and thanks
to Mindshare for buying into the idea and flawlessly helping people execute it.
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Tata Teleservices Limited has announced a technological breakthrougha first-of-itskind innovation in India with the launch of TATA Photon TV, a new application that
allows Tata Photon Plus subscribers to watch live television channels on their laptops
while on the move, and on their personal computers at home and in the office. The
Photon TV service is exclusively available to Photon Plus users. With its growing
popularity, Photon Plus has caught the admiration of millions of users across the country,
with
its
high-speed
data
access
capabilities
and
the
ease
of
mobility.
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Chapter-7
26
27
28
WEAKNESS
Skilled labor
Satellite technology
Signals
Viewer migration.
Uncertainty in viewer ship.
OPPORTUNITY
Technology
Distribution
Innovation
Value adding
THREAT
Economic downturn.
Climate
Radio
Cinema halls
Broad casting of channels
New entrants
Porters five force model
The five forces which one must consider to analyze any industry are the rivalry between
the firms within the industry being analyzed, the bargaining power of buyers, the
bargaining power of suppliers, the threat of substitute products or services, and the threat
of new entrants (also known as barriers to entry). They are also shown in the diagram
below. Initially propounded by Harvard Business School Professor Michael Porter, the
Five Forces framework has been accepted as a strategic framework which one can apply
to analyze any industry.
29
Threat of substitutes
DTH gives stiff competition from the terrestrial, cable & IPTV. As per the industry
estimates, there are 130 million TV homes of which 71 million are served by cable and
around 6 million served by DTH with the remaining taken by terrestrial transmission. As
IPTV is a new entrant there is not much data on its subscriber base.
Bargaining power of suppliers
DTH industry relies on three major suppliers. Customer premise equipment (CPE)
Comparing of the satellite Dish, Set Top Box with the necessary Access Card, the Ku
band transponders are obtaining satellites and content. With India set to overtake Japan as
Asias largest DTH by next year, the bargaining power of India DTH operators with CPE
suppliers have been steadily increasing.
Bargaining power of buyers
With enough operations to choose both from the point of alternate mediums like cable,
IPTV and terrestrial broadcast and from the point of increasing DTH operators, the
30
consumer is at his will to decide. Customers will continue to have a high bargaining
power until DTH platforms try to differentiate them as superior players with better
content and clarity.
Rivalry among existing firms
With 3 operational players and 4 players in the queue, inter firm rivalry is quite high.
The competition from state owned DD-Direct to private players in negligible from the
content point of view as the number of channels offered by DD-Direct is very limited.
However, DD-Direct does not change any monthly subscription charges. Between Dish
TV is Tata Sky there is an intense rivalry exhibited by price war and discount schemes
offered to new connections. Being the first mover, dish TV had price advantage in both
the STB offers superiors DVD quality Video to its advanced STB.
While Dish TV is planning to spend Rs. 850crs over the next 3 years, the rival TataSky is
willing to spend Rr.2000crs over the medium term. The companies have also set
ambitious targets with Dish TV aiming to reach 5 million subscribers in the next 18 to 20
months while Tata sky aiming to reach 8million subscribers in the next 18 to 20 months
while Tata sky aiming for 8 million subscribers by 2012.
Threat of new entrants
With already 7 players space in the DTH space, threat of new entrants is low. There is
already enough competition which will discourage new firms to enter this business.
While getting a licensee is relatively easy, the barriers to entry are high when it comes to
pricing of CPE and getting the required transponder. There is a definite, first mover
advantage.
Analysis of the Industry using Porters value chain model
Porters value chain analysis is considered with the value analysis of the several functions
of the DTH industry, it makes to understand the importance of this model to develop and
add on value to the present features of the industry and its functioning.
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Under the BCG GROWTH-SHARE MATRIX, as an industry matures and its growth rate
declines, a business unit will become either a cash cow or a dog, determined solely by
whether it had become the market leader during the period of high growth. While
originally developed as a model for resource allocation among the various business units
in a corporation, the growth-share matrix also can be used for resource allocation among
products within a single business unit.
In the DTH industry when the market share is obtained then it is automatically treated as
the market leader, and also it needs maximum market share to extent, when the market is
32
not in incremental state then the growth rate of the industry will retain. Again this
industry follows all the variables in the all areas till the both will come into normal level.
33
Chapter-8
Business Environment
34
Business Environment
PESTEL Model
Political factor
35
Chapter-9
36
37
Appendices
38
Appendices
MEDIUM 2008
TV
40.7
PRESS
46.9
RADIO
3.2
CINEMA 0.7
OUTDOOR6.8
INTERNET1.7
39
Indian TV channel broadcast 15.7-mn advertisement every year, which totals to 362-mn
seconds of TV advertisement every year.
TV viewer ship has declined by 5% since 2001. TV broadcasters are expected to go hike
in advertisement rate this year by 16-18%.
Yearly results of dish tv
In Rs (crores)
Sales Turnover
Other Income
Total Income
Total Expenses
Operating Profit
Profit On Sale Of Assets
Profit On Sale Of Investments
Gain/Loss On Foreign Exchange
VRS Adjustment
Other Extraordinary Income/Expenses
Total Extraordinary Income/Expenses
Tax On Extraordinary Items
Net Extra Ordinary Income/Expenses
Gross Profit
Interest
PBDT
Depreciation
Depreciation On Revaluation Of Assets
Mar '06
Mar '07
Mar '08
Mar '09
31.46
-31.46
114.44
-82.98
------120.34
---82.98
1.67
-204.99
2.84
--
190.94
3.40
194.34
376.11
-185.17
---------181.77
11.78
-193.55
57.53
--
413.28
2.43
415.72
632.34
-219.06
---------216.63
46.95
-263.56
149.05
--
737.69
1.27
738.97
926.41
-188.72
---------187.45
72.70
-260.14
215.41
--
40
PBT
Tax
Net Profit
Prior Years Income/Expenses
Depreciation for Previous Years Written
Back/ Provided
Dividend
Dividend Tax
Dividend (%)
Earnings Per Share
Book Value
Equity
Reserves
Face Value
-207.83
0.03
-207.86
0.03
-251.08
0.25
-251.33
-0.55
-412.61
0.59
-413.20
--
-475.55
0.73
-476.28
--
--
--
--
--
-----71.57
45.97
1.00
-----42.82
-82.30
1.00
-----42.82
-495.50
1.00
-----68.73
279.23
1.00
Reference:
Bibliography:
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