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HomeArticlesTechnicalThe Indian DTH industry A review of the year (2014) gone by
Wednesday, 04 March 2015 07:44

The Indian DTH industry A review of the year (2014) gone by

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From electing a new government to sending the first unmanned craft to Mars, a lot has happened in the past year. The Indian DTH industry is no exception to this change. What has helped bring this change is the nature of the business, which provides content across language barriers and is fast gaining acceptance with both urban and rural audiences? One of the biggest success factors of the DTH model is the transparent prepaid business model. 

What keeps this sector on the forefront is the innovation in technology that not only is a differentiator, also the key to fulfill customers changing and latent needs. From the recently launched iDTV to the 4K technology, capital investment and innovations in the sector is increasing with every passing year. Timely or rather before time technology advancements in the DTH sector, with a range of unique and interactive services gave rise to another level of enjoying entertainment right from Karaoke in the living room, headphone attached to the remote control, to TV on the go on tablets, smart-phones and laptops. These innovations helped the industry in adding more subscribers along with positively impacting the average revenue per user (ARPU). 

2014 has also been a defining year for the entire DTH industry. After being in an aggressive investment mode for a while now, the platform has gathered a fairly large number of consumers. The industry has now moved its focus on cutting down losses and improving qualitative factors like churn, ARPU, etc.  Recently The Department of Telecommunications (DoT) has issued orders confirming that set top boxes (STBs) are part of telecommunication equipment. This has been done to promote an increased production of STBs. This move will go a long way in helping domestic manufacturers produce them at more competitive prices by availing tax exemptions. 

In the past few years, sports events were one of the major drivers of the adoption of HD content on television, as fans were willing to go the extra mile to be a part of the cricketing and football action in superior quality. What took this year to another level was the launch of 4K, or Ultra-High Definition content, which brings four times clearer picture quality than full-HD. Intent to provide, intent to absorb and relish new technologies seems strong at both ends, hence the year ahead will be action packed.

The arrival of the new government in the country has seen some positive change for this sector. The budget 2014 got some respite to the set top box (STB) manufacturers by decreasing the excise duty from 12 per cent to 10 per cent. However, the plea continues for rationalizing the entertainment and service tax that is being levied on the industry since several years, while the cable operators go without paying it.

DTH category consists of six operators. They contribute 50 per cent of the pay revenue to the broadcasters. Then there are eight MSOs, who contribute 30 per cent. DTH operators pay more as content costs. So, if 40 per cent is tax and 35 per cent is content, players are left with 25 per cent to subsidize the box, pay for satellite, marketing, distributor and return to shareholder.

This is not yet possible in cable. The benefits of flexibility and empowerment in the case of DTH are in the customers’ hands.

It will not be wrong to say that the Indian viewers have never before experienced audio and video quality that is today delivered by DTH. The DTH industry started with baby steps and soon transformed to colossal strides, changing the TV viewing experience for viewers like never before. Where we are right now, the future looks promising as the market predicts a massive growth of $5 billion and 76.6 million subscribers by 2020.

Let’s wait and not forget to watch.

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