Xlri- Dth- Case Study

8/8/2019 Xlri- Dth- Case Study

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DTH

Current and future market scenario

Marketing Case Study

By

Soumya Prasanna Mishra


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DTH stands

for Direct-To-Home television.

A wireless digital audio / video

service is delivered through satellite.


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History

1992- Cable TV started. Distribution was done by Local Cable Operators.

2003/2004- Due to monopoly of cable TV operators and less discipline

amendment of the Cable TV networks(Regulation)Act to provide

Conditional Access System (CAS) was formed to address the mile

distribution and broadcast with accuracy and digitalization . CAS got

started in Chennai, Delhi, Mumbai and Kolkata.

2004 DTH was started . 1st DTH licence was provided to Dish TV(ZEE

group). Simultaneously Prasar Bharti also started DTH named DD Direct+.


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DTH Market Overview The DTH industry is a high tech industry and it require lot of capital investment.

High initial setup cost of satellite, transponder, Set Top Box cost (Rs.2500.00) and other high

tech equipment :

DTH is a low margin and high volume industry:

competitive pricing versus cable industry:

Differentiation through content i.e. channels :

Customer Service: Good quality service required by customers i.e better than Local Cable

operators.

Multicultural & Multilingual Geography: Local language channels and penetration

Long gestation and break even period:

High Cost of content:


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Current Scenario

Target -homes to convert from Cable & Satellite connection to DTH.

5 active players in the market and 2 new are trying to get in.

Price wars, discount schemes, procurement of transponders, bouquet of channels,set top boxes with superior quality of videos etc have been witnessed in themarket to catch up the space.

The DTH Industry revenue is expected to grow at 80% compounded per annumover the next 5 years and will be in the range of Rs.100 billion in 2011.

Total TV Population Distribution in million

Total TV Homes 120 50%Cable & Satellite

Connection

80 33%

DTH Connection 14 6%

No cable or DTH 26 11%


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Current Players and Market Share

DTH Industry Market Share 2008*

Brand Promoter Subscriber base

Million

Market Share

Dish TV Zee group 5 53%

TataSky Tata Sons & Star TV 3 30%

Big TV Anil Dhirubhai Abani

Group

1 15%

Others (Sun Direct,

AirTel Digital

Sun by SUN TV and

Airtel by Bharti

3 2%


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Contd.Dish TV Tata Sky Big TV Sun Airtel

2004 2006 2008 2007 2008

Subscribers 3.6million 2.6million 1.2million 1.4millionMarket positions 2

nd3rd 4th

Technology MPEG-2,

7transponders

MPEG-2 , 3

transponders,

Premium STB

power pause

/record online

MPEG-4, 12

Satellite

transponders

MPEG-4 , rent

for transponders

MPEG-4 DVB

S2

Channels 180 140 250 40 140

Value added Movie on

demand, Astro,

News, Sports,

Multilingual other

active services

Interactive

services,

ACTIVE

SCHOOL, KIDS,

Matrimonial etc

16 on demand

movies, niche

foreign channels

for high end

customers, 1st to

introduce a-la-

carte package

Pricing Rs. 4290( incl of STB , Dish and

Installation) ,

monthly package

200-300.01

Rs. 3000( incl ofSTB , Dish and

Installation) ,

monthly package

200-300.00

Rs.1000.00 forinstallation(incl .of

STB),cheapest

package-

Rs.100.00,spl -

200-300.00

Rs.1999.00 (10months

subscription incl

of dish and

STB)+Rs.100.00

for installation.

Minimum package

for package

3months.

Rs. 2500( incl ofSTB , Dish and

Installation) ,

monthly package

200-300.00

Outlets 35000 35000 2 lakh 1Lakh


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Contd.Dish TV Tata Sky Big TV Mon Airtel

Strengths 1st service

provider to have

got large

customer base

and known brand

name

Interactive

services and new

STB

Large mobile

phone and

customer base

through out India

66000 SUNTV

Cable TV

customer base,

strong brand in

South India

Large mobile

custoner base

throutgh out India

Strategy low entry price ,

reach no cable

area, language

packages,

encourage to

subscribe other

packages &VAS,focus brand

Value added

services like

interactive

programs ACTIVE

Low entry price,

Reach customers,

exploit existing

ADAG clients,

support through

ADAG Outlets

Low entry price ,

minm price minm

package.

Reach customers,

eploit existing

Aairtel mobile

clients, support

through AIRTEL

Outlets

Future Strategy 14 transponders,

own satellite,400

channels

2600 crores

investement for

technology, New

Interactive

services,

High defination

content,more

channels , mor

interactive

serivices

Entry into other

regions of the

country.

Investment in

technology.

High definition

content, more

channels , more

interactive

services


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Summary

All players are trying to offer less price initial and monthly subscription

charges for get a new customer.

All are making loss because of offer price, cost of accusation of a customer

is Rs.4000 (incl STB-Rs.2500). More volume/ roping more subscribers at a

lesser time is the Mantra for survival. The target break even period minimum 5years and customer base

>5million.

Apart from giving low price , amongst themselves players are building

edge over others by means of offering Interactive services, exclusive

channels, language channels, digital quality etc. Customer acquisition, retention and service are the criteria's of DTH

industry.


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Future

Television households are estimated to grow to 165 million in2011, The DTH industry is currently pegged at 2.6 millionsubscribers.

The DTH Industry revenue is expected to grow at 80%compounded per annum over the next 5 years and will be inthe range of Rs.100 billion in 2011.

with increase penetration of TVs, it will give a boost to thedemand for better quality products like DTH. DTH subscribersare expected to touch 27 million in 2011 and 61 million in2015.


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Conclusion

Increasing content costs and less

transponders,DTH market is difficult game.

Customer is sensitive to price companies haveto differentiate in terms of service and price.

We will see consolidation of players, out of 7

players 3or 4 may remain in the long run.


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Questions and Answers

1.What are the challenges before Dish TV when it pioneered the market?

Answer: DTH was introduced for the 1st time in the market. The challenges Dish TV faced

were consumer awareness of the technology, shifting from conventional cable TV to a newworld of viewing with 1st time investment in hardware.

2.How has Tata Sky performed?

Answer: Tata Sky performed very well. They could manage to grab customers by their

interactive programs (others do not have).

3. With the entry of Airtel Digital and Big TV how do you think the market dynamics would

change? What are the factors that would help these two new entrants and what are the

challenges?

Answer: Better price offers and more choice of channels, interactive services,better

customer care will be available in the market.

Factors that will help these two new entrants 1. Existing customer base and outlets 2.

Existing brand names

Challenges Initial Price and monthly subscription charges( customer wants less charges with

more channels and interactive services), reach to customers ( geographically),Both DishTVand Tata Sky have MPEG 2 format whereas Airtel and BigTV are MPEG 4 ready.


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4.What are the challenges before DTH TV and TataSky.

Answer: New technology MPEG4 gives beter picture quality and sound

effects. Both the old players will have upgrade to the new technology to

compete with new players.

5.How is Videocon d2h placed in the market?

Answer: Placed as a new entrant i.e 6th player in the market. They will

have a tough time to get customers roped in because of competition from

existing players and there subscribers. Their only plus point is their

distribution network throughout the country.

6.What should Sun Direct do for expansion?

Answer- Sun direct needs to add more of other language channels like,

Hindi, Marathi, Gujrati etc. They need to invest in technology.


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7.. What is the branding strategy of each of the players?

Answer: Dish TV- They want the customers not be happy with existing

cable TV but go for new satisfaction with DTH. Brand Ambassador

Shahrukh Khan, Brand Ambassador Amir Khan Tata Sky- More Interactive services and pause and record facility. Brand

Ambassador Amir Khan.

Big TV- More channels, better quality. Brand Ambassador Abhisekh

Bhachan.

Airtel Digital- same as their cellular services.

8. What are the key issues that you think are important in this Industry for

future success?

Answer: 1.due to long gestation period break-even will be a problem for

all players. 2. customer retention and customer service

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Xlri- Dth- Case Study