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Perspective

Is it the right time to start?

In all businesses, there used to be new comers and new start ups coming in intermittently. Same is the case in the cable and broadband industry.

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Over a period of last 2 years, this industry has seen very few new comers making an entry into the market. This is evident from the declining number of MSO and ISP licenses being issued from the authorities. During COVID pandemic, it became worse.

This could be a misnomer to construe that the market has been saturated and there is least scope for being able to make a substantial base in the cable TV market. That, a new start up may end up in huge losses before making a green bottom line. This statement gets fuelled up, when the market sees exit and/or merger of the telecom companies where the investment is really high in comparison to a cable TV and broadband business. Especially, after the havoc of recent pandemic, many must have lost courage for a start.

Mergers, acquisitions, exits, and entries do happen in any business. Same is the situation in this business. Further, business history reveals that many great brands have started during or after an economic slowdown. Hence, there should not be a fear of failure for new entry by an entity at this situation.

The cable TV business ponders around a couple of basic things, which have been eased up over a period till date. MSO licenses are being issued at a faster pace than before. Quality of hardware has come up, while comparative costs have gone down. Set-top boxes do constitute standalone maximum stake of this business. In present scenario, STB vendors have been offering them at cheaper prices payable over a period of up to 6 months.

Financial institutions being more cash rich are ready with extended facilities for a financing plan. TRAI having appointed several auditors throughout, the auditing processes have become easier and cheaper. Broadcasters too have come out from the stereotyped view-per-pay syndrome to suit to MSOs of all sizes.

Business actions in different situations need customized strategy. Set-top boxes are the major cost contributors and the keys. Markets are really not saturated, but the STBs in most of the markets are at least more than 3 years old. Having a warranty of 1 year, they need to be changed. New entrants should target such areas, where it needs replacement. One can refer the mobile handset market in this context, which is being continuously refreshed.

Realization of the investment into STBs remains the key area of concern. Presently it is difficult to sell STBs at more than `300. In that case MSOs must not bank only upon the monthly returns from connections. Providing broadband services is a must to make the returns rosy. If not as an ISP, a small or mid-sized MSO can partner with any existing ISP to provide multiple services to its viewers. When cable TV connections do reap a margin of mere 10 percent for the MSO, a broadband connection can make it up to 60 percent on the monthly bills. This would make good the investment on STBs to a large extent.

Advertisement revenues through use of middleware have largely remained as an ignored subject by small and mid-sized MSOs. After havoc of COVID pandemic, brands have become aggressive advertisers. It is time for the MSOs to open up to those avenues for additional revenues. Further, running local channels by the MSOs can start with very low investments. Apart from appeasing the niche viewer base, each such channel do have own little strengths to attract advertisement revenues from small and midsized advertisers.

To sum up, this in fact is the right time for new entrants in the cable TV and broadband market. The primary target markets could be the erstwhile Tier-III and Tier-IV clusters with preparedness for additional revenues from non-conventional sources.

There is never a wrong time for a right thing.

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