Television: A New Order Is Emerging Post-TRAI’s New Tariff

It appears that DTH service providers are making hay under the Telecom Regulatory Authority of India (TRAI)’s new tariff regime. Fully implemented on March 31, 2019, the order entails that customers migrate to the new tariff packs, a move aimed at giving them the freedom of choice to pay only for what they watch.

While the transition is still underway, a TRAI report states that there were 72.44 million DTH subscribers across the five DTH service providers (Tata Sky, Dish TV, Airtel Digital, Sun Direct and Reliance Digital TV) in the January-March 2019 period — a growth of 2.8% (or 1.95 million subscribers) in the first quarter of 2019, compared to only one percent growth in the previous two quarters.

Hitting the accelerator

The growth has been spotted not only in the subscriber base, but also in terms of revenue and the average revenue per user (ARPU). Airtel Digital TV, the DTH arm of Bharti Airtel, has added 3.91 lakh net subscribers during January-March 2019. The company’s ARPU was `233, up by 0.6% q-o-q.
Dish TV, too, saw 47,000 net subscriber additions during the same quarter, prompting this statement in its Q4 results: ‘March turned out to be a blockbuster with acquisitions being higher by 156%, and revenues higher by 18% over January and February average’. Tata Sky’s FY19 revenue reportedly increased to 8.11%, on the back of new subscribers.

Choosing new channel packs through cable operators is a tedious process for customers. Many were therefore drawn to the convenience offered by DTH operators. Harit Nagpal, CEO and MD, Tata Sky, attributes the growth of the DTH industry to the convenience that these services offer to consumers. “Despite both cable and DTH being digital platforms, it is DTH that offers total flexibility of instantly selecting a pack, separately for every room, and change it as often as required.”

Sukhpreet Singh, corporate head — marketing, Dish TV, says that apart from growth in subscriber base, the implementation of NTO has created a level playing field for the industry. “TRAI’s efforts to streamline the industry have helped the industry grow.” Singh adds that the launch of economical HD set-top-boxes as well as the strategy of targeting Free Dish subscribers with attractive schemes and bundled acquisition offers has further spurred growth for Dish TV.

Advantage: DTH

As compared to cable operators, DTH players were better braced for the transition to the new regime with subscriber management systems and customer support functions. They were equipped to handle the additional load, on account of the à la carte channel selection option.

“DTH operators have added to their subscriber base across most geographies post the NTO, leveraging the deep insight about subscribers and the technology that drives DTH service,” opines Girish Menon, partner and head, media and entertainment, KPMG India. However, he predicts that the revenues and ARPU are likely to increase moderately in the near to medium term.

It will not be all smooth sailing for distributors, though. In the pre-NTO era, broadcasters would get merely 20% of what the consumer paid to the DTH provider. Post the NTO implementation, the dynamics have tilted in favour of the broadcasters. There is a cap of 35-40% on what the distributor can earn, as per the new order, with the rest going to the broadcaster.

In the new regime, MSOs have lost market share to DTH players owing to two major reasons. “ARPU for DTH has come largely in line with the MSOs. Furthermore, the delay from MSOs’ end in implementing NTO due to a lack of cooperation from local cable operators is making consumers switch to DTH,” says a media analyst. Jehil Thakkar, head – media and entertainment and partner, Deloitte, says it would be rather prudent to wait for the dust to settle before inferring anything substantial, as the transition is expected to take at least five to six months to complete.―Financial Express

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