Where cable cannot reach, DTH can

As the country manager for Irdeto, Sanjiv Kainth is responsible for expanding the presence of Irdeto, the digital TV, IPTV and mobile content security company, in India. An engineer specialising in television technology, Kainth has rich experience in various capacities within the television domain from conventional television manufacturing to digital broadcast related. In this interview to Soma Das of FE, he talks about the prospects of direct-to-home (DTH) television in India and about the vexing issue of content security.

Despite registering a CAGR (compound annual growth rate) of over 30%, the DTH players are grappling with low ARPU (average revenue per user) and bleeding. How do you think the sector should cope with these challenges?

One of the biggest challenges facing the DTH industry is low ARPU. Though the volume the DTH sector is capturing is good and will continue to be so, the revenue streams need to be healthier. For this, the offering to the consumer needs to get richer with value-added services such as the introduction of personal video recorders. This would mean that digital pay-TV (both DTH and cable) could drive some elasticity in pricing and tap the premium segment, which has not yet been meaningfully penetrated.
That said, there need to be the right conditions in the regulatory and content environment so that digital platforms could profit from the sale of the TV channels over secure systems as that’s the core business and it’s hard to monetise today because of various limitations.

With the HITS (headend-in-the-sky) policy in the pipeline and cable still the dominant mode of distribution, where do you see future growth for DTH coming from?

Today, India has about 120 million television homes, out of which 75 million are cable TV homes, with the majority share on analog mode. There is a gap of approximately 45 million between these two figures alone. Digital cable currently caters to about 1 million subscribers and the implementation of conditional access (CAS) will drive large-scale conversion from analog to digital pay TV. On the other hand, DTH currently caters to about 7.5 million subscribers between the three operators and with the increase in the number of operators—especially with the coming of Reliance Big TV and Videocon D2H+—this figure is likely to grow. There would always be a lot of areas that cable still cannot reach but DTH can between MSOs (multiple system operators) and DTH, probably HITS. How do you see the subscriber share standing in 10 years?
HITS cannot qualify as an independent service to the consumer—it is another form of delivery mechanism for cable, and hence cannot be compared to DTH. The digitalisation process has already begun. Both DTH and digital cable are making steady inroads across the country.
Given the size of the Indian market there would be large volumes in both cable and DTH. In this industry, 10 years is too long; hence a five-year view would be more realistic. In my view, of all the digital subscribers, DTH will grab a major share and be at about 20-22 million subscribers by 2013. The estimate for digital cable points to around 4-5 million subscribers in the same time period.

Under-declaration and piracy are two glaring flaws of the analogue cable sector. How will things change once these two problems are taken care of? Do you see cable TV becoming more expensive for the consumer as the sector becomes fully digital?

If you look realistically, both these are the same thing. Under declaration means distributing content without paying to the content provider and that’s nothing but piracy. Digitalisation will certainly help reduce the impact of these elements and increase revenue realisation. The flip side of the coin is that consumers will have to pay more for what they watch.

How long will it take for the cable sector to become fully digital?

This is a difficult one. Looking at the vast expanse of our country, cable will never be fully digital. There will always be pockets, though small, which will remain analog. Digitalisation will have greater penetration through DTH.

How will the current compression standards crisis—MPEG2 versus MPEG4—impact the DTH industry?

Where is the crisis? I don’t understand what this debate is all about. MPEG4 is the next compression standard after MPEG2 and allows greater compression and better bandwidth utilisation for the operators. It’s nothing but evolution of technology with time. Later entrants get the advantage of the newer technology as is the case in any technology-based industry. Our regulatory framework and the standardisation process need to support and allow any evolution of technology. It is this evolution that helps operators offer richer viewing experience and build more creative and consumer-friendly business models a big way across the globe. Some very interesting statistics emerge from Korea where the take-up is more than 1.5 million. Contrary to expectations, more than 50% of the viewing time in Korea and other countries is in people’s homes rather than on the move. This brings in a whole new paradigm shift in the way people interact or use the television medium.
India is well placed in the mobile TV ecosystem. The very idea of television on the move or private viewing will create a lot of excitement for the Indian mobile users, especially for the young. With a huge film and television industry coupled with the craze for cricket, content will never be a problem to feed the desire of the Indian youth.

Do you believe that awareness and the growth of content protection will go hand in hand with the progress of digitalisation in the country?

Digitalisation opens up a whole new array of services and applications for consumers by the content creators and service operators that result in new revenue streams. This makes way for creative business models from the operator to the end consumer thus taking care of both—the consumer’s interest as well as the operator’s interests at an optimum cost for both.
Whether it is the television industry or the film industry or the telecom sector, the revenue streams of stakeholders along the value chain need to be protected from piracy for the sake of the health of the industry. That’s where content protection plays a very vital role in the digitalisation process.

What are your company’s targets for India in 2008-09?

Globally, Irdeto has been growing at over 20%, which should continue over the next two years. As pay TV is relatively a recent phenomenon in India, there is great scope for growth.

What are the new and innovative solutions or services offered by you in this segment?

Irdeto empowers companies to protect and monetise their digital assets and maximise return on content with reliable software technologies. The company’s products include conditional access, digital rights management, business support systems and set-top box software solutions. Through group company, Cloakware, it provides software and datacentre security solutions, while group company Entriq delivers content management and distribution solutions and services. More than 500 customers worldwide trust Irdeto to secure and enable the delivery of their valuable content across digital broadcast, IP, mobile, enterprise and government networks. Irdeto solutions enable simple to advanced business models on more than 1 billion devices and applications.

How difficult is the job of curbing piracy in the broadcasting sector and what is the record of Irdeto in this?

The success rate has been very high. Irdeto has been a pioneer in this field and has enjoyed tremendous success on all its platforms. The proof of the pudding is in the eating—we have had no hack or smart card replacement for the last seven years. This is a result of continuous technology innovation. Worldwide Irdeto has more customers than any other conditional access provider and even in India, more satellite broadcasters and cable operators have opted for Irdeto than any other conditional access system.

"Where cable cannot reach, DTH can" - The Financial Express