28-06-2008
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Join Date: Feb 2007 Location: Cochin
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Rep Power: 2  |  IPTV likely to eat into DTH market
IPTV likely to eat into DTH market Quote:
The new kid on the block, IPTV or Internet Protocol television, could prove to be a serious threat for direct-to-home (DTH) companies, say industry players, but given the low speed penetration of broadband in the country, DTH players argue otherwise. Recently, Aksh Optifibre rebranded its IPTV business as I-Control and has launched its services extensively in both Mumbai and Delhi (through Bharat Sanchar Telephone Nigam). The MTNL I-Control subscription is Rs 199 for Delhi with 120 channels including Sony Television, Star Television, Zee Television and so on. The subscription for Mumbai is Rs 100 which includes 100 channels and the company will soon increase the number. The company also plans to enter Northern India including Himachal Pradesh, Rajasthan, Haryana , Jammu and Kashmir and so on. Analysts feel that considering the low tariff plan that Aksh is offering, they may soon eat into the DTH business and not so much of the cable business.
Devi Prasad Ghosh, vice-president, marketing, Wire and Wireless India Ltd (WWIL), said, “Even cable operators have packages as low as that and so I do not think cable operators are really threatened. IPTV doesn’t have high speed penetration in this country and that will happen only with the broadband penetration.” WWIL is also planning to get into the IPTV business but that is at least 5-6 years away. “I think IPTV will eat up into the DTH area,” said Ghosh.
But DTH players are not wary about it. Jawahar Goel, managing director, Dish TV said that DD Direct is already showcasing 50 channels and 20 radio stations for free. They will soon increase it to 70 channels and 22 radio stations. Dish TV has a Rs 100 tariff plan which includes 80 channels. “So if it is the free-to-air channels that everybody is showing then it won’t affect our business,” said Goel.
Moreover, a growing number of subsidies have pushed DTH players into substantial losses. Dish TV losses have increased to around Rs 400 crore in the year ending on March 31, 2008. Analysts say that this loss will continue next year also and with IPTV in the vicinity, the recovery period for the company may go up. To this Goel said, “We can tackle this only by increasing the subscription base.” Currently the company has around three million subscribers and this year they are trying to add two million more. But with each new subscription the company is losing approximately Rs 2,600 because of subsidies. While Dish TV is installing set-top-boxes for free, Tata Sky has slashed both hardware and subscription prices.
“Subsidy is a tactic to increase subscription and we will stick to that”, said Goel. He added that while they are losing Rs 2,600 per subscription, competition is losing approximately Rs 5,000 and while it will take 30 months for Dish TV to recover the losses for every new connection, it will take 50 months for the competition.
Vikram Mehra, chief marketing officer, Tata Sky, said “DTH has always worked in geographically large countries like the US, Brazil, India and so on”. The reason being the cost of putting up a DTH connection in anywhere in India is the same. While for IPTV, one needs to physically draw the cable to that point, which is a costly affair. So the concept of IPTV works well in Hong Kong as it is densely populated and through one IPTV cable connection several connections could be drawn out. World over, while DTH has about 70-80 million subscribers, IPTV has a measly subscriber base of one million. However, analysts feel that every consumer will eventually migrate from cable to the digital platform
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