INDUSTRY ANALYSIS

ON

DIRECT TO HOME (DTH)

CONTENTS

Chapter

1. Introduction

2. Product lines and consumer behavior

3. Growth of the industry

4. Technology of production and distribution

5. Marketing

6. Innovation

7. Strategies and competition in the industry

8. Business environment

9. Critical success factors

Appendices

2

Chapter-1

Introduction

3

INTRODUCTION

Overview of the Industry

The history of Indian television dates back to the launch of doordarshan, India’s national

TV network in 1959. The transmission was in black & white. The 9 th Asian games which

were held in 1982 in the country’s capital New Delhi heralded the mark of color TV

broadcasting in India. In 1991, Indian economy was liberalized from the License Raj and

major initiatives like inviting foreign direct investments, deregulation of domestic

business emerged. This lead to the in flux of foreign channels like Star TV and creation

of domestic satellite channels like Sun TV and Zee TV. This virtually destroyed the

monopoly held by doordarshan. In 1992, the cable TV industry started which lead to

revolution.

Every city in the India had a complex web of co-axial cables running through the streets

with a new breed of entrepreneurs called as cablewallahs or Local Cable Operators

(LCO) taking in charge of distribution. The film industry was shocked by this sudden

growth and there were even organized protests for calling off the Cable TV industry.

There were simply too many cable operators in the country and the channels had a

difficult time in getting its returns as the existing system was a non-addressable and the

operators could simply give a reduced number of subscribers to amass profit. This lead to

the emergency of a new breed of firms called as Multi System Operators (MSO) who had

heavy financial muscles to make capital investments. . The MSO industry became highly

monopolistic which warrants government participation to ensure competition.

Later on, the United Front Government had issued a ban on use of ku band transmission.

After a change of government, the ban got lifted finally in 2001 and TRAI issued the

guidelines for operating DTH. Country’s first private DTH license was awarded to Dish

4

TV in 2003 which started operations in 2004. Prasar Bharati also started its product DD-

Direct+.

DTH Digital TV system receives signals directly from satellite through the dish, decodes

it with the Set-Top Box and then sends stunningly clear picture and sound to TV which is

the business under taken by some companies by observing the rate of growth and scope

for business & opportunity in the Indian market which has 120 million viewers of TV.

With the Indian economy growing at a GDP growth rate of 7.4%, there is a sense of

growth prevailing every where. The average Indian’s disposable income and purchasing

has risen to never before levels. The Indian entertainment and media industry is not far

behind. It is currently estimated at a worth of Rs.450 billion with a CAGR of 18% over

the next 5 years. Terms which were alien to Indian’s like capital DTH, digital cables,

IPTV are suddenly finding presence in the country’s journals.

In 2007, TRAI proposed a new initiative by name “Head end-In-The-Sky (HITS)” Model

as an alternative to the existing cable distribution. Instead of the MSO’s providing the

bundle, there will be a single HITS operator who will prepare the bundle of channels and

beam it to the Headed in the satellite. The LCO’s can receive this digitalized bundle and

deliver to the individual homes. With HITS, country wide implementation of CAS

becomes instantaneous and cost-effective. This benefits both the broadcasters and the

customers by ensuring Addressability, Better quality of service and increased number of

channels. Another emerging trend is the IPTV which is yet to be regulated and one can

expect lot of action in this sector.

According to a report on Direct to home (DTH) service, it predicts that India would

overtake Japan as Asia’s largest DTH by 2010 and be the Asia’s leading cable market by

2010 and the most profitable pay-TV market by 20015.

List of players in the industry

Doordarshan – (DD-Direct +) of Prasar Bharati comprising of 33 FTA channels

and 12 All India Radio Channels.

Dish TV of ZEE group.

Tata Sky joined venture between Tata and Rupert Murdoch’s Sky TV.

5

Sun direct of Sun Network.

BIG TV of Reliance Anil Dhirubhai Ambani group.

Airtel digital TV of Bharati telemedia

Videocon d2h of videocon industries

Categorization of players in the industry

Government owned player: DD Direct+.

Private players: Dish TV, Tata Sky, Sun direct, Big TV, Airtel digital TV, Videocon d2h

Brief profile of players in the industry

DD DIRECT+

Doordarshan is the public television broadcaster of India and a division of Prasar Bharati,

a public service broadcaster nominated by the Government of India. It is one of the

largest broadcasting organizations in the world in terms of the infrastructure

of studios and transmitters. Recently, it has also started Digital Terrestrial Transmitters.

On September 15 2009, Doordarshan celebrated its 50th anniversary.

Doordarshan had a modest beginning with the experimental telecast starting in Delhi on

15 September 1959 with a small transmitter and a makeshift studio. The regular daily

transmission started in 1965 as a part of All India Radio. The television service was

extended to Bombay (now Mumbai) and Amritsar in 1972. Till 1975, seven Indian cities

had television service and Doordarshan remained the only television channel in India.

Television services were separated from radio in 1976. Each office of All India Radio

and Doordarshan were placed under the management of two separate Director Generals

in New Delhi. Finally Doordarshan as a National Broadcaster came into existence.

National telecasts were introduced in 1982. In the same year, color TV was introduced in

the Indian market with the live telecast of the Independence Day speech by then Prime

6

Minister Indira Gandhi on 15 August 1982, followed by the 1982 Asian Games being

held in Delhi. Now more than 90 percent of the Indian population can receive

Doordarshan (DD National) programmes through a network of nearly 1400 terrestrial

transmitters and about 46 Doordarshan studios produce TV programs today.

DD Direct+ is a free Direct to Home (DTH) service that provides satellite television and

audio programming to households and businesses in the Indian subcontinent. Owned by

parent company Doordarshan, DD Direct Plus was launched on December 16, 2004. Now

chairman of DD plus+ is Shri Arun Bhatnagar and CEO is B S Lalli under the ministry of

information and broadcasting.

Dish TV 

Dish TV is the first private DTH satellite television provider in India, using MPEG-

2 digital compression technology, transmitting using NSS Satellite at 95.0. Dish TV's

managing director and Head of Business is Jawahar Goel who is also the promoter of

Essel Group and is also the President of Indian Broadcasting Foundation and Mr.

Subhash Chandra is the Chairman of Dish TV. Dish TV is a division of Zee Network

Enterprise (Essel Group Venture). EGV has national and global presence with business

interests in media programming, broadcasting & distribution, speciality packaging and

entertainment. Zee Network incorporated dishtv to modernize TV viewing. By

digitalizing Indian entertainment, this enterprise brought best television viewing

technology to the living room. It not only transmits high quality programmes through

satellite; but also gives a complete control of selecting channels and paying

DTH service was launched back in 2004 by launching of Dish TV by Essel Group's

Enterprises. Dish TV is on the same satellite where DD Direct+ is. Dish TV started its

service in Pakistan with the collaboration of Budget Communication. Dish TV was only

DTH operator in India to carry the two Turner channels, Turner Classic Movies and

Boomerang. Both the channels were removed from the platform due to unknown reasons

in March 2009. Dish TV uses NSS-6 to broadcast its programmes. NSS-6 was launched

7

on 17 December, 2002 by European-based satellite provider, New Skies. Dish TV

hopped on to NSS-6 from an INSAT satellite in July 2004. The change in the satellite

was to increase the channel offering as NSS 6 offered more transponder capacity.

Tata Sky

Tata Sky is a DTH satellite television provider in India, using MPEG-2 digital

compression technology, transmitting using INSAT 4A at 83.0°. Tata sky is incorporated

in 2004; Tata Sky is a JV between the TATA Group and STAR. Tata Sky

DTH endeavors to offer Indian viewers a world-class television viewing experience

through its satellite television service. Vikram Kaushik is present CEO of Tata Sky Ltd.

The TATA Group is one of India's largest and most respected business conglomerates. It

comprises 93 operating companies in seven business sectors and diversified group:

information systems and communications, engineering, materials, services, energy,

consumer products and chemicals. The TATA Group has operations in more than 40

countries across six continents and its companies export products and services to 140

nations.

The Group and its enterprises have been steadfast and distinctive in its adherence to

business ethics and their commitment to corporate social responsibility. This is a legacy

that has earned the Group the trust of many millions of stakeholders in measure few

business houses anywhere in the world can match.  The SKY brand, owned by the UK-

based British Sky Broadcasting Group, brings to Tata Sky the reputation of more than 20

years experience of satellite broadcasting. SKY is well known for the innovative products

and services launched by BSky, such as DTH broadcasting in 1989, digital satellite

broadcasting in 1998, interactive television services in 1999 and the SKY+ personal

video recorder in 2001. Tata Sky joins an international group of DTH businesses that

includes platforms as far apart as the UK and Italy in Europe, and Mexico and Brazil in

Latin America. Tata Sky Ltd is the First Indian DTH provider to be awarded the ISO

27001:2005 accreditation, the ultimate benchmark for information security. The

8

assessment for the certification was conducted by Intertek Systems Certification, the

management systems registration business unit of Intertek Group plc and is accredited by

several internationally-recognized accreditation bodies worldwide.

In October 2008, Tata Sky announced launching of DVR service Tata Sky+ which

allowed 45 hours of recording in a MPEG-4 compatible Set Top Box. The remote is

provided with playback control keys and is being sold with special offers for existing

subscribers. Tata Sky was selected as a SUPER BRAND for the year 2009-2010 by an

independent and voluntary council of experts known as Super brands Council. It is the

only Indian DTH to have won this distinction.

Sun Direct

Sun Direct is a DTH satellite television provider in India, using MPEG-4 digital

compression technology, transmitting using INSAT 4B at 93.5°E. It is the country's first

MPEG 4 technology DTH service provider. Sun Direct is a DTH service in India

headquartered in Chennai, Tamil Nadu. Sun Direct TV was registered in February 16,

2005. However, the failed launch of INSAT 4C resulted in a lack of transponders,

delaying the launch. The service was finally launched on December 2007 after

availability of transponders from INSAT 4CR. Because of the lowest pricing of any

DTH in India Sun Direct spread rapidly all over the country. On December Sun Direct

was launched in Mumbai and announced its pan India launch. By 2009 it became leading

DTH provider with 3 million subscribers. This makes it 4th largest DTH service provider

of India. In April 2009 Sun Direct officially launched its High-Definition service in India.

Sun Direct uses the latest MPEG-4 based technology to increase broadcast capacity.

Sun Direct provide next-generation services in fast-growing and emerging markets

quickly and efficiently. Sun Direct selected Oracle based on its convergent multi-service

capabilities and proven real-time scalability allowing it to consolidate billing operations,

enables powerful new service offerings and improves visibility into customer information

across services.

BIG TV

9

Reliance BIG TV is a DTH satellite television provider in India based in Navi Mumbai,

using MPEG-4 digital compression technology, transmitting using MEASAT-3 91.5°east.

It is the 5th DTH service launched in India. Reliance BIG TV limited is a part of

Reliance Communications Ltd., a subsidiary of Reliance Anil Dhirubhai Ambani Group

founded by the Late Dhirubhai Ambani, the Indian business tycoon and owned by his son

Anil Ambani. BIG TV started operations from 19 August 2008 with the slogan "TV ho

Tho BIG Ho" ("If you have a TV, make it BIG"). It currently offers close to 200 channels

and many interactive ones, 32 cinema halls (i.e. Pay Per View Cinema Channels) as well

as many Radio channels. The company plans to increase the number of channels in the

near future to 400 and begin High Definition (HD) broadcast. It is the first Pan-India

DTH provider that uses MPEG-4 for broadcasting. There are also plans to introduce

services like i-Stock, i-News and other such interactive services in the future.

Reliance BIG TV was launched on August 19, 2008 with the sole aim of providing the

consumer with quality and enriched home entertainment service at value-driven pricing.

Reliance BIG TV's launch in August was probably the biggest roll-out in home

entertainment ever and deployed the most advanced MPEG4 technology that enabled

them to deliver best quality digital audio-video to the consumer. It also got prepared for

the future when Hi-Definition TV will be launched in India because only MPEG4

technology can support HD TV and not MPEG2 which is used by the earlier entrants in

the DTH industry.

Reliance BIG TV's retailer network is spread across 100,000 outlets in 6,500 towns in

India. This was literally unheard of in the DTH industry. They had effectively out-

stripped the competition here. When it came to pricing – packaging, their introductory

offer stood at Rs. 1,490/- with 3 to 6 months of free subscription. They also introduced 32

Pay-Per-View Movie Channels, the highest by any DTH player.

Airtel digital TV

Bharti Airtel Limited is the flagship company of Bharti Enterprises and is India’s largest

integrated and the first private telecom services provider with a footprint in all the 23

telecom circles. As India's leading telecommunications company, the Airtel brand has

10

played the role of a major catalyst in India's reforms, contributing to its economic

resurgence. Airtel since its inception has been at the forefront of technology and has

steered the course of the telecom sector in the country with its world class products and

services.

Airtel Digital TV is a DTH (Direct to Home) service from Bharti Airtel. It uses MPEG-4

digital compression with DVB-S2 technology, transmitting using INSAT 4CR 74°E

Airtel digital launched on 8 October, 2008 with a 360 degree mega campaign 'Come

Home to the Magic. Since then it has launched 2 other campaigns: ‘Stars come home’

(March 2009) and ‘DTH Picture Clarity (August 2009) has increased its channel base to

183+ channels. Airtel digital TV is now amongst the fastest growing DTH brands in the

country and is available across 5000+ towns in India. It has also been ranked as the best

DTH service by “Living Digital” magazine.

Airtel chief Sunil Mittal said that Airtel digital TV and other DTH players have a bright

future in Indian market as the people are getting more attracted towards DTH because of

its quality and affordability.

Videocon d2h

Videocon d2h is a DTH satellite television provider in India based in Mumbai, using

MPEG-4 with DVB S2 digital compression technology

Videocon Leasing & Industrial Finance Limited was incorporated on 4th September,

1986 as Adhigam Trading Private Limited. In terms of the necessary resolutions

Passed under Sec. 21 of the Companies Act, 1956, the name of the Company was

changed to Videocon Leasing & Industrial Finance Limited on 14th February, 1991. The

Company received a fresh certificate of incorporation from the Registrar of Companies,

Gujarat at Ahmedabad on 14thFebruary, 1991.

Videocon d2h launched May 1, 2009. it came with a very good strategy for selling both

of its electronic products like TV’s DVD’s along with the new set top box. This is

offering direct to TV with out any set top box also. Only the antenna is enough, it also

11

came with DVD which is connected directly to the TV or antenna is connected to DVD

which gives a best quality of out put.

Chapter-2

Product Lines And Consumer Behavior

12

PRODUCT LINES AND CONSUMER BEHAVIOUR

Range of products

Set-Top-Box. Head-Antenna. Cable DVD Remote

LCD TV/PLASMA TV/CATHODE RAY TV/LED TV

Product description

SET-TOP-BOX:

The set top box comprises of the MPEG-2 OR MPEG-4 with DVB2 technology.

Head-antenna:

Antenna which receives signals directly from satellites,

Cable:

Cable connects antenna to the set up box

DVD:

One of the recent entrants into DTH industry is vediocon. This came with set top box

with DVD

ACCESS CARD:

The access card is another important thing in the set top box setup

13

Where the access card will receive the signals directly from satellite trough head top

antenna

LCD TV:

Some companies are offering the whole set of LCD TV with DTH connection

Ant in the case of cathode ray tubes and in case of PLASMA

Remote:

A compactable remote for both SET UP BOX and TV is used in operating both TV and

Set top box.

Complimentary Goods

LCD TV, DVD, CT TV, Cables, plus box, Ups, Home theaters, sound box, plastic and paper which are used for recharge cards.

Substitutes

Local Cable Operators, Inter-Net which is bringing many facilities like live TV channels,

along with the net browsing, Theaters, radio stations, I pods.

14

Chapter-3

Growth Of The Industry

15

GROWTH OF THE INDUSTRY

Rate of Growth

The DTH service market in India has emerged as one of the most lucrative markets which

have successfully resisted the impacts of the current economic slowdown. The slowdown

has certainly proved a boon for the Indian DTH industry as people have now started to

cut on their entertainment expenditure and instead of viewing movies at theatres, they are

preferring to stay at home with their television sets.

With the Indian economy growing at a GDP growth rate of 7.4%, there is a sense of

growth prevailing every where. The average Indian’s disposable income and purchasing

has risen to never before levels. The industry is anticipated to add nearly 5 Lakh

subscribers per month during 2009 and the numbers are forecasted to surge further at a

CAGR of around 30% through 2012, "Indian DTH Market Forecast to 2012". 20%

annual growth is being witnessed in the DTH sector in India with over 8.5 million

households having digital pay-TV.

A report attributes that the anticipated growth to the efforts of DTH industry players who

are all trying to lure viewers by cutting down prices as well as offering perks even though

it translates into loss of Rs 1,600-2,000 on each new subscriber acquired by them. They

have started to offer a number of value-added services such as 'movie on demand', live

recording of TV content, matrimonial match-making, etc.

Pattern of Growth

The big game is all about shaping up grandiose plans to master the winning rules to

garner as much portion of the Indian DTH pie as possible by a handful of players. Since

16

the DTH space denotes big value, akin to the space occupied by television and telephony,

inter-firm rivalries have thrown up price wars, discount schemes, procurement of

transponders, ambitious targets for improving the subscription base, popular bouquet of

channels, set top boxes with superior quality of videos, improving content, etc as a

desperate means to entice the Indian viewer.

The pattern of growth is very difficult to determine because a business cycle takes place

in long term. But this industry is having very short period for making or observing a

business cycle.

The analysis that can be made is though the economic cycles is not continues and it was

in boom then when the industry started and now just the economy is in recovering stage

from the recession. Interesting factor is that all the industries are hit seriously buy the

rescission but DTH industry has reported growth continuously but only it has slowdown

the rate of its growth. Now the industry is growing at 20% for every annum.

Growth Determinants

Demand constraints and SCAR are the factors which effects the growth of the industry.

Growth determinant and high TV sales increase the chance for more sales of set top box

which will effect the growth. When the facilities of the products increase it acts as a

growth determinant.

The entertainment channels and the news channels players increase the growth to opt the

DTH. Some of the DTH players are bringing innovative plans like live shopping, broad

band, and etc will act as growth determinants.

17

Chapter-4

Technology Of Production And Distribution

18

TECHNOLOGY OF PRODUCTION AND DISTRIBUTION

Cost Structure

The costs incurred by the DTH players is mainly on its technology, satellite dish, set top

box accessory cards, Ku band transponders in the satellites, customer premise

equipment(CPE). The launch of satellites is another huge cost which the DTH plays

shares the transponders. And it costs them much than any thing. Another cost incurred is

on operating cost.

Economies of Scale

Economies of scale may be utilized by any size firm expanding its scale of operation. The

common ones are purchasing (bulk buying of materials through long-term contracts),

managerial (increasing the specialization of managers), financial (obtaining lower-

interest charges when borrowing from banks and having access to a greater range of

financial instruments), and marketing (spreading the cost of advertising over a greater

range of output in media markets).

Cost Advantages

1] Direct customer relationship.

2] Better storage

3] Extensive use of resources.

4] Availability of labour at cheap rates

Economies of Scope

An economic theory stating that the average total cost of production decreases as a result

of increasing the number of different goods produced.

19

Often, as the number of products promoted is increased and the DTH players used, more

people can be reached with each rupee spent. These efficiencies do not last, however; at

some point, additional advertising expenditure on new products will start to be less

effective (an example of diseconomies of scope). If a sales force is selling several

products they can often do so more efficiently than if they are selling only one product.

The cost of their travel time is distributed over a greater revenue base, so cost efficiency

improves.

There can also be synergies between products such that offering a complete range of

products gives the consumer a more desirable product offering than a single product

would. Economies of scope can also operate through distribution efficiencies. It can be

more efficient to ship a range of products to any given location than to ship a single type

of product to that location.

Value added

Many players are using this DTH as the basis and giving many value added services to

the customers. Some of the players are giving best valued services to the customers like

Airtel gives live-news, home shopping, live gaming, broad band, horoscope, radio, and

etc. Tata sky is giving recording for more than 4 hours, and came with a differential

strategy of Tata sky+ with other facilities. Big TV is giving live with Big movies, Dish

TV is giving live TV on the wheels, and many other value additions.

Logistics

Logistics is still a nascent and fragmented industry in India. It is estimated that while

outsourced logistics accounts for 54% of total logistics spending in India, organized

players have only 10% of the pie.

DTH industry follows a good logistics which is as similar to the logistics which are used

buy automobile industry, for the effective management of the DTH industry.

Labor

Labours are included in every activity of the business, most of the people working are not

daily labours, they are employed and paid monthly in the form of salary. DTH requires

20

skilled labor like management executives, administrators, software engineers, sales

executives and attorneys.

Chapter-5

Marketing

21

Marketing

Market segmentation, marketing strategies, marketing practices and marketing concepts

specific to the industry

Indian TV channel broadcast 15.7-mn advertisement every year, which totals to 362-mn

seconds of TV advertisement every year. India currently has over 400 channels.

TV viewer ship has declined by 5% since 2001. TV broadcasters are expected to go hike

in advertisement rate this year by 16-18%. Market segmentation in DTH industry mainly

concentrates on women who don’t like missing their daily soap and news more ever

women are able to learn English speaking which is a very special feature of DTH. DTH

also concentrates on children also by providing them games, dictionary, some discovery

videos specially inbuilt, maths, science and social knowledge. It also focuses on old

people as it has updated videos of various holy and religious places.

DTH uses different marketing strategies for promotion and sales of its product. It gives

advertisements with their brand ambassadors which attract customers, door to door

selling, on the phone selling, discount and offer sales, packages, etc

Marketing practices is a continuous process as the competition keeps increasing among

the players in the industry. Each player is investing lots of money in promoting there

brands. Many players are making advertisement with movie actor and actress as brand

ambassadors for their products because DTH is mainly considered with entertainment.

22

Some of the companies like Tata sky is having Super Star Amir khan as brand

ambassador and Airtel is having many film stars like kareena kapoor, A.R.Rehaman, saif

ali khan, etc. Dish TV is also having Super Star Sharuk khan as the brand ambassador.

Sun direct also uses southern actress for their brand promotion. Marketing practices are

the decisions taken by the manufacturing company to increase sales, expand themselves

into many areas etc. Successful marketing practices bring sale up, while unsuccessful

marketing practices have no impact on sale or negatively impact sale.Marketing concepts

specific to the industry is primarily targeted at a niche segment who buy the TV sets from

the electronic retail chains.

Chapter-6

Innovation

23

Innovation

Types of innovation, concepts of innovation relevant to the industry, source of

innovation, rate of innovation and economies of scale.

The concept of innovation in DTH industry is INCREMENTAL innovation; every thing

that is done is due to constant research of many marketing and analysts to bring many

innovations to the existing products in the DTH industry. Incremental innovation is the

apt innovation which is suitable and all the DTH players are concentrating up on.

This innovation makes the business to grow continuously and brings advantages to the

customers using the products and the service.

There are many sources of innovation for this industry as mentioned in the above, the

technology and the people are the main sources for the innovation. Customer’s opinions

and their needs can be served by providing a service which is matching to their needs and

requirements. In this days every company setups its own R&D in its own company with

very intelligent people for meeting the expectation op the customer.

Digital TV, the DTH service from Airtel, has announced India’s first skin integration

innovation on its EPG screen in partnership with Yahoo. Yahoo takes forward its latest

brand campaign “YOU” in this first of its kind partnership where an online portal will use

DTH as a medium to promote itself.

24

The ‘Electronic Programming Guide’ screen on Airtel digital TV is now completely

integrated with Yahoo India’s homepage. Customers will find a message ‘Fill your home

page with all the things that make YOU’ when they log onto to the EPG screen. A

prompting ‘Red Button’ will take them to a dedicated landing page that elaborates the

offerings on Yahoo India’s new home page. The ‘YOU’ campaign enables users to

customized the home page as per their liking and empowers them with the choice to

integrate social applications such as Facebook with their Yahoo homepage. This whole

idea was conceived by NetworkPlay, right from design elements to execution and thanks

to Mindshare for buying into the idea and flawlessly helping people execute it.

Tata Teleservices Limited has announced a technological breakthrough—a first-of-its-

kind innovation in India with the launch of TATA Photon TV, a new application that

allows Tata Photon Plus subscribers to watch live television channels on their laptops

while on the move, and on their personal computers at home and in the office. The

Photon TV service is exclusively available to Photon Plus users. “With its growing

popularity, Photon Plus has caught the admiration of millions of users across the country,

with its high-speed data access capabilities and the ease of mobility.

TATA Photon TV is a personal computer- and laptop-based video-streaming application,

which allows Tata Photon Plus users to view live TV feed from various sports, news,

entertainment and regional channels, and to watch recorded TV shows from the library

(viz Coffee with Karan, Zoom, Pogo, etc), movies, music and videos on demand.

Internet Browsing charges will be charged as per your Photon+ tariff plan and it would be

applicable while viewing Photon TV. These charges would be over and above the

subscription charges for the Photon TV. (approximate data usage is 1-2MB per Min).

Rate of innovation in this sector is growing at a faster rate in the recent years where as it

is not very impressive before this period. The reason for this is the fair competition

between the all players in this DTH industry. It led to the development of new products in

this sector which also led to the diversification of products as there is abolition of entry of

25

foreign industries into Indian industries initially. It also made the industries in this sector

to establish their own R&D departments for successful product innovations like Airtel

Live, Vediocon d2h.

The brand loyalty for each and every company is very high, so there is no need of lot of

costs to be pored in marketing and promotion of the service and product.

Every function that is performed by the players is a well planned and executed properly.

So in all the areas those players are using the expertise people in the industry and

performing operations in DTH industry very economically.

Chapter-7

Strategies And Competition In The Industry

26

Strategies and competition in the industry

Competitors, Strategies used in the industry, Porter’s generic strategies model, porter’s

five forces model and analysis using it, element of industry structure, porter’s value chain

model analysis, swot analysis, concept of generic value chain, concept of growth share

market matrix, company position .

Competitors

Every company has its own goal, every company wants to achieve and full fill its goals,

many companies like the big players in the industry wants to grab most of the market

share. Some of the companies want to achieve 10million customer base by 2010 they are

Dish TV, Tata sky, Sun direct, BIG TV etc.

The industry’s objective is to achieve 60million customers buy ‘2012’ i.e., nearly 50% of

the present existing customers.

Strategies used in the industry

Technology transfer is one of strategy used in the industry and it is existence for a long

time. In recent decades, concerted effort has been made to exploit the existing technology

to a larger extent by transfer of technology, to generate greater economic impetus. It

27

provides opportunity to generate larger returns on the investments made in R&D. Its

importance lies in its ability to stimulate and strengthen the innovation process.

Porter’s generic strategies model

Generic strategies were used initially in the early 1980s, and seem to be even more

popular today. They outline the three main strategic options open to organization that

wish to achieve a sustainable competitive advantage.

The generic strategies are: 1. Cost leadership, 2. Differentiation, and 3. Focus

1. Cost leadership

In the case of media products, means they should be offered at a price lower than their

competitors’ but with as good benefits, or, the unique benefits the media products offer

can over-offset the premium.

2. Differentiation

Differentiation in DTH refers to when a organization provides unique benefits to the

users through product innovation. This is to increase the probability of the media users to

choose the product. A media organization with a target user loyalty can concentrate more

on how to fully meet the target user’s needs rather than on product cost saving.

3. Focus

Focus strategy is also known as a 'niche' strategy. The clutter of ads has now spilled out

on the number of channel availability due to which people are spoilt for choice. Thus

28

Niche channels are the only way to maintain viewer loyalty. TATA Photon plus is more

niche oriented.

SWOT Analysis

STRENGHT

Growing number of player and competitive advantage.

Supply creates its own demand.

Brand name

Service and flexibility.

WEAKNESS

Skilled labor

Satellite technology

Signals

Viewer migration.

Uncertainty in viewer ship.

OPPORTUNITY

Technology

Distribution

Innovation

Value adding

THREAT

Economic downturn.

Climate

Radio

Cinema halls

Broad casting of channels

New entrants

29

Porter’s five force model

The five forces which one must consider to analyze any industry are the rivalry between

the firms within the industry being analyzed, the bargaining power of buyers, the

bargaining power of suppliers, the threat of substitute products or services, and the threat

of new entrants (also known as barriers to entry). They are also shown in the diagram

below. Initially propounded by Harvard Business School Professor Michael Porter, the

Five Forces framework has been accepted as a strategic framework which one can apply

to analyze any industry.

Threat of substitutes

DTH gives stiff competition from the terrestrial, cable & IPTV. As per the industry

estimates, there are 130 million TV homes of which 71 million are served by cable and

around 6 million served by DTH with the remaining taken by terrestrial transmission. As

IPTV is a new entrant there is not much data on its subscriber base.

Bargaining power of suppliers

30

DTH industry relies on three major suppliers. Customer premise equipment (CPE)

Comparing of the satellite Dish, Set Top Box with the necessary Access Card, the Ku

band transponders are obtaining satellites and content. With India set to overtake Japan as

Asia’s largest DTH by next year, the bargaining power of India DTH operators with CPE

suppliers have been steadily increasing.

Bargaining power of buyers

With enough operations to choose both from the point of alternate mediums like cable,

IPTV and terrestrial broadcast and from the point of increasing DTH operators, the

consumer is at his will to decide. Customers will continue to have a high bargaining

power until DTH platforms try to differentiate them as superior players with better

content and clarity.

Rivalry among existing firms

With 3 operational players and 4 players in the queue, inter firm rivalry is quite high.

The competition from state owned DD-Direct to private players in negligible from the

content point of view as the number of channels offered by DD-Direct is very limited.

However, DD-Direct does not change any monthly subscription charges. Between Dish

TV is Tata Sky there is an intense rivalry exhibited by price war and discount schemes

offered to new connections. Being the first mover, dish TV had price advantage in both

the STB offers superiors DVD quality Video to its advanced STB.

While Dish TV is planning to spend Rs. 850crs over the next 3 years, the rival TataSky is

willing to spend Rr.2000crs over the medium term. The companies have also set

ambitious targets with Dish TV aiming to reach 5 million subscribers in the next 18 to 20

months while Tata sky aiming to reach 8million subscribers in the next 18 to 20 months

while Tata sky aiming for 8 million subscribers by 2012.

Threat of new entrants

With already 7 player’s space in the DTH space, threat of new entrants is low. There is

already enough competition which will discourage new firms to enter this business.

While getting a licensee is relatively easy, the barriers to entry are high when it comes to

31

pricing of CPE and getting the required transponder. There is a definite, first mover

advantage.

Analysis of the Industry using Porter’s value chain model

Porter’s value chain analysis is considered with the value analysis of the several functions

of the DTH industry, it makes to understand the importance of this model to develop and

add on value to the present features of the industry and it’s functioning.

Value analysis says that an effective logistics should be undertaken to commencement of

the business in cost effective way. The most the cost effective, the more value is added to

the process. It is noting but proper or optimal use of the resources present and using the

technology. This value addition is not only in the logistics, it should be carried in all

areas of the management, production, distribution and etc. Thus DTH industry can

increase its value addition to the customers and the features and of industry.

Concept of growth share matrix (BCG model)

The BCG – GROWTH SHARE MATRIX is a portfolio planning model developed by

Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the

observation that a company's business units can be classified into four categories based

on combinations of market growth and market share relative to the largest competitor,

hence the name” growth share”.

32

Under the BCG GROWTH-SHARE MATRIX, as an industry matures and its growth rate

declines, a business unit will become either a cash cow or a dog, determined solely by

whether it had become the market leader during the period of high growth. While

originally developed as a model for resource allocation among the various business units

in a corporation, the growth-share matrix also can be used for resource allocation among

products within a single business unit.

In the DTH industry when the market share is obtained then it is automatically treated as

the market leader, and also it needs maximum market share to extent, when the market is

not in incremental state then the growth rate of the industry will retain. Again this

industry follows all the variables in the all areas till the both will come into normal level.

33

Chapter-8

Business Environment

34

Business Environment

PESTEL Model

Political factor

35

Chapter-9

Critical Success Factors

36

Critical success factors

37

Appendices

38

Appendices

MEDIUM 2008

TV 40.7

PRESS 46.9

RADIO 3.2

CINEMA 0.7

OUTDOOR6.8

INTERNET1.7

GROWTH RATE OF ADVERTISEMENT REVENUE IN DIFFERENT MEDIUM:

39

Indian TV channel broadcast 15.7-mn advertisement every year, which totals to 362-mn

seconds of TV advertisement every year. India currently has over 400 channels.

TV viewer ship has declined by 5% since 2001. TV broadcasters are expected to go hike

in advertisement rate this year by 16-18%.

Yearly results of dish tv

Medium Year of growth in 2008(%)

TV 22

Press 18

Radio 40

Cinema 50

Outdoor 14

Internet 45

Total 20

40

In Rs (crores)

Mar '06 Mar '07 Mar '08 Mar '09

Sales Turnover 31.46 190.94 413.28 737.69Other Income -- 3.40 2.43 1.27Total Income 31.46 194.34 415.72 738.97Total Expenses 114.44 376.11 632.34 926.41Operating Profit -82.98 -185.17 -219.06 -188.72Profit On Sale Of Assets -- -- -- --Profit On Sale Of Investments -- -- -- --Gain/Loss On Foreign Exchange -- -- -- --VRS Adjustment -- -- -- --Other Extraordinary Income/Expenses -- -- -- --Total Extraordinary Income/Expenses -120.34 -- -- --Tax On Extraordinary Items -- -- -- --Net Extra Ordinary Income/Expenses -- -- -- --Gross Profit -82.98 -181.77 -216.63 -187.45Interest 1.67 11.78 46.95 72.70PBDT -204.99 -193.55 -263.56 -260.14Depreciation 2.84 57.53 149.05 215.41Depreciation On Revaluation Of Assets -- -- -- --PBT -207.83 -251.08 -412.61 -475.55Tax 0.03 0.25 0.59 0.73Net Profit -207.86 -251.33 -413.20 -476.28Prior Years Income/Expenses 0.03 -0.55 -- --Depreciation for Previous Years Written Back/ Provided -- -- -- --

Dividend -- -- -- --Dividend Tax -- -- -- --Dividend (%) -- -- -- --Earnings Per Share -- -- -- --Book Value -- -- -- --Equity 71.57 42.82 42.82 68.73Reserves 45.97 -82.30 -495.50 279.23Face Value 1.00 1.00 1.00 1.00

Reference:

Bibliography:

41