Monday July 21, 2008 – Antonette Goroch

With the North American and European Direct-to-Home (DTH) satellite markets having reached a near saturation point, where and how will the DTH satellite market find growth in a highly competitive pay TV marketplace?

India is where the industry is finding growth. But the growth will be of a different variety than the industry has experienced in the past.

India is fertile ground. It has one of the largest populations in the world, which counts some 120 million TV households (HH). In addition, there are now five DTH satellite services, up from just two in 2006. These services, which include both free-to-air (FTA) and pay segments, offer an improvement in channel capacity and quality in comparison to existing analog cable or terrestrial services which blanket the region. DTH satellite set-top box (STB) prices are coming down as competition heats up. In fact, as of mid-2008 Dish TV is offering a free STB with new subscriptions, speeding up subscription acquisition. Further, new government regulations instituting interoperable conditional access technologies and STB standardization, have provided programmers with a greater means to further monetize FTA households, as well as contributed to dropping upfront costs.

Despite the initial success, the market players are still working their way through some road blocks. Operators are experimenting with business models that can tap into the region’s demand for high-quality digital TV, while sustaining profits. Tata Sky, for instance, India’s first fully operational country-wide DTH satellite system, saw strong growth in subscribers after its 2006 launch, reaching 1 million in less than a year. This growth has tapered off in recent months, however, as Tata Sky has sought to tweak its business model to favor more pay channels and less FTA. The competitive environment makes such moves difficult however, as market pressures force operators to subsidize hardware costs and keep prices low. It was this reality that led rival service, Dish TV, to see record operating losses, even as they were cutting installation charges for new subscribers along with handing out a free STB.

One good thing about being the newest satellite kid on the block is that India is ripe for new-service implementations by those who are the most innovative competitors. Bharti Airtel, a division of the larger Bharti Teletech, plans to launch an MPEG-4 AVC based DTH satellite system this year. It’s rumored the service will be incorporated with Bharti’s broadband infrastructure for an integrated Internet/DTH satellite service. Not only do these plans help shape the fledgling DTH satellite market in India, they may serve as future models for satellite services worldwide.