Direct-to-Home (DTH) in India: Direct to Loss?


Code :BSM0044

Year :

Industry : Entertainment

Region : India

Teaching Note:Available

Structured Assignment :Available

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Introduction:Since Cable TV entered India in 1992, entertainment on television has grown rapidly. Out of the 71 million TV households in 1999, 32 million had access to Cable TV. However, along with the soaring viewership complaints on quality also increased. In the cable industry that runs like a cartel, the control lay with Local Cable Operators (LCOs), who operated in an unorganised and fragmented way. Viewers had to adjust with poor quality signals, limited choice of channels and frequent hikes in subscriptions. As a solution to the problem, many alternatives were tried. In mid-1990s, Multi-System Operators (MSOs) emerged and in 2003, Conditional Access System (CAS) was introduced to provide better services to the viewers through digitisation. However, in spite of offering several advantages over the LCOs, these options did not work well in the Indian market.

In 2003, a new service, DTH (Direct-to-Home) - a digital transmission of signals directly to the subscribers' homes through a Set Top Box (STB) entered India. Dish TV launched by Zee TV promoters (Essel Group) was the first and the leading DTH service provider in India followed by Tata Sky. To lure customers, DTH players spent heavily on marketing and slashed prices. However, in the process they incurred heavy losses. Surprisingly, this did not stop new players from entering the market. Two cash-rich companies - Reliance and Bharti Airtel - are preparing to flex their muscle in 2008. With a much cheaper and better offering, while these companies are planning to capture a major pie of the market share, the question is - can they make profits in this so far loss-making market?

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