PROJECT ON INDUSTRY RESEARCH

DTH REVOLUTION

ACKNOWLEDGEMENT

We take immense pleasure in thanking Prof.SK Bose for permitting us to carry out this project work. We wish to express my deep sense of gratitude to our faculty for his able guidance and useful suggestions, which helped us in completing the project work, in time.Words are inadequate in offering thanks to all the group members for their encouragement and cooperation in carrying out the project work. Finally, yet importantly, we would like to express our heartfelt thanks to our beloved parents for their blessings, our friends/classmates for their help and wishes for the successful completion of this project.

[Group Members]

INDEX

OBJECTIVE OF THE STUDY

To do a comparative analysis of tata sky and dish tv providing DTH services in India.The Indian entertainment and media industry is currently worth Rs450 billion.India is estimated to overtake Japan as Asias largest DTH provider by the next and the most profitable pay tv market by 2015.Now DTH services cover over 15 million homes all over the country.There are 120 million tv owing in households and estimated growth of 165 million in 2011.The size of this industry counts upto 15+million.DTH industry to grow at 80% and will be a Rs100 billion in 2011.

EXECUTIVE SUMMARY
This report discusses the detail of conducting a comparision and analysis of DTH industry.The purpose of this comparision and analysis is to reveal the DTH revolution in india.India has a total television population of close to 135 million, out of which 80% have access to cable and satellite (i.e. 108 million). The total DTH subscribers are close to 22 million. In 2005 Dish TV was the only player in the DTH industry and was registering subscriber growth mainly in the areas where cable TV was not available. The subscribers were not ready for the cost of set top box. In 2007 CAS mandate was introduced in selected metro cities, where users had to invest in a set top box. Though the initiative was not very successful, it gave a wider acceptance to the DTH and consumer became ready to pay for the set top box. Spotting the opportunity Sun Direct launched its services in 2007 with a drastically low one time cost involved for DTH subscriber. Followed by this Reliance, Big TV and Air-Tel and Videocon launched their services. The market became competitive. Every player came with innovative offerings, Dish TV offered Movie on Demand free worth the cost of set top box, Air-Tel and Big TV offered free subscription for first few months etc. All these things were coupled with aggressive marketing campaigns. Tata Sky gained the maximum subscribers during this period. Though DTH is comparatively expensive than cable service, the growth is coming from the rural area. If we see statistics the growth for the digital segment in rural areas were 34%, 49% and 64% in the past three years.(source:- TAM Annual Universe Update 2010). The growth in the rural segment can be attributed to frequent power cuts in the rural areas. DTH platform gives the rural consumer access to their favorite programs, with the help of generator/ invertors, which is not possible with the cable service in most of the areas. Though DTH has certain advantages such as better picture/ sound quality, better customer service. It also has a disadvantage of price. The DTH player have to pay various taxes such as Adjusted gross receipts @ 10%, service tax @ 12.36%,VAT @ 12.5%,CST@3%,corporate tax, Excise duty@ 16%, Customs duty, CVD ,customs duty etc. Whereas the local cable operators easily get away with government taxes by underreporting the subscriber base.

INDUSTRY PROFILE
IN THE current context of the global financial meltdown, the Direct to Home (DTH) industry in India is in the throes of multifarious challenges and opportunities.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 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.A neat 20 per cent annual growth is being witnessed in the DTH sector in India with over 8.5 million households having digital pay-TV. According to Harsh Bijoor, a brand consultant, Since Dish TV, the biggest market player on the Indian soil, has not scraped even five per cent of the pie, there is plenty left for other players to eat. In the early 2008, five major players, Zees Dish TV, Tata Sky, Reliance ADAG, Sun Direct and Bharti Telemedia formed an umbrella body DTH Operators Association of India (DOAI). The Cable and Satellite Broadcasting Association of India in its 2008 Pay TV Piracy Survey have predicted that the Grey TV market of around USD 1.1billion will gradually be taken over by the legal DTH industry. Marcel Fenez, chairman CASBAA, said, Despite the global sinking of economies, the Asia Pacific market is healthy and the decline in growth will not derail the industry. With 1.7 million digital cable subscriptions, the digital pay-TV market is finally taking off and this degree of penetration represents a tipping point for our industry in Asia. Starting with a million strong subscriber base in August 2006, Tata Sky, a DTH joint-venture Company between Star (owned by Rupert Murdoch) and the Tata Group, now has more than 2.7 million connections and the forecast for 2012 is that it will further increase to eight million.The Indian DTH growth scenario bodes well for the advertising industry as well with over Rs 30-40 crores being earmarked by these companies annually for advertising revenues.While Tata Sky has roped in Bollywood actors Amir Khan and Gul Panag for its promotion, Shahrukh Khan endorses for the Dish TV.

MD and CEO of Tata Sky, Vikram Kaushik, recently confirmed in an interview that the company estimates were standing at Rs 40 billion for its final funding requirement as competitive entries, explosive growth in volume and customer acquisition have jacked up the costs. Tata Sky recently launched the NDS-developed XTV personal video recorder (PVR) that enables the customers to watch a particular TV show while recording another. It is being hailed a major introduction in the Indian DTH market. Within a few days of its launch 2, 500 PVRs, priced at Rs 8, 999, were sold as claimed by the Tata Sky MD, Kaushik.This places Tata Sky among the top 19 pay-TV operators around the world with NDS solutions being a unique introduction to facilitate flexibility of PVR to their subscribers.A deal along similar lines was announced by Bharti Airtel, in the provision of DTH services, dependent on NDS for its conditional access. N Arjun, executive director Bharti Telemedia, expressed enthusiasm about the companys expansion plans by disclosing that his company looked forward to providing the best of home entertainment services via Airtel digital TV in terms of latest technology and exciting content. Since DTH is the future of home entertainment, with the support of our technology partner NDS, we will render superior, state-of-the-art services to our DTH service customers, he said. Sun Direct, which entered the DTH sector as a discounted brand in opposition to Tata Sky, notched at a 30 per cent premium and supposedly mopped up over a million subscribers within a short time span. Tata Sky, though placed at a launch-premium of Rs 1,000, is open to segmentations. A demand of a tax holiday of five years from the government has been mooted by the DOAI that should incentivise the DTH industry as its market has reportedly surpassed the Japanese one in the last five years.The Indian DTH industry players look forward to a seven times multiplication of its market, about 40 million subscribers by 2015, from a total of 165 million pay TV households.

Company Profile Of Tata Sky

Incorporated in 2004, Tata Sky is a JV between the TATA Group and STAR. Tata Sky DTH endeavours to offer Indian viewers a world-class television viewing experience through its satellite television service.The TATA Group is one of Indias largest and most respected business conglomerates. It comprises diversified businesses in sectors such as materials, engineering, services, energy, information systems&communications,consumerproductsandchemicals.The Group and its enterprises have been steadfast and distinctive in their 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. STAR is a leading media and entertainment company in Asia. STARs parent company, News Corporation, owns an International group of DTH businesses that include BSkyB in UK, Sky Italia in Italy and Foxtel in Australia.

Tata Sky+
Tata Sky+ is a premium set-top box-cum-Personal Video Recorder or even known as DVR Digital Video Recorder that allows recording up to 130 hours of live TV, recording one programme while watching another, pause, fast-forward and rewind a live telecast and review a TV programme. Also Tata Sky+ provides service using MPEG-4 digital compression technology.

Tata Sky HD
Tata Sky HD was launched on June 14, 2010, and has channels in their native resolution of 1080i or 720p. The STB is compatible with 5.1 CH surround sound as well. Starting with three HD channels National Geographic Channel HD, Discovery HD, Showcase HD (Pay Per View) more channels such as Star Plus HD, Star Movies HD and other popular sports channels in HD format are expected to be added soon. The High Definition DVR was launched in July 2010.

Company Profile Of Dish Tv

Dish TV India Limited (Dish TV) is an Indian company engaged in the business of providing direct-to-home (DTH) satellite television service, which includes teleport service, customer support and transponder space leasing. It operates through three segments. The Direct to Home Services segment is involved in uplink of satellite television signals to be received by the customer, including multiple system operators (MSO) and cable operators. The Trading segment is engaged in the trading of electronics and other equipments. The Teleport Services segment provides facility for uplink signals. During the fiscal year ended March 31, 2009 (fiscal 2009), Dish TV had five million subscribers. During fiscal 2009, it launched a Premiere Channel on its Movie on Demand Service to broadcast Hollywood and Bollywood movies within weeks of their theatrical release. During fiscal 2009, it launched services, such as Bhakti Active, ICICI Active, Astro Active, Shaadi Active, Naukri Active and new titles.

TATA SKY & DISH TV

History of TATA SKY

It is a joint venture between the Tata Group, that owns 80% and STAR Group that owns a 20% stake. Tata Sky was incorporated in 2004 but was launched only in 2006. It currently offers close to 140 channels and some interactive ones. The company uses the Sky brand owned by British Sky Broadcasting. 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. In 2008, Singapore-based Temasek Holdings picked up 10% stake in Tata Sky from the Tata Group. This has diluted Tata's stake in the venture to 70%. STARs parent company, News Corporation, owns an International group of DTH businesses that include BSkyB in UK, Sky Italia in Italy and Foxtel in Australia.

SPEACIAL OFFERS TATA SKY+

Tata Sky+ is a premium set-top box-cum-Personal Video Recorder that allows recording up to 45 hours of live TV, recording one programme while watching another, pause a live telecast and review a TV programme.

Tata Sky+ Diwali Offer

Terms and Conditions The Offer entitles New Tata Sky subscribers to purchase Tata Sky+ Hardware at a special concessional price of Rs 5,999 (including standard installation charges of Rs 1,000). Existing Tata Sky subscribers, shall be entitled to purchase Tata Sky+ Hardware at a special concessional price of Rs 4,999 and Standard Installation will be free for existing subscribers

USP/UBP OF TATA SKY

Tata Sky+ is a premium set-top box-cum-Personal Video Recorder that allows recording up to 45 hours of live TV, recording one programme while watching another, pause a live telecast and review a TV programme. The company emphasized on all aspects of marketing mix including

product, price, place and promotion. It offered more than 170 channels along with different interactive services. Rural penetration through ITC E-Choupal and Godrej Aadhar.

COMPETITION:

Current situation:
Tata Sky crossed the two million connections mark in a period of 20 months, thus

retaining its position as the fastest growing direct-to-home service provider across the globe. The marketing budget that TATA Sky begun with was 15% of sales. This included around 5% for advertisements, 7% discounts and promotions and 1% sponsorships. Currently TATA Sky has roped in Aamir Khan as its brand ambassador. Aamir Khan would feature in all TATA Sky brand and product communication, including advertisements in TV, print and radio. Further, tie ups with ITC E-Choupal and Godrej Aadhar give it wider rural reach. Also for its distribution, TATA Sky has a tie up with ITC International Business Division. The 24X7 guru.com has joined hands with TATA Sky to provide content for Active Learning. Tata Sky has adopted a 360 degree marketing campaign approach that encapsulates television,print, outdoor and radio along with on-ground activities and marketing on the digital platform.

Tata Sky plans tie-ups with Sony Pictures, Fox for content- Pay per View service for

exclusive events.

Considering
50 45 40 35

survey

result,

based

on

consumers

preferences:

MA

PROGRAM CHOICES 30 25 20 15 10 5 0 1 2 3 4 5 6 RECEPTION PRICE NEW TECHNOLOGY TECHNICAL SUPPORT CUSTOMER SERVICES

PERCENTAGE IN THE DIFFERENT STATES IN INDIA STATE

MAHARASHTRA

GUJRAT KARNATAKA UTTAR PARDESH TAMIL NADU PUNJAB ORISSA WEST BENGAL KERALA ANDER PERDESH

SHARE% 12.1 10.5 7.2 6.9 6.6 6.4 5.3 4.7 4.6 4.6

RAJASTHAN ASSAM MADHYA PARDESH OTHERS TOTAL

4.5 4.0 3.8 18.8 100

Current distribution system that Tata Sky has adopted

FUTURE OF TATA SKY

"Tata Sky is leaping ahead to garner eight million connections by 2012. We are the first DTH

Company across the globe to achieve the significant milestone of crossing one million connections in the first year of our operations and are confident of achieving the eight million mark as well."1 - Chakrapani Perangur, CIO, Tata Sky Limited, in January 2009. "Efficient customer service, superior technology and more interactive features are the keys."2

- Vikram Mehra, Chief Marketing Officer, Tata Sky Limited, commenting on the company's success factors, in June 2009.

HISTORY OF DISH TV
DTH service was launched back in 2004 by launching of Dish TV by Essel Group's Zee Entertainment 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 is also in Srilanka, Nepal and Bangladesh. 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 is a DTH satellite television provider in India, using MPEG2 digital compression technology, transmitting using NSS Satellite at 95.0. Dish TVs 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.

SPECIAL OFFERS

USP/UBP OF DISH TV Dishtv has on its platform 240 channels & services including 21 audio channels with over 5.7 million subscribers, which is growing. Dishtv has a vast distribution network of about 700 distributors & 48,000 dealers that spans around 6600 towns across the country. Dishtv has 24* 7 call centre with 1600 seats in 11 different languages to take care of subscriber requirements at any point of time. We are excited to announce another unique offer under which our customers enjoy largest bouquet of 185 channels at Rs. 125 and to make this festive occasion more colorful & bright every 10th customer is assured Rs. 1000 as cash back. COMPETITION With a claim to offer 240 channels, more than any other DTH operator, it is hoping this will draw consumers. It has, as mentioned, around five million of the 12 million consumers (excluding DD Direct). Tata Sky has about 3.4 mn, Sun Direct over 2.3 mn, Big TV about 1.2 mn and Airtel Digital about 0.3 mn subscribers. Dish TV claims to be a market leader with 40 per cent market share in a fiveplayer market. The company is also said to have sizeable sales and distribution infrastructure of over 800 distributors and 48,000 dealers across 6,600 towns once again, the largest in the category

Dish TV targets 2.5m customer addition

Jawahar Goel, Managing Director of Dish TV, said that a depreciating dollar will provide some comfort to the business. He added that their sales are higher now due to the festive season. Goel added that the company will maintain its content costs and he does not see the customer acquisition costs rising. He also said that the company is targeting 22.5 million customer additions and that subscriber renewals will add to the companys revenue. Dishtv joins hands with Sony Pictures Television International to offer latest Sony blockbusters to its subscribers New Delhi, December, 2007: dishtv, Indias leading Direct-to-Home service has entered into an agreement with Sony Pictures Television International to air the latest Sony blockbusters on its premier value added service, Movie on Demand.

This tie-up adds yet another feather to the existing variety of services being offered to dishtv subscribers, giving them the facility to order more Hollywood blockbusters directly on their television throughout the day. Subscribers of the Movie on Demand service will have access to a slate of boxoffice hit features from Sony Pictures, including titles such as Spider-Man 3 (Sony Pictures highest grossing film to date), Wind Chill, Black Book, Resident Evil: Extinction, Surfs Up, Are We Done Yet?, The Proposition and many more. Speaking on this tie-up, Mr. Arun Kumar Kapoor, CEO, dishtv said, We are the only DTH provider in the country to offer Hollywood blockbusters through our value added service Movie on Demand. Our association with Sony Pictures Television International further strengthens our offering to our valued subscribers and our appeal amongst our target audiences. With our discerning subscribers always looking for newer, trendier television content, this is yet another step to achieve our vision of providing them with the best and most exclusive content throughout. We will continue to expand the bouquet of value added services to our 2.6 million subscribers, through such endeavors.

Dish TV: Wishing for more Dish TV future

Moreover, although major broadcasters are understood to have agreed to a fixed fee in return for content as opposed to that based on the subscriber base, the cost of content at an estimated 40 per cent of revenues is fairly high in the June 2009 quarter, it was over 43 per cent. Also, while the average revenue per subscriber (ARPU) at Rs 142 crore was higher than Rs 132 in the March The high growth of the DTH industry should help the operator post decent returns. With the Direct to Home (DTH) market now having nearly half-a-dozen big players, Dish TVs market share is just above 40 per cent and its subscriber base 4.6 million. In fact, the company managed to net just a fifth of the total subscriber additions in the June 2009 quarter. However, the DTH market is expected to grow a compounded 37 per cent in the next five years, adding 10 million subscribers in 2010-11.

If the growth is driven by households in bigger cities, Zee should manage to get its fair share since it has the necessary distribution to fight local cable operators. Operating costs remain high the average subscriber acquisition cost in the June quarter,
the monthly churn of 2 per cent is worrying. Dish TV needs to increase its ARPUs and reduce the churn.

With revenues expected to go up by about 55 per cent this year to Rs 1,150 crore, analysts believe the company could turn in an operating profit the operating loss last year was Rs 179 crore while the net loss was Rs 480 crore. However analysts are also surprised that Dish TV has outstanding loans of around Rs 200 crore from a group company when the balance sheet remains leveraged. At the current price of Rs 45, the stock trades at a high 16 times 2010-11 EV/EBITDA (enterprise value to earnings before interest tax and depreciation).

SWOT ANALYSIS OF TATA SKY

STRENGTHS Leveraging on brand TATA and high brand recall Technological expertise with newscorps DTH arm sky Superior picture quality Leads in introducing new packages and services Customer service Retail penetration through ITC E-Choupal and Godrej adhar Interactive channels and program guides Innovative product offering Tata Sky Plus

WEAKNESSES Second mover after Dish Tv who captured market share Cannot match free service like DD Currently does not offer free set up box like Dish Tv Litigation due to issues related to sports channel which is lost Dependency on broadcaster and had issues with Sun Tv

OPPORTUNITIES Larger disposable income with India Tapping niche markets with better service and product offering Expansion of distribution network through exclusive stores

Interactive advertising-tie up with Samsung Value added services are gaining steam

THREATS IPTV provides superior technology if implemented Cable set up boxes provides easy switching due to negligible switching cost Increasing competition internally Dependency on broadcasters for their channel content and thus increase in cost

SWOT ANALYSIS OF DISH TV

STRENGTH
Dish tv was the first entrant in the DTH category and has thus became synonymous with the satellite tv broadcasting business in India.Leveraging its lineage with the Zee group,dish tv has built accomendable brand and relevant product that answers the consumers needs for quality entertainment.Some of the inherent strengths stem from a strong presence all across the geography of India,consumer friendly and pocket friendly multi-tiered and customizable regional packages,abundant transponder capacity to support its widest content basket,a very strong and diversified content offering addressing consumers with diverse needs of genres and languages,an extremely cost conscious structure and a superior technology for the entire gamut of services.

WEAKNESS