Competition will Give Way to Consolidation

With average revenues touching $4 per customer, India is abysmally low on the ARPU front when compared to other international markets.

For example while the US has an ARPU of $60 Europe boasts of average revenues of around $40 and Asian markets like Singapore earn around $15-20 per customer . India will always be a low ARPU market but what we are looking at right now is to create a big base of customers. We want to keep acquiring new customers for a few more years and then focus our attention on unlocking value from these customers. Dish TV has the biggest chunk of subscribers in the industry at 9 million with ARPUs at Rs 139 and it expects to turn profitable in the next one year.

Even as the industry goes through this hyper activation phase, DTH players are trying hard to differentiate themselves by introducing high definition boxes, digital video recorders (DVRs) and other such value added services.

Videocon d2h – the latest entrant in the market — recently launched a bouquet of 20 music channels in association with Planet M priced at Rs 20 to drive up revenues. We will increasingly look at introducing unique services like this one in order to improve revenues. With 2 million customers Videocon d2h is looking to turn around by the time it touches the 4 million in mid 2011.

Advertising agencies, facilities for marketing research, repair services, specialized consumer financing agencies and storage and warehousing facilities are facilitating agencies created to serve the particular needs of expanded markets and economies. These institutions do not come about automatically and the necessary marketing structure does not simply appear. Part of the marketer’s task when studying an economy is to determine structure does not simply appear. Part of the marketer’s task when studying an economy is to determine what in the foreign environment will be useful and how much adjustment will be necessary to carry out stated objectives. In some developing countries it may be up the marketer to institute the foundations of a modern market system.

Future An integrated play

Players such as Bharti and Reliance communications (RCOM) are banking on the advantage of bundling service to rake in the moolah, replicating their international counterparts. Recently RCOM acquired Digicable India’s leading cable TV service provider to spruce up its over all portfolio and bundle in cable, DTH broadband, IPTV together while Bharti Airtel plans to integrate its telecom.
Broadband and DTH: We plan to get the customer’s TV screens on his or her mobile and internet and that will be the big differentiator for us. TV will not be about linear watching anymore, it is bound to become more intelligent and integrated and that is where we have an advantage.

Globally, the DTH play is about embedding new services to rake n revenues and that is what these players are looking at to gain from as they work on their convergence format.

Post this hyper competitive phase there can be some amount of consolidation in the market. There will be some players who will see the business as a drain on the overall profits of the group and may look to hive off the DTH business. Some even talk about a geographic consolidation where regional players will look to merge with pan Indian players to acquire scale. But for now the fight is only on the one plank and that is who gets the most number of subscribers.

Though India is set to overtake the US to become the world’s biggest DTH market, predatory pricing is eroding profitability. And the competition is only going to get tougher.