In the early days, the Indian TV scene had always been dominated by MSOs or what are popularly known as the local ‘cable wallas’ (the local cable guy). DTH, in spite of being an old technology, had not really picked up in India, with the exception of Dish TV. And even Dish TV had been operating for a long time in areas where cable TV was not feasible to deliver and was never a large scale player during its early days.
However, sometime around 2010, DTH started gaining steam in India. The end of the tussle between Zee and Star regarding carriage fee opened the floodgates for mass adoption of DTH in India. High-profile DTH launches by Tata Sky, Reliance’s Big TV, Sun DTH, and Videocon D2H, pushed DTH to the next level. MSOs were content providing analogue TV, which gave users no option other than changing channels and volume through a remote, even as DTH operators stole the thunder by providing set top boxes (STBs) that could help one classify channels according to genres; know which show is running currently, what show would come next, set reminders, change languages, get monthly bill statements and a lot more. DTH operators clearly had a technological lead when they made their debut and some like Tata Sky had coupled that technological lead with above average customer care to make MSOs look even worse.
Ever since 2010, DTH operators have been growing at an upward trajectory in terms of customers with the top three DTH operators in the country easily having 10 million plus subscribers. However, this rosy period might be coming to an end soon because of a wide variety of factors.
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DTH cost structure blues
DTH operators have a unique cost structure in the sense that it is the capacity that costs them and not the coverage. Basically, every DTH connection relies on a satellite to send the encoded video which is then decoded by the set top box, after which users get to see all the channels. Coverage is not a problem for DTH operators as it is almost ubiquitous throughout the country. The satellite in space has a circular coverage area. Most satellites used by Indian DTH operators are placed in such a manner that their circular coverage area covers all of India and in some cases, ends up covering certain parts of India’s adjacent countries as well.
So, coverage is not a problem for Indian DTH operators. However, capacity is. The coverage of a satellite depends on its position in space but the capacity of a satellite depends on the number of transponders on it. Indian DTH operators need to lease transponders on satellites that they choose to use. The transponders have a fixed capacity and the more transponders a DTH company chooses to lease, the higher its cost structure. Now, an HD video stream is obviously more data heavy than an SD video stream. So, if a transponder can carry say thirty SD channels then the number of HD channels the transponder can carry will be just 4 to 5. Newer video decoding codes such as HEVC can only help so much in reducing the size of the video stream and most often do so with a compromise on picture clarity. Ultimately, when a move is made to a higher resolution, the data size of the video stream increases.
As time has passed, Indian DTH operators have added more and more HD channels but these have come at the cost of leasing more transponders either on the same satellite or from different satellites. With more transponders being leased, costs go up and this cost has been passed onto consumers in the form of high base tariffs. There has been a remarkable increase in the tariffs of almost all DTH operators as time has passed.
Currently, if a transponder is able to handle just 4-5 HD channels, then in the future it might be able to handle just a single 4K/UHD channel. With 4K content becoming readily available and the price of 4K TVs plummeting, it is not difficult to see the appetite for high-quality video streams. Currently, there is no proper full-time 4K channel being provided by any DTH provider in India, but the amount of 4K content available on Netflix and Youtube has been increasing steadily every year. It would become economically unviable for DTH operators were they to provide a lot of the current HD channels at 4K resolution considering the sheer number of transponders that would have to be leased.
While in DTH, capacity has been an issue, that is not the case with IPTV or TV that’s delivered over the Internet which is what I believe Reliance Jio would do. The price per GB for both fixed and wireless broadband has been decreasing constantly year after year. Once you factor in peering, there is almost negligible cost to deliver content over the Internet or at least bandwidth stops being an issue. It is going to be much easier for someone to deliver, say a hundred 4K channels over an IP network than by using a satellite. Simply put, I do not see the current cost structure of DTH operators as being viable over the long term as the resolution of the video content we consume keeps increasing.
Improving Internet connectivity in India = DTH headache!
I personally feel that wireless internet is just one place where Jio has totally upended the industry. Consider the fact that a Rs 300-350 plan initially used to provide a person with just 1 GB of mobile Internet per month and now the same plans provide people with 1 GB of mobile Internet per day. This will bring a seismic shift in the habits of millions of Indians that use data packs.
Jio also has big plans for fixed broadband. Some users in Pune, Mumbai, and a few other cities, have been beta testing Jio’s gigabit fiber plans and once Jio manages to get some time off from its wireless initiative, wired broadband would be its next big target. Jio already has an MSO license and has all the plans to provide people TV services through its IP network.
Other MSO operators are also moving in a similar direction, considering how Hathway provides both TV and broadband and DEN has also started providing DEN broadband under its Boomband brand. The point I am trying to make is that with both wireless and fixed broadband improving in India, DTH operators will have their task cut out to survive because one of the many reasons why IPTV and OTT apps did not pick steam in India was because of India’s poor Internet infrastructure. And that seems to be changing.
If some company provides you internet as well TV delivered over the Internet, then that is definitely a more compelling proposition than DTH operators that provide TV alone and do not provide broadband or Internet in any manner. One more thing – the cost of delivering high-quality streams over the internet is much lower than that of satellite.
Who needs DTH in the Planet of OTT apps?
Over the top (OTT) apps have become increasingly popular in India – witness the rise of Netflix, Hotstar, Sony LIV and now Amazon Prime Video. The companies behind these apps have signaled their intention to invest massively in them. As per Economic Times:
“Amazon’s video streaming service has so far committed at least Rs 500 crore to creating original content in India, outspending its top domestic rivals as it signs up some of the country’s most high-profile production houses. Amazon Prime Video has invested about one-fourth of its Rs 2,000-crore India budget in local production houses, including those of filmmakers Farhan Akhtar and Anurag Kashyap, according to executives at production firms Amazon has been in talks with.“
It is not just Amazon. After Hotstar’s deal to license content from Disney, the amount of content available on various OTT apps is becoming steadily compelling. Significantly, using these apps is not an expensive proposition – some also showcase sports. For example, Amazon Prime Video is available for free with a Prime subscription which costs a measly Rs 500/year when DTH operators are charging more than that per month. Similarly, HotStar’s premium tier costs just Rs 200/month.
While OTT operators are upping the ante and investing in original content that appeals to youth, DTH operators are doing no such thing. DTH operators, for the most part, have only been licensing content, content which anyone else can license as well and deliver over an alternate medium. While some might say that it is perfectly all right for DTH operators to not want to invest in their own original programming, I feel they should at least provide a way for users to be able to access various OTT services from their set top boxes. But no such option is present. Instead, DTH operators are pouring money into VAS which honestly adds very little value in this day and age where so many apps perform much better than the VAS offerings of these DTH operators. And at much cheaper rates too.
Update: While the article was being edited, Airtel and Videocon had just announced that they would start providing Netflix on its STBs.
Set Top Boxes – no longer high-tech
When they first launched, the set top boxes (STBs) provided by DTH operators seemed to be something from another world as India had always been accustomed to local cable folks who provided no additional program info or controls. However, as time has passed, these STBs seem increasingly outdated. In this day and age when all of us are accustomed to the cloud, beautifully designed apps, instant launches with almost zero lag, STBs seem woefully out of place.
A side effect of the monstrous growth of smartphones and the ecosystem thus created has been the creation of several third party devices. For example, drones today immensely benefit from the work that has been done on smartphone batteries for years now. Similarly, ARM processors now pack in quite a decent amount of power, and coupled with a couple of gigs of RAM can easily come for less than USD 100 and make for a decently fair STB. The Xiaomi Mi Box, Roku, Amazon Fire TV are all examples of decent streaming media players that do not cost very much.
But Indian DTH operators have hardly improved their STBs. If you want to record some video then it would be stored locally on a hard disk drive (HDD) and the HDD STB would cost extra. Having toured Jio’s HQ in Mumbai, I had the opportunity to have a look at Jio’s offering and take my word for it – it is miles ahead of what current DTH operators offer.
Basically, Jio would be offering a combination of home broadband and IPTV. The IPTV is based on the NVIDIA Shield box which means you could play HD games and access other OTT apps such as Youtube, Netflix and HotStar on it as well. Meanwhile, the Jio TV app like the one currently available on Android would allow you to view all channels and their programs for the past seven days. Seven days of programming for ALL channels are stored on the cloud and can be accessed at any time without having to worry about internal storage. Considering what Jio has in the pipeline, the STBs of current DTH operators seem like a child’s toys, to be honest.
Doomsday for DTH looms?
With the rapid improvement of broadband, the popularity of OTT apps, and the other factors that I have outlined, the value proposition of current DTH operators is becoming lesser and lesser. Over a period of time, a confluence of all the factors mentioned in this article would in one way or another kill the DTH market of India. To be fair, some DTH operators like TataSky are trying their best to improve their value proposition with the addition of more HD channels and features like +1 HD channels for accessing programming that is delayed by 1 hour but these are just minor perks which would lose relevance in the grand scheme of things.