DTH Market
India The world's 3rd largest television market with 138mn TV households, has approximately 105mn cable & satellite households. This C&S penetration at 76%, is far lower as compared to countries like USA & China where it is close to 100%, indicating high growth potential. Digitization has been a key growth driver for the Indian entertainment industry and this trend was even more pronounced in FY 2010 as the industry exceeded growth expectations to reach a base of 33 million subscribers, clocking a 50% growth over its subscriber base of FY 2009. The growth trend is set to continue with the DTH subscriber base expected to touch 70mn by 2014.

The government's initiative on mandatory digitization across India, over the next few year, will lead to rapid build-up of DTH subscriber base across geographies, further accentuating the DTH growth story.

DTH service offers its subscriber, the flexibility to choose various channel packages as per his/her requirements. In FY2010, the industry saw the advent of A-la-carte packaging, promising the subscribers the ultimate flexibility to handpick their entertainment & create their own packaging. And now the industry is all set to offer further enhanced experience with next generation feature of High Definition (HD) picture quality. Most of the DTH operators are now offering between 6 to 40 HD channels. Currently, Reliance Digital TV is the only player offering all 250 channels in HD like quality, with 10 times sharper picture, in its HD Set Top Boxes.

This next generation entertainment experience along with the steal away entry offers & flexible subscription packages ranging between Rs 100 to Rs.500 per month, is attracting a lot of prospective buyers ensuring an aggressive growth in the DTH subscriber base.

While the growth in subscriber base is eminent, it is crucial to ensure not just growth but 'Profitable growth'. The 6 player competitive industry has to be cautious in its subsidy offerings at the time of new subscriber acquisition. Scarcity of satellite capacity will put pressure on the number of channels that can be carried by each DTH player leading to eventual differentiation of channels/ offerings. The high taxation of DTH services by government & the under reporting by analog cable service providers are creating an unequal playing field enabling aggressive subscription price competition from analog cable, there by impacting the DTH subscription revenue. While mandatory digitization will solve the problem of under reporting, the high taxation still needs to be reviewed for optimization & rationalization. For the DTH players, superior entertainment experience, differentiated offerings & customized consumer care management are key to quality consumers & profitable growth of the industry.

Technologies and Trends
DTH industry in India was operating on MPEG 2 technology till 2008. Reliance Digital TV became the 1st DTH operators to launch its all India service in MPEG 4 technology, giving the flexibility to offer more channels & better experience quality. Thereafter all new DTH players have launched services in MPEG 4 technology. Even some of the older players have started operations in MPEG 4 technology, parallel to their existing MPEG 2 technology.

DTH services were started with the basic intention of organized digitization at optimal quality, benefiting the consumers. However, with time the DTH operators have been introducing newer products & features like Digital Video Recorders- along with the flexibility to Pause- play- rewind-forward, near Video On Demand- greater flexibility to the customer in terms of viewing any paid content instantaneously, Universal Remotes- to control multiple devices with the single DTH remote etc. Reliance Digital TV remains the 1st HD DVR provider packaging three unique benefits of High Definition, Recording & Universal Remote into a single Set Top Box. All these technological innovation & developments ensured enhancement in the viewing experience by taking TV viewing to the next level.

And, there is more to be expected. In recent future, the 3D advancements will provide new dimension to the subscriber's viewing experience. DTH operators have already introduced 3D enabled devices. However, currently the 3D content is very scarce & the technology is in the nascent stage, indicating a gestation period before this becomes the next milestone in the home entertainment experience.

Value added services
Indian DTH players have started using VAS to differentiate offerings and establish their USPs. Some of the Value Added Services being offered by various DTH players include On-Screen Shopping, Education, Stock Market updates, Cooking Lessons, Games and watching movie premiers on TV from the comfort of one's home. In India, gaming in general has attracted the youngsters but is yet far behind the international trend of avid and serious gamers. DTH gaming in India has evoked interest of the pre-teenagers but has lots to catch up including awareness creation and advanced gaming offerings to catch interest of a wider age group of audience. Movies have a large following in India and can be a lever to enhance the VAS revenues. The advantages of 'comfort of watching at home 'and' at time of your choice' needs to be supported by compelling content & awareness, in order to overcome the inherent competition from the 'Theater/ Multiplex experience' & the existing TV channels that beam movies.

Internationally, exclusive content (movies/ sports etc) & Gaming are the major contributors to VAS revenue which constitutes around 8% of their total revenue. VAS in India is still in its infancy stage with negligible revenue contribution but is expected to be the significant revenue source contributing 5% to 8% of total DTH revenues.