Competitive Strategies, Positioning & Branding of DTH Companies in India

ABSTRACT
In early 2000’s India saw its first Direct To Home (DTH) company emerge in the form Essel Group’s Dish TV Network. Tata Sky as an offering from the house of Tata’s came in 2006. Later on five more players joined the industry. By 2010 the industry was turning very aggressive & all players fiercely fought competition. Not just market leader & challenger but all players in the industry were playing with keen interest because of the size of this industry in India. The Indian DTH Market is projected to become the world’s largest DTH Market in 2012 itself. The regulations that necessitate digitization of television content & signals will also drive the sale of this product in the time to come. The advantage over cable & satellite service providers that it gives, rural & remote transmission because of wireless service, technological advances like electronic program guide that it provides makes it an enticing product for consumers. In race to acquire maximum customers companies have been fiercely fighting on the price point as well. Doordarshan’s DD Direct Plus with a conglomeration of free to air channels only plays at a different level for rural masses & economy seekers. The competition in the mainstream is mainly between the Dish TV & Tata Sky, with Airtel Digital TV, Reliance Big TV, Videocon D2H & Sun Direct Plus playing on a different platter. It becomes very interesting to see how these players fight it out between themselves on different fronts of positioning & differentiation; when the core offering of bouquets & prices are almost the same everywhere. All DTH majors bear loss in the industry right now & try to make it good with the help of Value Added Services they have to offer. Because of the inherent potential in the industry & aggression with which players chase it, the industry is all set to see its introduction, growth & maturity in a span of just a decade to overpower US market to occupy first position in DTH markets worldwide. India presents an interesting case of DTH market where all the players deliver almost the same product & service, match each other out very fast & even then project themselves distinctly with vigor.

DTH Industry in India
One of the fastest growing industries in terms of rate of growth as well as popularity among the consumer masses is the Direct-To-Home (DTH) Service in India. A nascent industry by at least the time standards, witnessing just eighth year in existence, is set to make India the biggest DTH market in the world. The entry of players, advancement of technology, reduction in prices, competition getting fierce, consumers benefitting in this fierce competition all have been the features of this industry and the call by broadcasters to digitize the content, an idea bought well by the government, has made the industry growth & competition even more obvious & emphatic for the players.
The product itself has definite advantages to be passed on to the consumers. One of the earliest players in this field, Dish TV, has very effectively portrayed the benefits in its ad copies with the usage of its brand endorser Shah Rukh Khan & the famous tagline- “Thoda aur wish karo, Dish Karo” (Do wish some more, do wish for Dish) when he says that u get to receive best quality picture & sound, widest range of channels, movies on demand, active services, electronic program guide, language options etc. For cricket followers in India- they specialize with multi viewing angles & Multi language commentaries. Moreover being a wireless service, users can avail it all over India & rural areas are specially benefitted by this service when they get a network connectivity at par with any urbanized concentration.
The industry has witnessed a race for subscriptions in the recent times, which makes all competitors play very aggressively because of which revenues of all majors are in negative only. The change in regulatory environment is taking shape. All television transmission is to be digitized by December 2014. At the first phase of this four metro’s are mandated for digitization of cable content by October 31st 2012. This deadline is an extended one, set after June 30 deadline could not be met by stakeholder. This major change in regulation has made the case even more interesting. One facet of this is that LCO’s will definitely have to digitize their content, will have to provide set top boxes as analogue transmission has to be discontinued and choice based digital transmission becomes the norm. Secondly, DTH service providers view an opportunity in this to make the viewers move from LCO to DTH in a straight move because of better choices & options. The price that they pay at both the places has come at par, as DTH had to reduce the prices in order to be competitive & LCO’s had to raise prices in order to give better services. Thirdly, aggressive players like Essel groups Dish TV are even working on crossovers between DTH & LCO’s by collaborating with these LCO’s to shift to their platform of digital telecast that they call as Headend In The Sky (HITS) (Jainhits) to come to the market by November 2012. The definite advantage positioned with Hits platform is that it is cheaper than DTH or LCO’s prevailing prices. This kind of crossover arrangement even wins over an essential difference between the DTH & LCO’s, of that of Local Channel & Content. Hits Platform intends to make available few channels for local content also when they collaborate with the LCO’s.1
Research Objectives & Methodology Used
In this research paper the researcher intends to document the changes in product, service & offerings of DTH majors, the pricing of these offerings, promotion, competition & aggression in acquiring new customers by these DTH Operators. Branding & Brand positioning in this crucial sector, which essential involves a similar product by all industry players is interesting to note. With all positioning efforts in place; the choice of consumers, the market leader in this industry & its competition with market challenger also presents an interesting picture.
In order to map these trends & changes in this industry, the changes that regulators & government brings to this industry; published sources are looked at thoroughly to put things & perspectives in right place. Newspaper reports, Marketing Magazines, Company Websites are all researched for this purpose. Content Analysis of ad copies to assess the message & intent of companies & open source encyclopedia wiki is used for accessing generic information about this industry.
Size of DTH Industry in India
The size of the Indian television owning households is estimated to be 120 mn & growing, with about 44% of households in India possessing a television set, receiving television signal in one way or the other. A big segment in entertainment industry, the DTH industry has about seven national level companies playing in this segment, other than 60,000 Local Cable Operators (LCO’s) who serve the industry. The Cable & Satellite service providers industry fledged in the 1990’s after decades of controlled broadcast in India where Doordarshan was the sole broadcaster with a single channel first & with more than one channel in the later days. The proliferation of channels necessitated providing Set Top Boxes (STB) in late 1990’s in metro’s to provide for Conditional Access System (CAS), so that consumers are saved from paying for unnecessary channels, setting the regulatory frame in place. The sector, like telecom sector is governed by the Telecom Regulatory Authority of India (TRAI). An important intervention by TRAI made the users avail the “once in a year off” up to 20 days on this subscription of theirs, if the families travel out of homes holidaying during vacations.
A nascent industry as we can call it, just eight years in existence and last four years as considerably competitive one’s; the potential of the industry for future can very well be accessed by striking a comparison between past & future. The way subscriber bases have grown in last four years & an obvious projection of this for rise in coming four years. Not only the multiplier effect & bandwagon for the spiraling number needs to be accounted but also the changing regulatory environment that necessitates only digital content to be on air in future. 2013 estimates on subscriber bases for DTH are placed at 45 mn & at 50 mn for 2014.2
The telecom & DTH industry share things more than the TRAI as a governor. The age of the industries does differs when DTH industry is about eight years old in India & the telecom industry about double on age, but the life cycles have moved quite in sync for both. Both the industries saw huge volumes coming with the reduction in prices in course of their growth. Telecom services & DTH services, both are available today at a price much lower than the price at which they were introduced. Both have seen subscribers grow in a drastic proportion & both stand at a position that makes India the biggest market in these domains. India is poised to take over US as the world largest DTH market in 2012, when Subscriber mark in India crosses 30 mn subscribers, accounting for one-fifth of the world market. Needless to say, the potential in Indian market is still much larger & it has higher strides in store as the penetration of the service is still to reach the roots in full. For telecom, which has seen even larger numbers & can be considered as an individual service rather than household service, government intends to provide one to every individual standing, as a part of BPL doles, in the time to come. The empowerment & connectivity provided by this service, the wonders it has done to the masses can definitely be commended.
Growth inducing forces for DTH Industry in India
In the 2006 article of Donald L Laurie, Yves L Doz & Claude P Sheer, published in Harvard Business Review (May 2006) titled “New Growth Platforms”, the authors have suggested that the strategic opportunity for growth, that can make a new product successful, lies at the intersection of three components: 3 1) Enabling technologies & regulatory environment, 2) Unmet customer needs getting fulfilled & 3) Know-how & Capabilities of companies.

It simply says that if all these things start rising for an industry at the same time, the industry will have best chances to grow fast. This model of New Growth Platform (NGP) looks enabled for this industry. All the companies have tie ups with some foreign players, were waiting for governments go ahead from late 1990’s as in the case of Sun Direct’s tie up with Astro Malaysia. The technology, know-how & competency at the side of companies were building up. But the market was not ready. When the market opened up & started building, companies brought in new technologies at a very fast rate, to which all other were in a position to cope up. Consumers were first made to feel the need of the product with the help of consumer education campaigns brought in by Dish TV & Tata Sky- the premiers in the industry. These efforts of theirs started yielding results when the regulatory environment also started taking shape in their favor. Recently the market is in a state of flux & bound to grow fast because of call for digitization in the industry and as we can see it, competitors vie for the subscriber numbers & share in the market pie.
Among the many reasons for regulation to change in favor of digitized content is the control on content going out. The Cable Television Network Rules 1994, stipulates just 12 minutes of advertising as acceptable standard for one hour of content delivered. Since this also is blatantly misused by broadcasters, government wants to come in for full control on the content, number of subscribers & telecast of channels by bringing in full transparency & digitization. It believes the advertising menace can be tamed by virtue of subscription revenues rising upon digitization.4

Players & Competitive Scenario
Table 1. Industry Players & Positions5 S | Company | Established | Owners | Subscribers | Market Share | 1 | Dish TV | 2004 | Essel Group | 12 mn | 26% | 2 | Tata Sky | 2006 | Tata Sons | 9 mn | 21% | 3 | Airtel Digital | 2008 | Bharti Airtel | 7.1 mn | 20% | 4 | Reliance Digital TV | 2008 | Reliance ADAG | 5 mn | 10% | 5 | Videocon D2H | 2009 | Videocon | 6 mn | 11% | 6 | Sun Direct | 2008 | Sun TV | 6 mn | 11 % | 7 | DD Direct Plus | 2004 | Prasar Bharti | | |

Dish TV: The Essel Group with the Goyal family introduced the first Private Indian TV Channel with Zee TV in 1992. The group was again first in bringing Dish TV as First DTH platform in India in 2004. Dish TV holds the biggest market share in Indian Market & is soon to become the single largest DTH operator in terms of subscribers worldwide. It pioneered with another distinction of bringing DTH on wheels concept in India by offering Satellite TV service on wheels compatible to traveling vehicles. The group claims to be having the largest number of HD services in its HD bouquet called Dish Tru HD at 41 services.
Tata Sky: Right from the beginning of Tata Sky, in 2006, quality as a differential was the Tata Sky’s motto in this service. It even made the best effort in consumer education by bringing out the first ad copy portraying Amir Khan in double role. In course of a discussion between the husband & wife, the ad tried to educate consumers about the product, promoters, product benefits along with its famous tagline “Isko Laga Dala To Life Jhingalala’. To take care of quality in all aspects of their operations, they initially had people from BSkyB (News Corp) working for them in India to structure the content agreements with channels. With the help of trained engineers in DTH installations, Tata Sky created a 3000 strong workforce skilled in installing DTH services up to the mark providing an initial edge on competition. It got the ISO27001:2005 certification in 2009 for the handling of information security in its service offering. The Tata Sky DVR offers 425 hrs of SD content recording which is unmatched by competition.
Airtel Digital: Sunil Bharti Mittal’s Bharti Airtel owned Airtel Digital TV came to DTH industry in 2008. It gives more than 300 channels in its bouquets and has15 HD channels. It claims to be different in offering upto 7 days EPG to its viewers. It also stands out in offering a universal remote that works on both STB & television. The premium DVR that Airtel Digital offers has 160 GB Hard disk to store 150 hours of television content.
Reliance Big TV: Promoted by the Anil Dhirubhai Ambani Group, Reliance Digital TV was earlier named as Reliance Big TV. With an initial tagline of “TV ho to Big ho”, it lately changed its tagline to “See Big, Feel Big, Be Big”
Videocon D2H: launched in August 2009, Videocon D2H is an offering from the electronics major Videocon in India. Videocon is world’s third largest picture tube manufacturer & has business interests in many parts of the world. Being an electronics major themselves, Videocon brought to India the concept of DTH enabled hardware that is television & LCD’s having in built STB of Videocon D2H. Videocon D2H has in its portfolio 22 HD services, HD DVR’s & 3D compatible STB with one 3D channel on air.
Sun Direct: This DTH service was commercially launched from 2008. It is a joint venture between Sun TV Network in Tamil Nadu & Astro group of Malaysia. This DTH Company is known to be most aggressive in pricing its initial bouquets which were as low as Rs 85 a few years back topping with a free STB given to buyers. Sun Direct had a very high growth rate in 2009 & 2010 because of its bouquet pricing.
DD Direct Plus: DD direct plus is from Prasar Bharti & Doordarshan in India. It airs about 60 Television channels, 20+ from Doordarshan & 30+ from private broadcasters which are all free to air channels. In addition to these TV channels, DD Direct Plus also provides about 23 radio channels to its audiences. Being the only free DTH service, it has limited urban demand & has more utility in community usage across India.
Branding & Competitive Strategies by Players
The product differential with all the companies in DTH industry is meager. More than the product part, the differential happens on the service or the price part of competition. Core technologies & the assortment of channels is more or less common among all players. Tata Sky enjoys a premium image on service, installation & quality of network. All major advancements in technology to this industry in last six years have been introduced by Tata Sky to which all other have followed suit. May it be HD services, DVR, Mobile Applications, common remote; Tata Sky has always maintained a lead over all others.
Dish TV enjoys the largest market share, being the first entrant in the industry had a leading edge which it has been able to maintain in the long run also. Competes fiercely with all others, specially Tata Sky, which is not only the second largest player & a challenger to its supremacy, but has a distinct edge in offering a premium service. When Tata Sky tried to put down the weight & baggage of this premium image with a campaign without Amir Khan, bringing commoners to say “Poochne mein kya jata hai?”, so to make consumers explore options before buying; Dish TV replied with its own satire saying ‘pooch ke dekh lo” you will even then be convinced to go for Dish TV.6
Product & Services
The DTH Operators by virtue of their negotiations & content sharing arrangements strike a deal with the channels to bring out the largest bouquet of channel on offer & at better prices than competitors. Tata Sky with 32 channels from Star TV’s stable & Dish TV with 32 channels from Zee TV’s stable, stand out at a better position in these negotiations. Sun Direct has the backing of Sun TV Network in Tamil Nadu & trades on those channels. Other smaller broadcasters have to strike a deal with all DTH majors in their own humble ways. Reliance Digital TV for this very advantage intends to come into broadcasting business of its own channels in future.
The usual features accompanying DTH services like Electronic Program Guide (EPG), Language options for some channels, the interactive services apart from the benefits of unhindered access at any terrain, definite quality improvement over terrestrial networks stand as common advantages with all service providers.
The multi angle multi camera feed that DTH majors support during sporting events provides to the viewers stadium like experience from the comfort of their home in an economical & effective way. “This is a differential offering in a country where cricketing is religion”, believes Vikram Mehra, CMO Tata Sky. Some time back the advertisement of Tata Sky was centered around this feature of their services.7
Pricing
The Industry players are all incurring heavy losses in this fierce race for the subscribers. But they expect the numbers to swell before the revenues come up & comfort them. In present spate of things the subscribers seem to be highly subsidized by the service providers. Service providers are first interested in customer acquisition & market creation than profits at this stage. Early players in the industry know it better & have seen how the industry has changed in the span of six years. Initial prices stood around 5000 Rs in 2006 for STB & service activation, from there it came down to 3500 Rs, 2000 Rs, 1000 Rs & went even below this when the number of players increased in 2010. The Festive prices offer in 2009 & in 2010 brought down the prices at Rs 999 for this service with Dish TV & Tata Sky both. All the companies had their price offers between Rs 890 to Rs 1200. Dish TV for example in 2010 was giving STB for Rs 990 + Rs 200 for installation extra, but giving recharge vouchers worth Rs 990 absolutely free, thus an offer that puts STB for free. Companies have gone even below this to acquire a customer. Videocon was offering STB at Rs 888. Sun Direct came with the most lucrative offer with STB at Rs 890 & offered the lowest base pack at Rs 99 which was most economical pack across board. When they did so, the companies were virtually subsidizing the subscriber for about 2500 Rs, the basic cost of STB & Antennae doled almost for free, in hope of future earnings & revenues. Giving this subsidy is not everyone’s forte. So the stiffness in which industry works; the urge & drive to bring DVR & Value Added Services (VAS) at the same time with subsidies, to make good the losses in serving acquired customer can be understood. A 2010 report entitled- ‘Asia Pacific Pay TV & Broadband Markets by 2010’ from Hong Kong based media research agency Media Partners Asia says Indian DTH companies will start earning profits by 2013, when the DTH subscribers number will stand around 45 mn.
Knowing the industry trends & the financials of these companies, attrition of subscribers can be a big problem. To those who have done so, the ownership of hardware they use has come out as the biggest issue of contention, as obviously the company owns all hardware when they provide it to subscribers at this subsidized price. About 5 to 8 % of DTH subscribers keep looking for cheaper variants of DTH or even switch back to cable & satellite service providers (LCO) in search for cheaper deals, putting DTH players in trouble. LCO’s had an advantage of under reporting the subscriber numbers by which they comforted themselves to a large extent. With the level playing field introduced between LCO & DTH operators by digital broadcast eventually negating underreporting, the things are expected to improve in favor of DTH operators. Transparency by way of regulation was needed for a long time in this industry & things have started moving in right direction.
The pricing of bouquets also heats up the competition. Sun Direct has been an aggressive player on that. It differentiates by offering the best value for money economical pack, while all others had to struggle hard to come down. Dish TV in this competition brought down its initial bouquet at little above 100 Rs, giving a tough fight to LCO’s. Tata Sky on the other hand had a tough time shedding its prestige & premium image. It came out with a special campaign in answer to this bouquet price war of competitors, where it had to set aside Amir Khan as brand endorser & had to make use of two young boys in Laurel & Hardy attire asking the vendor for the lowest price bouquet in a campaign aptly called “Poochne Mein Kya Jata Hai?”. An image shedding which must have been felt as an important way to tackle price advantage all other players were counting on, compared to Tata Sky’s premium image & fine positioning as the best service provider. What is even more special is that the exercise was precisely an image shedding overture or else the low price offers were always there with Tata Sky. What was felt emphatically was an urge to educate consumers about presence of such price bouquets with them and hence the need to do it without Amir Khan.
A common situation with all DTH players is the losses in overall revenue. With the help of value added services like- Video on demand, Active & interactive services, Movie on demand, Music on demand, Cooking guides & Tutorials etc the companies try to make good their losses on core service losses. The DVR service with recording facility, that almost all DTH majors came with around the time of sporting events like FIFA Football World Cup 2010, ICC Cricket World Cup 2011, CWG 2010 & Olympics 2012 were all attempts in this very revenue model. The DVR Platform supporting HD Channels can rake in more money for the DTH operators by way of drastically increasing the Average Revenue Per User (ARPU). To sustain & enhance this differential offering of theirs, DTH majors will have to convince popular channels to provide HD feed of their channels. This change is happening but at a slower pace.8
Table 2: ICC Cricket World Cup Offers 2011 from DTH Companies Company | SD STB | HD STB | DVR | Sports package | Tata Sky | 999 | 2599 | 5999 | India cricket pack 365 Rs PA, HD Gold pack 30 Rs PM | Dish TV | 990 | 2990 | NA | Four Month Gold pack Rs 1590, A-La-carte channels from Rs 20 pm onwards | Airtel Digital | 1690 | 3190 | 4990 | SD 4 months for Rs 220; HD 4 Months free | Videocon D2H | 1390 | NA | NA | New Gold Sports(207) Channels Rs 215+ tax | Sun Direct | Free | NA | NA | Sports package Rs 99 pm | (Source: Business Standard, Mumbai, January 17th 2011)
Advertising & Marketing Campaign Strategies
DTH Companies in India have widely utilized festive seasons & sporting events as an opportunity to sell their product on the basis of inherent product benefits or because of the sports special features that they have to offer to sports enthusiasts around major sporting events. Competitively placing their products & specially war of words started in industry after 2009, when Dish TV, Tata Sky & Sun Direct were fiercely fighting out each other. Sun Direct brought the service price down to which all had to react by corrective pricing. When Tata Sky tried to down place itself with the help of “Poochne mein kya jata hai” campaign, Dish TV took a dig at their attempts by saying “Poochte ke dekh lo” kind of campaigns.
Some DTH Majors come out to collaborate with television manufacturers to sell their DTH at subsidized prices or in some other promotional offers. Airtel Digital tying up with Sony Bravia, Reliance Digital TV tying up with Onida & Videocon D2H clubbed with or inbuilt with Videocon Televisions are prominent examples of this.
Competitive Moves, Industry Leader & Future Prospects of Industry
The enabling regulations, in last one year are making the industry even more competitive. The industry stands a good chance to raise the quality bar. Digital revolution brewing, will benefit the users but also the government, by fastening the grip on number of subscribers which was open to manipulation in analogue telecast. Not just the broadcast industry, but the content providers are also put under scrutiny like never before in India. The forums like Indian Broadcasting Federation (IBF), Advertising Standards Council of India (ASCI) & News Broadcasting Association (NBA) are active in India & regularly ask for viewer feedback & complaints. Much needed in our society where there are more than 130 news channels alone, highest in any country world over. Other pertinent challenges the industry faces are the advent of Digital Video Recorders (DVR), providing viewers the power to skip string of commercials on recorded content, which makes ad space booking by marketers look less lucrative to them & they devise their own ways of tacking by doing product placements & other more aggressive marketing efforts. The convergence of content on online platforms is also a force to reckon with. A majority of television content is available electronically now a days & if this trend catches on, the revenue model & content access will change drastically in the time to come. 9
All efforts to introduce transparency & regulations are keeping pace with the growing needs of industry. The numbers are moving fast in right direction for the industry. Dish TV stands at number one position with more than 12 mn subscribers and having about 26% of market share. All other players are also fast catching up & the growth prospects of industry are very bright & promising. The industry prevails in a win-win situation where all stand to gain by industry’s growth: the consumers, DTH companies, government as regulator & as revenue collector.

References: 1. Afaqs (2012) Hits Platform to be available in India again, New Delhi August 30. 2. Business Standard (2010) India’s DTH Market will soon be the world’s largest 4th October. 3. Harvard Business Review (2006) New Growth Platforms, Donald L Laurie etal, May 2006. 4. Business Standard (2010) When Transparency pays (Editorial) 12th October. 5. Wiki/ DTH accessed at http://en.wikipedia.org/wiki/Sun_Direct on October 5th 2012. 6. Business Standard (2011) Method in the madness, 10th November. 7. Financial Express (2011) DTH service providers bet on high definition viewers for more profits, 27th February. 8. Business Standard (2010) DTH Firms adopt smart tactics on pricing without real cuts, October 19. 9. Harvard Business Review (2010), Advertisers learn to love the DVR, April 2010.