Digitalisation to drive value shift in India pay-TV ecosystem

MUMBAI: A new report by Media Partners Asia (MPA) indicates that digital pay-TV penetration of TV homes in India will grow from less than 20 per cent in 2011 to 50 per cent by 2016, and 61 per cent by 2020.

The key demand drivers will come from cable operators, six commercial DTH pay-TV platforms, and DD Direct, the government-owned free DTH platform. A gradual consolidation of last-mile local cable operators will become inevitable, leading to a shift in industry profits and value to centralised distribution platforms and broadcasters.

The report ‘Asia Pacific Pay-TV and Broadband Markets 2012‘, measures consumption and revenue generation across pay-TV and broadband industries in 16 Asian markets, including India, which the remains the key pay-TV market for Asia in the future.

MPA executive director Vivek Couto said, "India’s digitalisation timetable implies a three-year transition to full digital TV (DTV) conversion. This is ambitious though we believe DTV transition will occur but over a longer time frame. The industry will remain capital-intensive until 2017 at the earliest, due to the capex requirements associated with digitalisation. This will lead to more M&A and fund-raising activity in both primary and secondary markets."

The sector’s improved transparency, scale and operating leverage will attract large domestic and international strategic players, who will play a key role in M&A activity.

MPA’s biggest concerns include cable execution and capitalisation as MSOs transition from a B2B to B2C model; DTH satellite capacity; and the extent of regulation in the broadcast ecosystem. While digitalisation is the result of policy progress, this has not been the case for investment and taxation policies.

MPA projections indicate that pay-TV industry subscription fees will grow at an 11 per cent CAGR between 2011-16, driven by increased volume over DTH and digital cable. Total pay-TV subs are expected to reach 172 million by 2016, and 199 million by 2020.

MPA projections measure pay-TV penetration after accounting for households that opt for multiple services. Using this definition, MPA estimates that pay-TV penetration will grow from 79 per cent to 89 per cent between 2011 and 2020.

The majority of DTH pay-TV platforms will be generating free cash in the next three to four years, says MPA. The active DTH subscriber base (i.e. paying customers only) could grow from 29 million in 2011 to 69 million by 2016, and 93 million in 2020. This implies a 46 per cent share of the overall market by 2020 (versus 23% in 2011), and a 65 per cent share of the digital pay-TV market. DTH operators have been working together to improve the overall economics for the business; nonetheless, a rise in subscriber acquisition costs due to growing competition from digital cable, as well as medium-term satellite capacity constraints, remain concerns.

DTH industry revenues will reach almost $4 billion by 2016 and $6 billion by 2020, with revenue growth largely driven by expanding the subs base. ARPU growth will be partially limited as DTH expands nationally, with low-income homes coming into the mix, although MPA also sees a greater contribution from high-ARPU HD subs.

Digital cable subs will reach approximately 33 million by 2016 and 48 million by 2020, with cable’s consumer proposition, in the form of channel packs, HD, VAS and broadband, driving subs and Arpu growth. Monthly digital cable ARPUs will grow from $4 in 2011 to $5 by 2016 and $6 by 2020. Total cable industry subscription revenues will grow from $4.2 billion in 2011 to $6.4 billion by 2020, with broadband contributing 15 per cent to sales by 2020 versus 85 per cent for pay-TV.

For broadcasters, digitalisation and greater transparency in the pay-TV ecosystem will result in a higher proportion of subscription revenues, as well as rationalised carriage and placement fees. At the same time, broadcasters will need to programme stronger, differentiated content to survive and prosper in a new ecosystem, and create new consumer demand.

MPA expects total pay-TV channel revenues to grow from $3.4 billion in 2011 to $6.7 billion by 2016, and to $9.6 billion by 2020. Subscription revenue upside from DTH will be capped, however, due to fixed fee deals already in place between broadcasters and DTH operators. Incremental growth and upside will largely be driven through digital cable platforms.

Revenues will continue to remain skewed in favor of advertising, with the latter contributing 70 per cent to total broadcaster revenues in the long term.

Latest Reads
Livestreaming App SWOO sees momentum in India; Launches Trivia Format in India

SWOO, a leading global livestreaming platform established in Middle East, today announced the launch of its SWOO TRIVIA SHOW – a celebrity hosted live video streaming game show for Indians. SWOO is a user friendly, engaging and feature-rich live broadcasting app available across Android/ iOS/ Web...

Technology Software Applications
TiVo exits STB business

MUMBAI: TiVo is exiting the manufacturing, sales and distribution of set-top boxes to a yet-undisclosed third party, the company has said.

Technology Hardware Set-top Boxes
IET India IoT Panel joins hands with exhibitions india group for the 3rd edition of IoT india congress

IoT India Congress is India’s Platform of Platforms for the Internet of Things conceptualized by IET India IoT Panel, a think tank constituted by the Institution of Engineering and Technology (IET) India. The 3rd edition of IoT India Congress will be hosted in collaboration with India’s leading...

Technology Software Firmware
Tata Elxsi's Automation suite adopted by pan-European Media and Telecommunications Company

Tata Elxsi, a global design and technology services company, announced the licensing of its integrated test automation and monitoring suite ‘FalconEye’ to a pan-European media and telecommunications company for OTT automation and improving streaming performance.

Technology Software Firmware
Verimatrix recognized for contributions to latin american Pay-TV market with PRODU award win at NAB Show

LAS VEGAS: Verimatrix, a specialist in securing and enhancing revenue for network-connected devices and services, has received the PRODU Award for Best Pay-TV Technology Contribution on behalf of its MultiRights™ OTT solution. MultiRights helps service providers effectively navigate the modern OTT...

Technology Software Firmware
Amagi debuts machine-learning powered content-preparation suite

Amagi, a cloud-based technology provider for media processing, has launched Tornado, a machine learning-based content preparation service that enables TV networks and content owners to scale their operations and accelerate broadcast workflows.

Technology Hardware Components
Sharp and TiVo extend interactive program guide deal to power content Discovery across entertainment devices

MUMBAI: TiVo Corporation (NASDAQ: TIVO), a global leader in entertainment technology and audience insights, today announced that Sharp Corporation will further utilize TiVo’s G-Guide HTML across Sharp 4K smart TVs and Ultra HD Blu-ray recorders in Japan, TiVo’s G-Guide xD app and remote schedule...

Technology Hardware Components
HARMAN announces Priyanka Chopra as global brand ambassador

HARMAN International, a wholly-owned subsidiary of Samsung Electronics Co., Ltd. focused on connected technologies for automotive, consumer and enterprise markets, today announced that actress, singer, producer and philanthropist Priyanka Chopra has been named a global brand ambassador for the...

Technology Hardware Components
Etere HSM expands interoperability with Grass Valley

Etere HSM features an integration with Grass Valley that improves interoperability, streamlines connectivity, enables faster content processing and includes deep archive capabilities. Etere introduces a new integration layer between Etere Hierarchical Storage Management (HSM) and Grass Valley...

Technology Hardware Components

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories