When the Dhoots of the Videocon group decided to foray into the direct to home (DTH) television business, the odds were stacked against them. Five other players had already established themselves, and the segment was already boiling over with competition. But that did not deter the Dhoot family which was keenly looking at investing in high growth emerging businesses.
They charged an old hand who had spent nearly three decades with the consumer durables and electronics group in various managerial positions in sales and marketing - Anil Khera - to get the venture going under Bharat Business Channel. Launched in 2009, with Khera as CEO, Videocon d2h, is another success story for the Dhoots.
And Khera has contributed in no small measure to that success. A very desi brand builder and marketer, he is known to have his ear very close to the ground, and his eye on the consumer. Today Videocon d2h has more than 10 million subscribers and claims to be the fastest growing company in terms of net DTH additions. And Khera is looking at further accelerating that growth.
He took out some time to speak to indiantelevision.com’s Vishaka Chakrapani about the company’s stellar performance, the way ahead and the DTH industry on an overall basis.
How has 2013 been for Videocon d2h? What are your expectations in 2014?
2013 has been a tremendous year for us. We consolidated our market leadership further and maintained a 26-27 per cent market share in incremental growth. We crossed 10M subscriber base and introduced several innovative products like 1TB DVR recording facility in zapper boxes through USB etc.
We expect 2014 to be a similar year. We would also look at introducing new products and services to our customers like Anywhere TV etc.
What is good about the India DTH industry? How can it be made better?
The size of Indian Pay TV market in terms of number of subscribers is unparalleled across the world. Also, it’s a completely open market structure that promotes competition by accommodating several DTH and Cable companies at the same time. However, its overly regulated and high rate of taxation is the single biggest issue.
What differentiates Videocon d2h from other players?
The hallmark of Videocon d2h is its simplicity and execution focus in approach. Some of these can be described as:
·We constantly thrive on simplifying our offerings to customers.
·Our consumer durable DNA means we have decades of insights and knowledge on customer behavior.
·Our entire organisation is very execution orientated constantly speaking to trade and customers.
What are the value added services (VAS) that the subscribers get from d2h? How do you finalise the services for your customers?
We offer the following value added services:
·Pay Per View channel bringing the best and latest movies to our customers
·In house VOD channels
·Audio music channels bringing music across 20 genres ranging from religious to romantic
·Audio Video channel
·Premium subscription channels like Star World Premiere
·Special customised tickers like stock market updates 24X7 across any channel
Our services are finalised on the customer’s demands, maturity of offering and our hypothesis on future potential of the service.
Do you have plans to target the mobile space any time soon?
We would be launching Anytime TV sometime soon in 2014.
How many net customer additions did you have in 2013? Have you seen a fall in the number of subscribers?
We have added arguably the largest chunk of industry net additions in 2013. We have certainly seen dramatic fall in churn rates post phase 1 and phase 2 digitisation. We expect this to further drop post phase 3 and 4 of digitisation process.
How has revenue growth been in 2013? Has the revenue growth been on account of subscriber additions or rise in average revenue per user (ARPU)?
2013 has seen significant growth in terms of revenue. This has been on account of:
·Subscriber base has gone up significantly from where we were at the start of the year.
·Customer prices have seen a 5-6 per cent increase during the year.
·Increase in HD is improving our revenue mix and hence overall revenue.
·With reduction in churn and suspension rates due to digitisation, customer realisation has improved quite a lot.
Have your ARPUs grown over the years?
Over the past few years, ARPU has grown at a healthy double digit rate. We expect this to continue to grow and a low double digit rate for the next three years
How do you work on increasing your ARPUs?
We expect ARPU to grow by a low double digit this year on account of Better HD mix; marginal price increases; and introduction of VAS offerings like Anywhere TV.
Claims are that the DTH business has stayed stagnant for some time now. Your opinion?
While the overall industry is growing at only 10-12 per cent, this is not necessarily true for each player. Various players are growing at rates varying from negative to high double digit rate.
What is status of your IPO? Why has it not happened even after getting SEBI approval in March last year?
We have had fantastic feedback from potential investors across the world on our IPO. However, given the election year, there is uncertainty about any investments in the market at this point. We are waiting for the opportune moment and investor mindset to realise the true value of our IPO.
Do you believe that content aggregators are trying to push several unwanted channels along with the popular ones on DTH platforms? What is your way of dealing with the aggregators?
This does happen at this point for sure. We generally avoid putting unwanted channels. We focus on channels only which will add value to the customer and some channels which are entering in carriage arrangement with us.
Should the DTH players bring content costs down, or upselling is better as both the content owner and platform increases its revenues and thus the ARPUs?
This is the moot issue today as for the past 10 years DTH industry has alone bore the brunt of broadcasters cost. We have subsidised the cable industry for far too long. With digitisation complete in Phase I and II, major markets for carriage, it’s high time broadcasters and aggregators star treating digital cable and DTH at par. They can't continue to expect DTH to fund everyone's P&L forever. In entire value chain DTH is the only industry where all six players are still making losses.
Having said that, there is no doubt we need to continue to focus on revenue growth and subscriber growth also. We need to strike the right balance between growth and cost efficiency.
Are you planning to move from a fixed-fee deal with broadcasters to per subscriber arrangement?
In our view once a certain critical mass is achieved, which today almost every player has achieved, it doesn't matter whether deals are fixed or per subscriber. There are similar robust calculations and negotiation that go behind it.
How many subscribers from phases I and II switched over from cable to Videocon d2h? What is your expectation from phsases III and IV?
Close to 25-30 per cent in various Phase I markets and 30-35 per cent in various Phase II markets have shifted to DTH. Our estimate is that 26-27 per cent of that has shifted to Videocon d2h. We expect Phase III and IV to be in favor of the DTH industry.
What is the vision for the company?
We want to be amongst the world’s leading top 10 Pay TV operators and surely amongst the top three in the Indian market. We want to be known for our simplicity, innovation and customer centricity.