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INDUSTRY ANALYSIS
        ON
DIRECT TO HOME (DTH)
CONTENTS



Chapter
  1. Introduction
  2. Product lines and consumer behavior
  3. Growth of the industry
  4. Technology of production and distribution
  5. Marketing
  6. Innovation
  7. Strategies and competition in the industry
  8. Business environment
  9. Critical success factors


Appendices




                                                  2
Chapter-1




Introduction




                           3
INTRODUCTION

Overview of the Industry

The history of Indian television dates back to the launch of doordarshan, India’s national
TV network in 1959. The transmission was in black & white. The 9 th Asian games which
were held in 1982 in the country’s capital New Delhi heralded the mark of color TV
broadcasting in India. In 1991, Indian economy was liberalized from the License Raj and
major initiatives like inviting foreign direct investments, deregulation of domestic
business emerged. This lead to the in flux of foreign channels like Star TV and creation
of domestic satellite channels like Sun TV and Zee TV. This virtually destroyed the
monopoly held by doordarshan. In 1992, the cable TV industry started which lead to
revolution.
Every city in the India had a complex web of co-axial cables running through the streets
with a new breed of entrepreneurs called as cablewallahs or Local Cable Operators
(LCO) taking in charge of distribution. The film industry was shocked by this sudden
growth and there were even organized protests for calling off the Cable TV industry.
There were simply too many cable operators in the country and the channels had a
difficult time in getting its returns as the existing system was a non-addressable and the
operators could simply give a reduced number of subscribers to amass profit. This lead to
the emergency of a new breed of firms called as Multi System Operators (MSO) who had
heavy financial muscles to make capital investments. . The MSO industry became highly
monopolistic which warrants government participation to ensure competition.
Later on, the United Front Government had issued a ban on use of ku band transmission.
After a change of government, the ban got lifted finally in 2001 and TRAI issued the
guidelines for operating DTH. Country’s first private DTH license was awarded to Dish
TV in 2003 which started operations in 2004. Prasar Bharati also started its product DD-
Direct+.
DTH Digital TV system receives signals directly from satellite through the dish, decodes
it with the Set-Top Box and then sends stunningly clear picture and sound to TV which is
the business under taken by some companies by observing the rate of growth and scope
for business & opportunity in the Indian market which has 120 million viewers of TV.



                                                                                        4
With the Indian economy growing at a GDP growth rate of 7.4%, there is a sense of
growth prevailing every where. The average Indian’s disposable income and purchasing
has risen to never before levels. The Indian entertainment and media industry is not far
behind. It is currently estimated at a worth of Rs.450 billion with a CAGR of 18% over
the next 5 years. Terms which were alien to Indian’s like capital DTH, digital cables,
IPTV are suddenly finding presence in the country’s journals.
In 2007, TRAI proposed a new initiative by name “Head end-In-The-Sky (HITS)” Model
as an alternative to the existing cable distribution. Instead of the MSO’s providing the
bundle, there will be a single HITS operator who will prepare the bundle of channels and
beam it to the Headed in the satellite. The LCO’s can receive this digitalized bundle and
deliver to the individual homes. With HITS, country wide implementation of CAS
becomes instantaneous and cost-effective. This benefits both the broadcasters and the
customers by ensuring Addressability, Better quality of service and increased number of
channels. Another emerging trend is the IPTV which is yet to be regulated and one can
expect lot of action in this sector.
According to a report on Direct to home (DTH) service, it predicts that India would
overtake Japan as Asia’s largest DTH by 2010 and be the Asia’s leading cable market by
2010 and the most profitable pay-TV market by 20015.


List of players in the industry
    •   Doordarshan – (DD-Direct +) of Prasar Bharati comprising of 33 FTA channels
        and 12 All India Radio Channels.
    •   Dish TV of ZEE group.
    •   Tata Sky joined venture between Tata and Rupert Murdoch’s Sky TV.
    •   Sun direct of Sun Network.
    •   BIG TV of Reliance Anil Dhirubhai Ambani group.
    •   Airtel digital TV of Bharati telemedia
    •   Videocon d2h of videocon industries




                                                                                       5
Categorization of players in the industry


Government owned player: DD Direct+.


Private players: Dish TV, Tata Sky, Sun direct, Big TV, Airtel digital TV, Videocon d2h


Brief profile of players in the industry


DD DIRECT+


Doordarshan is the public television broadcaster of India and a division of Prasar Bharati,
a public service broadcaster nominated by the Government of India. It is one of the
largest broadcasting organizations in the world in terms of the infrastructure
of studios and transmitters. Recently, it has also started Digital Terrestrial Transmitters.
On September 15 2009, Doordarshan celebrated its 50th anniversary.
Doordarshan had a modest beginning with the experimental telecast starting in Delhi on
15 September 1959 with a small transmitter and a makeshift studio. The regular daily
transmission started in 1965 as a part of All India Radio. The television service was
extended to Bombay (now Mumbai) and Amritsar in 1972. Till 1975, seven Indian cities
had television service and Doordarshan remained the only television channel in India.
Television services were separated from radio in 1976. Each office of All India Radio
and Doordarshan were placed under the management of two separate Director Generals
in New Delhi. Finally Doordarshan as a National Broadcaster came into existence.
National telecasts were introduced in 1982. In the same year, color TV was introduced in
the Indian market with the live telecast of the Independence Day speech by then Prime
Minister Indira Gandhi on 15 August 1982, followed by the 1982 Asian Games being
held in Delhi. Now more than 90 percent of the Indian population can receive
Doordarshan (DD National) programmes through a network of nearly 1400 terrestrial
transmitters and about 46 Doordarshan studios produce TV programs today.




                                                                                          6
DD Direct+ is a free Direct to Home (DTH) service that provides satellite television and
audio programming to households and businesses in the Indian subcontinent. Owned by
parent company Doordarshan, DD Direct Plus was launched on December 16, 2004. Now
chairman of DD plus+ is Shri Arun Bhatnagar and CEO is B S Lalli under the ministry of
information and broadcasting.


Dish TV


Dish    TV is    the    first   private DTH satellite    television   provider     in India,
using MPEG-2 digital compression technology, transmitting using NSS Satellite at 95.0.
Dish TV's managing director and Head of Business is Jawahar Goel who is also the
promoter of Essel Group and is also the President of Indian Broadcasting Foundation and
Mr. Subhash Chandra is the Chairman of Dish TV. Dish TV is a division of Zee
Network Enterprise (Essel Group Venture). EGV has national and global presence with
business interests in media programming, broadcasting & distribution, speciality
packaging and entertainment. Zee Network incorporated dishtv to modernize TV
viewing. By digitalizing Indian entertainment, this enterprise brought best television
viewing technology to the living room. It not only transmits high quality programmes
through satellite; but also gives a complete control of selecting channels and paying
DTH service was launched back in 2004 by launching of Dish TV by Essel Group's
Enterprises. Dish TV is on the same satellite where DD Direct+ is. Dish TV started its
service in Pakistan with the collaboration of Budget Communication. Dish TV was only
DTH operator in India to carry the two Turner channels, Turner Classic Movies and
Boomerang. Both the channels were removed from the platform due to unknown reasons
in March 2009. Dish TV uses NSS-6 to broadcast its programmes. NSS-6 was launched
on 17 December, 2002 by European-based satellite provider, New Skies. Dish TV
hopped on to NSS-6 from an INSAT satellite in July 2004. The change in the satellite
was to increase the channel offering as NSS 6 offered more transponder capacity.




                                                                                          7
Tata Sky


Tata Sky is a DTH satellite television provider in India, using MPEG-2 digital
compression technology, transmitting using INSAT 4A at 83.0°. Tata sky is incorporated
in 2004; Tata Sky is a JV between the TATA Group and STAR. Tata Sky
DTH endeavors to offer Indian viewers a world-class television viewing experience
through its satellite television service. Vikram Kaushik is present CEO of Tata Sky Ltd.
The TATA Group is one of India's largest and most respected business conglomerates. It
comprises 93 operating companies in seven business sectors and diversified group:
information systems and communications, engineering, materials, services, energy,
consumer products and chemicals. The TATA Group has operations in more than 40
countries across six continents and its companies export products and services to 140
nations.
The Group and its enterprises have been steadfast and distinctive in its adherence to
business ethics and their commitment to corporate social responsibility. This is a legacy
that has earned the Group the trust of many millions of stakeholders in measure few
business houses anywhere in the world can match. The SKY brand, owned by the UK-
based British Sky Broadcasting Group, brings to Tata Sky the reputation of more than 20
years experience of satellite broadcasting. SKY is well known for the innovative products
and services launched by BSky, such as DTH broadcasting in 1989, digital satellite
broadcasting in 1998, interactive television services in 1999 and the SKY+ personal
video recorder in 2001. Tata Sky joins an international group of DTH businesses that
includes platforms as far apart as the UK and Italy in Europe, and Mexico and Brazil in
Latin America. Tata Sky Ltd is the First Indian DTH provider to be awarded the ISO
27001:2005 accreditation, the ultimate benchmark for information security. The
assessment for the certification was conducted by Intertek Systems Certification, the
management systems registration business unit of Intertek Group plc and is accredited by
several internationally-recognized accreditation bodies worldwide.
In October 2008, Tata Sky announced launching of DVR service Tata Sky+ which
allowed 45 hours of recording in a MPEG-4 compatible Set Top Box. The remote is
provided with playback control keys and is being sold with special offers for existing



                                                                                       8
subscribers. Tata Sky was selected as a SUPER BRAND for the year 2009-2010 by an
independent and voluntary council of experts known as Super brands Council. It is the
only Indian DTH to have won this distinction.

Sun Direct

Sun Direct is a DTH satellite television provider in India, using MPEG-4 digital
compression technology, transmitting using INSAT 4B at 93.5°E. It is the country's first
MPEG 4 technology DTH service provider. Sun Direct is a DTH service in India
headquartered in Chennai, Tamil Nadu. Sun Direct TV was registered in February 16,
2005. However, the failed launch of INSAT 4C resulted in a lack of transponders,
delaying the launch. The service was finally launched on December 2007 after
availability of transponders from INSAT 4CR. Because of the lowest pricing of any
DTH in India Sun Direct spread rapidly all over the country. On December Sun Direct
was launched in Mumbai and announced its pan India launch. By 2009 it became leading
DTH provider with 3 million subscribers. This makes it 4th largest DTH service provider
of India. In April 2009 Sun Direct officially launched its High-Definition service in India.
Sun Direct uses the latest MPEG-4 based technology to increase broadcast capacity.
Sun Direct provide next-generation services in fast-growing and emerging markets
quickly and efficiently. Sun Direct selected Oracle based on its convergent multi-service
capabilities and proven real-time scalability allowing it to consolidate billing operations,
enables powerful new service offerings and improves visibility into customer information
across services.


BIG TV


Reliance BIG TV is a DTH satellite television provider in India based in Navi Mumbai,
using MPEG-4 digital compression technology, transmitting using MEASAT-3 91.5°east.
It is the 5th DTH service launched in India. Reliance BIG TV limited is a part of
Reliance Communications Ltd., a subsidiary of Reliance Anil Dhirubhai Ambani Group
founded by the Late Dhirubhai Ambani, the Indian business tycoon and owned by his son
Anil Ambani. BIG TV started operations from 19 August 2008 with the slogan "TV ho


                                                                                          9
Tho BIG Ho" ("If you have a TV, make it BIG"). It currently offers close to 200 channels
and many interactive ones, 32 cinema halls (i.e. Pay Per View Cinema Channels) as well
as many Radio channels. The company plans to increase the number of channels in the
near future to 400 and begin High Definition (HD) broadcast. It is the first Pan-India
DTH provider that uses MPEG-4 for broadcasting. There are also plans to introduce
services like i-Stock, i-News and other such interactive services in the future.
Reliance BIG TV was launched on August 19, 2008 with the sole aim of providing the
consumer with quality and enriched home entertainment service at value-driven pricing.
Reliance BIG TV's launch in August was probably the biggest roll-out in home
entertainment ever and deployed the most advanced MPEG4 technology that enabled
them to deliver best quality digital audio-video to the consumer. It also got prepared for
the future when Hi-Definition TV will be launched in India because only MPEG4
technology can support HD TV and not MPEG2 which is used by the earlier entrants in
the DTH industry.
Reliance BIG TV's retailer network is spread across 100,000 outlets in 6,500 towns in
India. This was literally unheard of in the DTH industry. They had effectively out-
stripped the competition here. When it came to pricing – packaging, their introductory
offer stood at Rs. 1,490/- with 3 to 6 months of free subscription. They also introduced 32
Pay-Per-View Movie Channels, the highest by any DTH player.



Airtel digital TV

Bharti Airtel Limited is the flagship company of Bharti Enterprises and is India’s largest
integrated and the first private telecom services provider with a footprint in all the 23
telecom circles. As India's leading telecommunications company, the Airtel brand has
played the role of a major catalyst in India's reforms, contributing to its economic
resurgence. Airtel since its inception has been at the forefront of technology and has
steered the course of the telecom sector in the country with its world class products and
services.




                                                                                        10
Airtel Digital TV is a DTH (Direct to Home) service from Bharti Airtel. It uses MPEG-4
digital compression with DVB-S2 technology, transmitting using INSAT 4CR 74°E
Airtel digital launched on 8 October, 2008 with a 360 degree mega campaign 'Come
Home to the Magic. Since then it has launched 2 other campaigns: ‘Stars come home’
(March 2009) and ‘DTH Picture Clarity (August 2009) has increased its channel base to
183+ channels. Airtel digital TV is now amongst the fastest growing DTH brands in the
country and is available across 5000+ towns in India. It has also been ranked as the best
DTH service by “Living Digital” magazine.
Airtel chief Sunil Mittal said that Airtel digital TV and other DTH players have a bright
future in Indian market as the people are getting more attracted towards DTH because of
its quality and affordability.


Videocon d2h


Videocon d2h is a DTH satellite television provider in India based in Mumbai, using
MPEG-4 with DVB S2 digital compression technology
Videocon Leasing & Industrial Finance Limited was incorporated on 4th September,
1986 as Adhigam Trading Private Limited. In terms of the necessary resolutions
 Passed under Sec. 21 of the Companies Act, 1956, the name of the Company was
changed to Videocon Leasing & Industrial Finance Limited on 14th February, 1991. The
Company received a fresh certificate of incorporation from the Registrar of Companies,
Gujarat at Ahmedabad on 14thFebruary, 1991.
Videocon d2h launched May 1, 2009. it came with a very good strategy for selling both
of its electronic products like TV’s DVD’s along with the new set top box. This is
offering direct to TV with out any set top box also. Only the antenna is enough, it also
came with DVD which is connected directly to the TV or antenna is connected to DVD
which gives a best quality of out put.




                                                                                      11
Chapter-2




Product Lines And Consumer Behavior




                                          12
PRODUCT LINES AND CONSUMER BEHAVIOUR


Range of products
   •     Set-Top-Box.
   •     Head-Antenna.
   •     Cable
   •     DVD
   •     Remote
   •     LCD TV/PLASMA TV/CATHODE RAY TV/LED TV

Product description


SET-TOP-BOX:
The set top box comprises of the MPEG-2 OR MPEG-4 with DVB2 technology.


Head-antenna:
Antenna which receives signals directly from satellites,


Cable:
Cable connects antenna to the set up box


DVD:
One of the recent entrants into DTH industry is vediocon. This came with set top box
with DVD


ACCESS CARD:
The access card is another important thing in the set top box setup
Where the access card will receive the signals directly from satellite trough head top
antenna


LCD TV:
Some companies are offering the whole set of LCD TV with DTH connection
Ant in the case of cathode ray tubes and in case of PLASMA


                                                                                   13
Remote:
A compactable remote for both SET UP BOX and TV is used in operating both TV and
Set top box.


Complimentary Goods
LCD TV, DVD, CT TV, Cables, plus box, Ups, Home theaters, sound box, plastic and
paper which are used for recharge cards.


Substitutes
Local Cable Operators, Inter-Net which is bringing many facilities like live TV channels,
along with the net browsing, Theaters, radio stations, I pods.




                                                                                      14
Chapter-3




Growth Of The Industry




                                     15
GROWTH OF THE INDUSTRY
Rate of Growth
The DTH service market in India has emerged as one of the most lucrative markets which
have successfully resisted the impacts of the current economic slowdown. The slowdown
has certainly proved a boon for the Indian DTH industry as people have now started to
cut on their entertainment expenditure and instead of viewing movies at theatres, they are
preferring to stay at home with their television sets.
With the Indian economy growing at a GDP growth rate of 7.4%, there is a sense of
growth prevailing every where. The average Indian’s disposable income and purchasing
has risen to never before levels. The industry is anticipated to add nearly 5 Lakh
subscribers per month during 2009 and the numbers are forecasted to surge further at a
CAGR of around 30% through 2012, "Indian DTH Market Forecast to 2012". 20%
annual growth is being witnessed in the DTH sector in India with over 8.5 million
households having digital pay-TV.
A report attributes that the anticipated growth to the efforts of DTH industry players who
are all trying to lure viewers by cutting down prices as well as offering perks even though
it translates into loss of Rs 1,600-2,000 on each new subscriber acquired by them. They
have started to offer a number of value-added services such as 'movie on demand', live
recording of TV content, matrimonial match-making, etc.


Pattern of Growth


The big game is all about shaping up grandiose plans to master the winning rules to
garner as much portion of the Indian DTH pie as possible by a handful of players. Since
the DTH space denotes big value, akin to the space occupied by television and telephony,
inter-firm rivalries have thrown up price wars, discount schemes, procurement of
transponders, ambitious targets for improving the subscription base, popular bouquet of
channels, set top boxes with superior quality of videos, improving content, etc as a
desperate means to entice the Indian viewer.




                                                                                        16
The pattern of growth is very difficult to determine because a business cycle takes place
in long term. But this industry is having very short period for making or observing a
business cycle.
The analysis that can be made is though the economic cycles is not continues and it was
in boom then when the industry started and now just the economy is in recovering stage
from the recession. Interesting factor is that all the industries are hit seriously buy the
rescission but DTH industry has reported growth continuously but only it has slowdown
the rate of its growth. Now the industry is growing at 20% for every annum.


Growth Determinants


Demand constraints and SCAR are the factors which effects the growth of the industry.
Growth determinant and high TV sales increase the chance for more sales of set top box
which will effect the growth. When the facilities of the products increase it acts as a
growth determinant.
The entertainment channels and the news channels players increase the growth to opt the
DTH. Some of the DTH players are bringing innovative plans like live shopping, broad
band, and etc will act as growth determinants.




                                                                                        17
Chapter-4




Technology Of Production And Distribution




                                                18
TECHNOLOGY OF PRODUCTION AND DISTRIBUTION


Cost Structure
The costs incurred by the DTH players is mainly on its technology, satellite dish, set top
box accessory cards, Ku band transponders in the satellites, customer premise
equipment(CPE). The launch of satellites is another huge cost which the DTH plays
shares the transponders. And it costs them much than any thing. Another cost incurred is
on operating cost.
Economies of Scale
Economies of scale may be utilized by any size firm expanding its scale of operation. The
common ones are purchasing (bulk buying of materials through long-term contracts),
managerial (increasing the specialization of managers), financial (obtaining lower-
interest charges when borrowing from banks and having access to a greater range of
financial instruments), and marketing (spreading the cost of advertising over a greater
range of output in media markets).
Cost Advantages
1] Direct customer relationship.
2] Better storage
3] Extensive use of resources.
4] Availability of labour at cheap rates


Economies of Scope
An economic theory stating that the average total cost of production decreases as a result
of increasing the number of different goods produced.
Often, as the number of products promoted is increased and the DTH players used, more
people can be reached with each rupee spent. These efficiencies do not last, however; at
some point, additional advertising expenditure on new products will start to be less
effective (an example of diseconomies of scope). If a sales force is selling several
products they can often do so more efficiently than if they are selling only one product.
The cost of their travel time is distributed over a greater revenue base, so cost efficiency
improves.



                                                                                         19
There can also be synergies between products such that offering a complete range of
products gives the consumer a more desirable product offering than a single product
would. Economies of scope can also operate through distribution efficiencies. It can be
more efficient to ship a range of products to any given location than to ship a single type
of product to that location.
Value added
Many players are using this DTH as the basis and giving many value added services to
the customers. Some of the players are giving best valued services to the customers like
Airtel gives live-news, home shopping, live gaming, broad band, horoscope, radio, and
etc. Tata sky is giving recording for more than 4 hours, and came with a differential
strategy of Tata sky+ with other facilities. Big TV is giving live with Big movies, Dish
TV is giving live TV on the wheels, and many other value additions.


Logistics
Logistics is still a nascent and fragmented industry in India. It is estimated that while
outsourced logistics accounts for 54% of total logistics spending in India, organized
players have only 10% of the pie.
DTH industry follows a good logistics which is as similar to the logistics which are used
buy automobile industry, for the effective management of the DTH industry.


Labor


Labours are included in every activity of the business, most of the people working are not
daily labours, they are employed and paid monthly in the form of salary. DTH requires
skilled labor like management executives, administrators, software engineers, sales
executives and attorneys.




                                                                                        20
Chapter-5




Marketing




                        21
Marketing


Market segmentation, marketing strategies, marketing practices and marketing concepts
specific to the industry


Indian TV channel broadcast 15.7-mn advertisement every year, which totals to 362-mn
seconds of TV advertisement every year.          India currently has over 400 channels.
TV viewer ship has declined by 5% since 2001. TV broadcasters are expected to go hike
in advertisement rate this year by 16-18%. Market segmentation in DTH industry mainly
concentrates on women who don’t like missing their daily soap and news more ever
women are able to learn English speaking which is a very special feature of DTH. DTH
also concentrates on children also by providing them games, dictionary, some discovery
videos specially inbuilt, maths, science and social knowledge. It also focuses on old
people as it has updated videos of various holy and religious places.
DTH uses different marketing strategies for promotion and sales of its product. It gives
advertisements with their brand ambassadors which attract customers, door to door
selling, on the phone selling, discount and offer sales, packages, etc
Marketing practices is a continuous process as the competition keeps increasing among
the players in the industry. Each player is investing lots of money in promoting there
brands. Many players are making advertisement with movie actor and actress as brand
ambassadors for their products because DTH is mainly considered with entertainment.
Some of the companies like Tata sky is having Super Star Amir khan as brand
ambassador and Airtel is having many film stars like kareena kapoor, A.R.Rehaman, saif
ali khan, etc. Dish TV is also having Super Star Sharuk khan as the brand ambassador.
Sun direct also uses southern actress for their brand promotion. Marketing practices are
the decisions taken by the manufacturing company to increase sales, expand themselves
into many areas etc. Successful marketing practices bring sale up, while unsuccessful
marketing practices have no impact on sale or negatively impact sale.Marketing concepts
specific to the industry is primarily targeted at a niche segment who buy the TV sets from
the electronic retail chains.




                                                                                        22
Chapter-6




Innovation




                         23
Innovation
Types of innovation, concepts of innovation relevant to the industry, source of
innovation, rate of innovation and economies of scale.


The concept of innovation in DTH industry is INCREMENTAL innovation; every thing
that is done is due to constant research of many marketing and analysts to bring many
innovations to the existing products in the DTH industry. Incremental innovation is the
apt innovation which is suitable and all the DTH players are concentrating up on.
This innovation makes the business to grow continuously and brings advantages to the
customers using the products and the service.


There are many sources of innovation for this industry as mentioned in the above, the
technology and the people are the main sources for the innovation. Customer’s opinions
and their needs can be served by providing a service which is matching to their needs and
requirements. In this days every company setups its own R&D in its own company with
very intelligent people for meeting the expectation op the customer.
Digital TV, the DTH service from Airtel, has announced India’s first skin integration
innovation on its EPG screen in partnership with Yahoo. Yahoo takes forward its latest
brand campaign “YOU” in this first of its kind partnership where an online portal will use
DTH as a medium to promote itself.
The ‘Electronic Programming Guide’ screen on Airtel digital TV is now completely
integrated with Yahoo India’s homepage. Customers will find a message ‘Fill your home
page with all the things that make YOU’ when they log onto to the EPG screen. A
prompting ‘Red Button’ will take them to a dedicated landing page that elaborates the
offerings on Yahoo India’s new home page. The ‘YOU’ campaign enables users to
customized the home page as per their liking and empowers them with the choice to
integrate social applications such as Facebook with their Yahoo homepage. This whole
idea was conceived by NetworkPlay, right from design elements to execution and thanks
to Mindshare for buying into the idea and flawlessly helping people execute it.




                                                                                       24
Tata Teleservices Limited has announced a technological breakthrough—a first-of-its-
kind innovation in India with the launch of TATA Photon TV, a new application that
allows Tata Photon Plus subscribers to watch live television channels on their laptops
while on the move, and on their personal computers at home and in the office. The
Photon TV service is exclusively available to Photon Plus users. “With its growing
popularity, Photon Plus has caught the admiration of millions of users across the country,
with   its   high-speed   data   access    capabilities   and   the   ease   of   mobility.
TATA Photon TV is a personal computer- and laptop-based video-streaming application,
which allows Tata Photon Plus users to view live TV feed from various sports, news,
entertainment and regional channels, and to watch recorded TV shows from the library
(viz Coffee with Karan, Zoom, Pogo, etc), movies, music and videos on demand.


Internet Browsing charges will be charged as per your Photon+ tariff plan and it would be
applicable while viewing Photon TV. These charges would be over and above the
subscription charges for the Photon TV. (approximate data usage is 1-2MB per Min).


Rate of innovation in this sector is growing at a faster rate in the recent years where as it
is not very impressive before this period. The reason for this is the fair competition
between the all players in this DTH industry. It led to the development of new products in
this sector which also led to the diversification of products as there is abolition of entry of
foreign industries into Indian industries initially. It also made the industries in this sector
to establish their own R&D departments for successful product innovations like Airtel
Live, Vediocon d2h.


The brand loyalty for each and every company is very high, so there is no need of lot of
costs to be pored in marketing and promotion of the service and product.
Every function that is performed by the players is a well planned and executed properly.
So in all the areas those players are using the expertise people in the industry and
performing operations in DTH industry very economically.




                                                                                              25
Chapter-7




Strategies And Competition In The Industry




                                             26
Strategies and competition in the industry


Competitors, Strategies used in the industry, Porter’s generic strategies model, porter’s
five forces model and analysis using it, element of industry structure, porter’s value chain
model analysis, swot analysis, concept of generic value chain, concept of growth share
market matrix, company position .


Competitors
Every company has its own goal, every company wants to achieve and full fill its goals,
many companies like the big players in the industry wants to grab most of the market
share. Some of the companies want to achieve 10million customer base by 2010 they are
Dish TV, Tata sky, Sun direct, BIG TV etc.
The industry’s objective is to achieve 60million customers buy ‘2012’ i.e., nearly 50% of
the present existing customers.


Strategies used in the industry
Technology transfer is one of strategy used in the industry and it is existence for a long
time. In recent decades, concerted effort has been made to exploit the existing technology
to a larger extent by transfer of technology, to generate greater economic impetus. It
provides opportunity to generate larger returns on the investments made in R&D. Its
importance lies in its ability to stimulate and strengthen the innovation process.


Porter’s generic strategies model
Generic strategies were used initially in the early 1980s, and seem to be even more
popular today. They outline the three main strategic options open to organization that
wish to achieve a sustainable competitive advantage.




                                                                                         27
The generic strategies are: 1. Cost leadership, 2. Differentiation, and 3. Focus
1. Cost leadership
In the case of media products, means they should be offered at a price lower than their
competitors’ but with as good benefits, or, the unique benefits the media products offer
can over-offset the premium.
2. Differentiation
Differentiation in DTH refers to when a organization provides unique benefits to the
users through product innovation. This is to increase the probability of the media users to
choose the product. A media organization with a target user loyalty can concentrate more
on how to fully meet the target user’s needs rather than on product cost saving.
3. Focus
Focus strategy is also known as a 'niche' strategy. The clutter of ads has now spilled out
on the number of channel availability due to which people are spoilt for choice. Thus
Niche channels are the only way to maintain viewer loyalty. TATA Photon plus is more
niche oriented.


SWOT Analysis
STRENGHT
Growing number of player and competitive advantage.
Supply creates its own demand.
Brand name
Service and flexibility.


                                                                                        28
WEAKNESS
Skilled labor
Satellite technology
Signals
Viewer migration.
Uncertainty in viewer ship.




OPPORTUNITY
Technology
Distribution
Innovation
Value adding


THREAT
Economic downturn.
Climate
Radio
Cinema halls
Broad casting of channels
New entrants


Porter’s five force model
The five forces which one must consider to analyze any industry are the rivalry between
the firms within the industry being analyzed, the bargaining power of buyers, the
bargaining power of suppliers, the threat of substitute products or services, and the threat
of new entrants (also known as barriers to entry). They are also shown in the diagram
below. Initially propounded by Harvard Business School Professor Michael Porter, the
Five Forces framework has been accepted as a strategic framework which one can apply
to analyze any industry.



                                                                                         29
Threat of substitutes
DTH gives stiff competition from the terrestrial, cable & IPTV. As per the industry
estimates, there are 130 million TV homes of which 71 million are served by cable and
around 6 million served by DTH with the remaining taken by terrestrial transmission. As
IPTV is a new entrant there is not much data on its subscriber base.


Bargaining power of suppliers
DTH industry relies on three major suppliers. Customer premise equipment (CPE)
Comparing of the satellite Dish, Set Top Box with the necessary Access Card, the Ku
band transponders are obtaining satellites and content. With India set to overtake Japan as
Asia’s largest DTH by next year, the bargaining power of India DTH operators with CPE
suppliers have been steadily increasing.


Bargaining power of buyers
With enough operations to choose both from the point of alternate mediums like cable,
IPTV and terrestrial broadcast and from the point of increasing DTH operators, the



                                                                                        30
consumer is at his will to decide. Customers will continue to have a high bargaining
power until DTH platforms try to differentiate them as superior players with better
content and clarity.


Rivalry among existing firms
With 3 operational players and 4 players in the queue, inter firm rivalry is quite high.
The competition from state owned DD-Direct to private players in negligible from the
content point of view as the number of channels offered by DD-Direct is very limited.
However, DD-Direct does not change any monthly subscription charges. Between Dish
TV is Tata Sky there is an intense rivalry exhibited by price war and discount schemes
offered to new connections. Being the first mover, dish TV had price advantage in both
the STB offers superiors DVD quality Video to its advanced STB.
While Dish TV is planning to spend Rs. 850crs over the next 3 years, the rival TataSky is
willing to spend Rr.2000crs over the medium term. The companies have also set
ambitious targets with Dish TV aiming to reach 5 million subscribers in the next 18 to 20
months while Tata sky aiming to reach 8million subscribers in the next 18 to 20 months
while Tata sky aiming for 8 million subscribers by 2012.


Threat of new entrants
With already 7 player’s space in the DTH space, threat of new entrants is low. There is
already enough competition which will discourage new firms to enter this business.
While getting a licensee is relatively easy, the barriers to entry are high when it comes to
pricing of CPE and getting the required transponder. There is a definite, first mover
advantage.


Analysis of the Industry using Porter’s value chain model


Porter’s value chain analysis is considered with the value analysis of the several functions
of the DTH industry, it makes to understand the importance of this model to develop and
add on value to the present features of the industry and it’s functioning.




                                                                                           31
Value analysis says that an effective logistics should be undertaken to commencement of
the business in cost effective way. The most the cost effective, the more value is added to
the process. It is noting but proper or optimal use of the resources present and using the
technology. This value addition is not only in the logistics, it should be carried in all
areas of the management, production, distribution and etc. Thus DTH industry can
increase its value addition to the customers and the features and of industry.


Concept of growth share matrix (BCG model)
The BCG – GROWTH SHARE MATRIX is a portfolio planning model developed by
Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the
observation that a company's business units can be classified into four categories based
on combinations of market growth and market share relative to the largest competitor,
hence the name” growth share”.




Under the BCG GROWTH-SHARE MATRIX, as an industry matures and its growth rate
declines, a business unit will become either a cash cow or a dog, determined solely by
whether it had become the market leader during the period of high growth. While
originally developed as a model for resource allocation among the various business units
in a corporation, the growth-share matrix also can be used for resource allocation among
products within a single business unit.
In the DTH industry when the market share is obtained then it is automatically treated as
the market leader, and also it needs maximum market share to extent, when the market is



                                                                                        32
not in incremental state then the growth rate of the industry will retain. Again this
industry follows all the variables in the all areas till the both will come into normal level.




                                                                                            33
Chapter-8




Business Environment




                                   34
Business Environment
PESTEL Model
Political factor




                       35
Chapter-9




Critical Success Factors




                                       36
Critical success factors




                           37
Appendices




             38
Appendices


MEDIUM 2008
TV      40.7
PRESS   46.9
RADIO   3.2
CINEMA 0.7
OUTDOOR6.8
INTERNET1.7




GROWTH RATE OF ADVERTISEMENT REVENUE IN DIFFERENT MEDIUM:


Medium         Year of growth in 2008(%)
TV             22
Press          18
Radio          40
Cinema         50
Outdoor        14
Internet       45
Total          20




                                                       39
Indian TV channel broadcast 15.7-mn advertisement every year, which totals to 362-mn
seconds of TV advertisement every year.            India currently has over 400 channels.
TV viewer ship has declined by 5% since 2001. TV broadcasters are expected to go hike
in advertisement rate this year by 16-18%.


Yearly results of dish tv
                                                  In Rs (crores)
                                             Mar '06        Mar '07       Mar '08       Mar '09
Sales Turnover                                 31.46         190.94        413.28        737.69
Other Income                                       --          3.40          2.43          1.27
Total Income                                   31.46         194.34        415.72        738.97
Total Expenses                                114.44         376.11        632.34        926.41
Operating Profit                              -82.98        -185.17       -219.06       -188.72
Profit On Sale Of Assets                           --             --            --            --
Profit On Sale Of Investments                      --             --            --            --
Gain/Loss On Foreign Exchange                      --             --            --            --
VRS Adjustment                                     --             --            --            --
Other Extraordinary Income/Expenses                --             --            --            --
Total Extraordinary Income/Expenses          -120.34              --            --            --
Tax On Extraordinary Items                         --             --            --            --
Net Extra Ordinary Income/Expenses                 --             --            --            --
Gross Profit                                  -82.98        -181.77       -216.63       -187.45
Interest                                        1.67          11.78         46.95         72.70
PBDT                                         -204.99        -193.55       -263.56       -260.14
Depreciation                                    2.84          57.53        149.05        215.41
Depreciation On Revaluation Of Assets              --             --            --            --
PBT                                          -207.83        -251.08       -412.61       -475.55
Tax                                             0.03           0.25          0.59          0.73




                                                                                      40
Net Profit                                -207.86   -251.33    -413.20     -476.28
Prior Years Income/Expenses                  0.03     -0.55          --          --
Depreciation for Previous Years Written
                                               --         --         --          --
Back/ Provided
Dividend                                       --         --         --         --
Dividend Tax                                   --         --         --         --
Dividend (%)                                   --         --         --         --
Earnings Per Share                             --         --         --         --
Book Value                                     --         --         --         --
Equity                                     71.57      42.82      42.82      68.73
Reserves                                   45.97     -82.30    -495.50     279.23
Face Value                                  1.00       1.00       1.00       1.00




Reference:




Bibliography:




                                                                          41

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industry analysis of DTH(electronic media)

  • 1. INDUSTRY ANALYSIS ON DIRECT TO HOME (DTH)
  • 2. CONTENTS Chapter 1. Introduction 2. Product lines and consumer behavior 3. Growth of the industry 4. Technology of production and distribution 5. Marketing 6. Innovation 7. Strategies and competition in the industry 8. Business environment 9. Critical success factors Appendices 2
  • 4. INTRODUCTION Overview of the Industry The history of Indian television dates back to the launch of doordarshan, India’s national TV network in 1959. The transmission was in black & white. The 9 th Asian games which were held in 1982 in the country’s capital New Delhi heralded the mark of color TV broadcasting in India. In 1991, Indian economy was liberalized from the License Raj and major initiatives like inviting foreign direct investments, deregulation of domestic business emerged. This lead to the in flux of foreign channels like Star TV and creation of domestic satellite channels like Sun TV and Zee TV. This virtually destroyed the monopoly held by doordarshan. In 1992, the cable TV industry started which lead to revolution. Every city in the India had a complex web of co-axial cables running through the streets with a new breed of entrepreneurs called as cablewallahs or Local Cable Operators (LCO) taking in charge of distribution. The film industry was shocked by this sudden growth and there were even organized protests for calling off the Cable TV industry. There were simply too many cable operators in the country and the channels had a difficult time in getting its returns as the existing system was a non-addressable and the operators could simply give a reduced number of subscribers to amass profit. This lead to the emergency of a new breed of firms called as Multi System Operators (MSO) who had heavy financial muscles to make capital investments. . The MSO industry became highly monopolistic which warrants government participation to ensure competition. Later on, the United Front Government had issued a ban on use of ku band transmission. After a change of government, the ban got lifted finally in 2001 and TRAI issued the guidelines for operating DTH. Country’s first private DTH license was awarded to Dish TV in 2003 which started operations in 2004. Prasar Bharati also started its product DD- Direct+. DTH Digital TV system receives signals directly from satellite through the dish, decodes it with the Set-Top Box and then sends stunningly clear picture and sound to TV which is the business under taken by some companies by observing the rate of growth and scope for business & opportunity in the Indian market which has 120 million viewers of TV. 4
  • 5. With the Indian economy growing at a GDP growth rate of 7.4%, there is a sense of growth prevailing every where. The average Indian’s disposable income and purchasing has risen to never before levels. The Indian entertainment and media industry is not far behind. It is currently estimated at a worth of Rs.450 billion with a CAGR of 18% over the next 5 years. Terms which were alien to Indian’s like capital DTH, digital cables, IPTV are suddenly finding presence in the country’s journals. In 2007, TRAI proposed a new initiative by name “Head end-In-The-Sky (HITS)” Model as an alternative to the existing cable distribution. Instead of the MSO’s providing the bundle, there will be a single HITS operator who will prepare the bundle of channels and beam it to the Headed in the satellite. The LCO’s can receive this digitalized bundle and deliver to the individual homes. With HITS, country wide implementation of CAS becomes instantaneous and cost-effective. This benefits both the broadcasters and the customers by ensuring Addressability, Better quality of service and increased number of channels. Another emerging trend is the IPTV which is yet to be regulated and one can expect lot of action in this sector. According to a report on Direct to home (DTH) service, it predicts that India would overtake Japan as Asia’s largest DTH by 2010 and be the Asia’s leading cable market by 2010 and the most profitable pay-TV market by 20015. List of players in the industry • Doordarshan – (DD-Direct +) of Prasar Bharati comprising of 33 FTA channels and 12 All India Radio Channels. • Dish TV of ZEE group. • Tata Sky joined venture between Tata and Rupert Murdoch’s Sky TV. • Sun direct of Sun Network. • BIG TV of Reliance Anil Dhirubhai Ambani group. • Airtel digital TV of Bharati telemedia • Videocon d2h of videocon industries 5
  • 6. Categorization of players in the industry Government owned player: DD Direct+. Private players: Dish TV, Tata Sky, Sun direct, Big TV, Airtel digital TV, Videocon d2h Brief profile of players in the industry DD DIRECT+ Doordarshan is the public television broadcaster of India and a division of Prasar Bharati, a public service broadcaster nominated by the Government of India. It is one of the largest broadcasting organizations in the world in terms of the infrastructure of studios and transmitters. Recently, it has also started Digital Terrestrial Transmitters. On September 15 2009, Doordarshan celebrated its 50th anniversary. Doordarshan had a modest beginning with the experimental telecast starting in Delhi on 15 September 1959 with a small transmitter and a makeshift studio. The regular daily transmission started in 1965 as a part of All India Radio. The television service was extended to Bombay (now Mumbai) and Amritsar in 1972. Till 1975, seven Indian cities had television service and Doordarshan remained the only television channel in India. Television services were separated from radio in 1976. Each office of All India Radio and Doordarshan were placed under the management of two separate Director Generals in New Delhi. Finally Doordarshan as a National Broadcaster came into existence. National telecasts were introduced in 1982. In the same year, color TV was introduced in the Indian market with the live telecast of the Independence Day speech by then Prime Minister Indira Gandhi on 15 August 1982, followed by the 1982 Asian Games being held in Delhi. Now more than 90 percent of the Indian population can receive Doordarshan (DD National) programmes through a network of nearly 1400 terrestrial transmitters and about 46 Doordarshan studios produce TV programs today. 6
  • 7. DD Direct+ is a free Direct to Home (DTH) service that provides satellite television and audio programming to households and businesses in the Indian subcontinent. Owned by parent company Doordarshan, DD Direct Plus was launched on December 16, 2004. Now chairman of DD plus+ is Shri Arun Bhatnagar and CEO is B S Lalli under the ministry of information and broadcasting. Dish TV Dish TV is the first private DTH satellite television provider in India, using MPEG-2 digital compression technology, transmitting using NSS Satellite at 95.0. Dish TV's managing director and Head of Business is Jawahar Goel who is also the promoter of Essel Group and is also the President of Indian Broadcasting Foundation and Mr. Subhash Chandra is the Chairman of Dish TV. Dish TV is a division of Zee Network Enterprise (Essel Group Venture). EGV has national and global presence with business interests in media programming, broadcasting & distribution, speciality packaging and entertainment. Zee Network incorporated dishtv to modernize TV viewing. By digitalizing Indian entertainment, this enterprise brought best television viewing technology to the living room. It not only transmits high quality programmes through satellite; but also gives a complete control of selecting channels and paying DTH service was launched back in 2004 by launching of Dish TV by Essel Group's Enterprises. Dish TV is on the same satellite where DD Direct+ is. Dish TV started its service in Pakistan with the collaboration of Budget Communication. Dish TV was only DTH operator in India to carry the two Turner channels, Turner Classic Movies and Boomerang. Both the channels were removed from the platform due to unknown reasons in March 2009. Dish TV uses NSS-6 to broadcast its programmes. NSS-6 was launched on 17 December, 2002 by European-based satellite provider, New Skies. Dish TV hopped on to NSS-6 from an INSAT satellite in July 2004. The change in the satellite was to increase the channel offering as NSS 6 offered more transponder capacity. 7
  • 8. Tata Sky Tata Sky is a DTH satellite television provider in India, using MPEG-2 digital compression technology, transmitting using INSAT 4A at 83.0°. Tata sky is incorporated in 2004; Tata Sky is a JV between the TATA Group and STAR. Tata Sky DTH endeavors to offer Indian viewers a world-class television viewing experience through its satellite television service. Vikram Kaushik is present CEO of Tata Sky Ltd. The TATA Group is one of India's largest and most respected business conglomerates. It comprises 93 operating companies in seven business sectors and diversified group: information systems and communications, engineering, materials, services, energy, consumer products and chemicals. The TATA Group has operations in more than 40 countries across six continents and its companies export products and services to 140 nations. The Group and its enterprises have been steadfast and distinctive in its adherence to business ethics and their commitment to corporate social responsibility. This is a legacy that has earned the Group the trust of many millions of stakeholders in measure few business houses anywhere in the world can match. The SKY brand, owned by the UK- based British Sky Broadcasting Group, brings to Tata Sky the reputation of more than 20 years experience of satellite broadcasting. SKY is well known for the innovative products and services launched by BSky, such as DTH broadcasting in 1989, digital satellite broadcasting in 1998, interactive television services in 1999 and the SKY+ personal video recorder in 2001. Tata Sky joins an international group of DTH businesses that includes platforms as far apart as the UK and Italy in Europe, and Mexico and Brazil in Latin America. Tata Sky Ltd is the First Indian DTH provider to be awarded the ISO 27001:2005 accreditation, the ultimate benchmark for information security. The assessment for the certification was conducted by Intertek Systems Certification, the management systems registration business unit of Intertek Group plc and is accredited by several internationally-recognized accreditation bodies worldwide. In October 2008, Tata Sky announced launching of DVR service Tata Sky+ which allowed 45 hours of recording in a MPEG-4 compatible Set Top Box. The remote is provided with playback control keys and is being sold with special offers for existing 8
  • 9. subscribers. Tata Sky was selected as a SUPER BRAND for the year 2009-2010 by an independent and voluntary council of experts known as Super brands Council. It is the only Indian DTH to have won this distinction. Sun Direct Sun Direct is a DTH satellite television provider in India, using MPEG-4 digital compression technology, transmitting using INSAT 4B at 93.5°E. It is the country's first MPEG 4 technology DTH service provider. Sun Direct is a DTH service in India headquartered in Chennai, Tamil Nadu. Sun Direct TV was registered in February 16, 2005. However, the failed launch of INSAT 4C resulted in a lack of transponders, delaying the launch. The service was finally launched on December 2007 after availability of transponders from INSAT 4CR. Because of the lowest pricing of any DTH in India Sun Direct spread rapidly all over the country. On December Sun Direct was launched in Mumbai and announced its pan India launch. By 2009 it became leading DTH provider with 3 million subscribers. This makes it 4th largest DTH service provider of India. In April 2009 Sun Direct officially launched its High-Definition service in India. Sun Direct uses the latest MPEG-4 based technology to increase broadcast capacity. Sun Direct provide next-generation services in fast-growing and emerging markets quickly and efficiently. Sun Direct selected Oracle based on its convergent multi-service capabilities and proven real-time scalability allowing it to consolidate billing operations, enables powerful new service offerings and improves visibility into customer information across services. BIG TV Reliance BIG TV is a DTH satellite television provider in India based in Navi Mumbai, using MPEG-4 digital compression technology, transmitting using MEASAT-3 91.5°east. It is the 5th DTH service launched in India. Reliance BIG TV limited is a part of Reliance Communications Ltd., a subsidiary of Reliance Anil Dhirubhai Ambani Group founded by the Late Dhirubhai Ambani, the Indian business tycoon and owned by his son Anil Ambani. BIG TV started operations from 19 August 2008 with the slogan "TV ho 9
  • 10. Tho BIG Ho" ("If you have a TV, make it BIG"). It currently offers close to 200 channels and many interactive ones, 32 cinema halls (i.e. Pay Per View Cinema Channels) as well as many Radio channels. The company plans to increase the number of channels in the near future to 400 and begin High Definition (HD) broadcast. It is the first Pan-India DTH provider that uses MPEG-4 for broadcasting. There are also plans to introduce services like i-Stock, i-News and other such interactive services in the future. Reliance BIG TV was launched on August 19, 2008 with the sole aim of providing the consumer with quality and enriched home entertainment service at value-driven pricing. Reliance BIG TV's launch in August was probably the biggest roll-out in home entertainment ever and deployed the most advanced MPEG4 technology that enabled them to deliver best quality digital audio-video to the consumer. It also got prepared for the future when Hi-Definition TV will be launched in India because only MPEG4 technology can support HD TV and not MPEG2 which is used by the earlier entrants in the DTH industry. Reliance BIG TV's retailer network is spread across 100,000 outlets in 6,500 towns in India. This was literally unheard of in the DTH industry. They had effectively out- stripped the competition here. When it came to pricing – packaging, their introductory offer stood at Rs. 1,490/- with 3 to 6 months of free subscription. They also introduced 32 Pay-Per-View Movie Channels, the highest by any DTH player. Airtel digital TV Bharti Airtel Limited is the flagship company of Bharti Enterprises and is India’s largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. As India's leading telecommunications company, the Airtel brand has played the role of a major catalyst in India's reforms, contributing to its economic resurgence. Airtel since its inception has been at the forefront of technology and has steered the course of the telecom sector in the country with its world class products and services. 10
  • 11. Airtel Digital TV is a DTH (Direct to Home) service from Bharti Airtel. It uses MPEG-4 digital compression with DVB-S2 technology, transmitting using INSAT 4CR 74°E Airtel digital launched on 8 October, 2008 with a 360 degree mega campaign 'Come Home to the Magic. Since then it has launched 2 other campaigns: ‘Stars come home’ (March 2009) and ‘DTH Picture Clarity (August 2009) has increased its channel base to 183+ channels. Airtel digital TV is now amongst the fastest growing DTH brands in the country and is available across 5000+ towns in India. It has also been ranked as the best DTH service by “Living Digital” magazine. Airtel chief Sunil Mittal said that Airtel digital TV and other DTH players have a bright future in Indian market as the people are getting more attracted towards DTH because of its quality and affordability. Videocon d2h Videocon d2h is a DTH satellite television provider in India based in Mumbai, using MPEG-4 with DVB S2 digital compression technology Videocon Leasing & Industrial Finance Limited was incorporated on 4th September, 1986 as Adhigam Trading Private Limited. In terms of the necessary resolutions Passed under Sec. 21 of the Companies Act, 1956, the name of the Company was changed to Videocon Leasing & Industrial Finance Limited on 14th February, 1991. The Company received a fresh certificate of incorporation from the Registrar of Companies, Gujarat at Ahmedabad on 14thFebruary, 1991. Videocon d2h launched May 1, 2009. it came with a very good strategy for selling both of its electronic products like TV’s DVD’s along with the new set top box. This is offering direct to TV with out any set top box also. Only the antenna is enough, it also came with DVD which is connected directly to the TV or antenna is connected to DVD which gives a best quality of out put. 11
  • 12. Chapter-2 Product Lines And Consumer Behavior 12
  • 13. PRODUCT LINES AND CONSUMER BEHAVIOUR Range of products • Set-Top-Box. • Head-Antenna. • Cable • DVD • Remote • LCD TV/PLASMA TV/CATHODE RAY TV/LED TV Product description SET-TOP-BOX: The set top box comprises of the MPEG-2 OR MPEG-4 with DVB2 technology. Head-antenna: Antenna which receives signals directly from satellites, Cable: Cable connects antenna to the set up box DVD: One of the recent entrants into DTH industry is vediocon. This came with set top box with DVD ACCESS CARD: The access card is another important thing in the set top box setup Where the access card will receive the signals directly from satellite trough head top antenna LCD TV: Some companies are offering the whole set of LCD TV with DTH connection Ant in the case of cathode ray tubes and in case of PLASMA 13
  • 14. Remote: A compactable remote for both SET UP BOX and TV is used in operating both TV and Set top box. Complimentary Goods LCD TV, DVD, CT TV, Cables, plus box, Ups, Home theaters, sound box, plastic and paper which are used for recharge cards. Substitutes Local Cable Operators, Inter-Net which is bringing many facilities like live TV channels, along with the net browsing, Theaters, radio stations, I pods. 14
  • 15. Chapter-3 Growth Of The Industry 15
  • 16. GROWTH OF THE INDUSTRY Rate of Growth The DTH service market in India has emerged as one of the most lucrative markets which have successfully resisted the impacts of the current economic slowdown. The slowdown has certainly proved a boon for the Indian DTH industry as people have now started to cut on their entertainment expenditure and instead of viewing movies at theatres, they are preferring to stay at home with their television sets. With the Indian economy growing at a GDP growth rate of 7.4%, there is a sense of growth prevailing every where. The average Indian’s disposable income and purchasing has risen to never before levels. The industry is anticipated to add nearly 5 Lakh subscribers per month during 2009 and the numbers are forecasted to surge further at a CAGR of around 30% through 2012, "Indian DTH Market Forecast to 2012". 20% annual growth is being witnessed in the DTH sector in India with over 8.5 million households having digital pay-TV. A report attributes that the anticipated growth to the efforts of DTH industry players who are all trying to lure viewers by cutting down prices as well as offering perks even though it translates into loss of Rs 1,600-2,000 on each new subscriber acquired by them. They have started to offer a number of value-added services such as 'movie on demand', live recording of TV content, matrimonial match-making, etc. Pattern of Growth The big game is all about shaping up grandiose plans to master the winning rules to garner as much portion of the Indian DTH pie as possible by a handful of players. Since the DTH space denotes big value, akin to the space occupied by television and telephony, inter-firm rivalries have thrown up price wars, discount schemes, procurement of transponders, ambitious targets for improving the subscription base, popular bouquet of channels, set top boxes with superior quality of videos, improving content, etc as a desperate means to entice the Indian viewer. 16
  • 17. The pattern of growth is very difficult to determine because a business cycle takes place in long term. But this industry is having very short period for making or observing a business cycle. The analysis that can be made is though the economic cycles is not continues and it was in boom then when the industry started and now just the economy is in recovering stage from the recession. Interesting factor is that all the industries are hit seriously buy the rescission but DTH industry has reported growth continuously but only it has slowdown the rate of its growth. Now the industry is growing at 20% for every annum. Growth Determinants Demand constraints and SCAR are the factors which effects the growth of the industry. Growth determinant and high TV sales increase the chance for more sales of set top box which will effect the growth. When the facilities of the products increase it acts as a growth determinant. The entertainment channels and the news channels players increase the growth to opt the DTH. Some of the DTH players are bringing innovative plans like live shopping, broad band, and etc will act as growth determinants. 17
  • 18. Chapter-4 Technology Of Production And Distribution 18
  • 19. TECHNOLOGY OF PRODUCTION AND DISTRIBUTION Cost Structure The costs incurred by the DTH players is mainly on its technology, satellite dish, set top box accessory cards, Ku band transponders in the satellites, customer premise equipment(CPE). The launch of satellites is another huge cost which the DTH plays shares the transponders. And it costs them much than any thing. Another cost incurred is on operating cost. Economies of Scale Economies of scale may be utilized by any size firm expanding its scale of operation. The common ones are purchasing (bulk buying of materials through long-term contracts), managerial (increasing the specialization of managers), financial (obtaining lower- interest charges when borrowing from banks and having access to a greater range of financial instruments), and marketing (spreading the cost of advertising over a greater range of output in media markets). Cost Advantages 1] Direct customer relationship. 2] Better storage 3] Extensive use of resources. 4] Availability of labour at cheap rates Economies of Scope An economic theory stating that the average total cost of production decreases as a result of increasing the number of different goods produced. Often, as the number of products promoted is increased and the DTH players used, more people can be reached with each rupee spent. These efficiencies do not last, however; at some point, additional advertising expenditure on new products will start to be less effective (an example of diseconomies of scope). If a sales force is selling several products they can often do so more efficiently than if they are selling only one product. The cost of their travel time is distributed over a greater revenue base, so cost efficiency improves. 19
  • 20. There can also be synergies between products such that offering a complete range of products gives the consumer a more desirable product offering than a single product would. Economies of scope can also operate through distribution efficiencies. It can be more efficient to ship a range of products to any given location than to ship a single type of product to that location. Value added Many players are using this DTH as the basis and giving many value added services to the customers. Some of the players are giving best valued services to the customers like Airtel gives live-news, home shopping, live gaming, broad band, horoscope, radio, and etc. Tata sky is giving recording for more than 4 hours, and came with a differential strategy of Tata sky+ with other facilities. Big TV is giving live with Big movies, Dish TV is giving live TV on the wheels, and many other value additions. Logistics Logistics is still a nascent and fragmented industry in India. It is estimated that while outsourced logistics accounts for 54% of total logistics spending in India, organized players have only 10% of the pie. DTH industry follows a good logistics which is as similar to the logistics which are used buy automobile industry, for the effective management of the DTH industry. Labor Labours are included in every activity of the business, most of the people working are not daily labours, they are employed and paid monthly in the form of salary. DTH requires skilled labor like management executives, administrators, software engineers, sales executives and attorneys. 20
  • 22. Marketing Market segmentation, marketing strategies, marketing practices and marketing concepts specific to the industry Indian TV channel broadcast 15.7-mn advertisement every year, which totals to 362-mn seconds of TV advertisement every year. India currently has over 400 channels. TV viewer ship has declined by 5% since 2001. TV broadcasters are expected to go hike in advertisement rate this year by 16-18%. Market segmentation in DTH industry mainly concentrates on women who don’t like missing their daily soap and news more ever women are able to learn English speaking which is a very special feature of DTH. DTH also concentrates on children also by providing them games, dictionary, some discovery videos specially inbuilt, maths, science and social knowledge. It also focuses on old people as it has updated videos of various holy and religious places. DTH uses different marketing strategies for promotion and sales of its product. It gives advertisements with their brand ambassadors which attract customers, door to door selling, on the phone selling, discount and offer sales, packages, etc Marketing practices is a continuous process as the competition keeps increasing among the players in the industry. Each player is investing lots of money in promoting there brands. Many players are making advertisement with movie actor and actress as brand ambassadors for their products because DTH is mainly considered with entertainment. Some of the companies like Tata sky is having Super Star Amir khan as brand ambassador and Airtel is having many film stars like kareena kapoor, A.R.Rehaman, saif ali khan, etc. Dish TV is also having Super Star Sharuk khan as the brand ambassador. Sun direct also uses southern actress for their brand promotion. Marketing practices are the decisions taken by the manufacturing company to increase sales, expand themselves into many areas etc. Successful marketing practices bring sale up, while unsuccessful marketing practices have no impact on sale or negatively impact sale.Marketing concepts specific to the industry is primarily targeted at a niche segment who buy the TV sets from the electronic retail chains. 22
  • 24. Innovation Types of innovation, concepts of innovation relevant to the industry, source of innovation, rate of innovation and economies of scale. The concept of innovation in DTH industry is INCREMENTAL innovation; every thing that is done is due to constant research of many marketing and analysts to bring many innovations to the existing products in the DTH industry. Incremental innovation is the apt innovation which is suitable and all the DTH players are concentrating up on. This innovation makes the business to grow continuously and brings advantages to the customers using the products and the service. There are many sources of innovation for this industry as mentioned in the above, the technology and the people are the main sources for the innovation. Customer’s opinions and their needs can be served by providing a service which is matching to their needs and requirements. In this days every company setups its own R&D in its own company with very intelligent people for meeting the expectation op the customer. Digital TV, the DTH service from Airtel, has announced India’s first skin integration innovation on its EPG screen in partnership with Yahoo. Yahoo takes forward its latest brand campaign “YOU” in this first of its kind partnership where an online portal will use DTH as a medium to promote itself. The ‘Electronic Programming Guide’ screen on Airtel digital TV is now completely integrated with Yahoo India’s homepage. Customers will find a message ‘Fill your home page with all the things that make YOU’ when they log onto to the EPG screen. A prompting ‘Red Button’ will take them to a dedicated landing page that elaborates the offerings on Yahoo India’s new home page. The ‘YOU’ campaign enables users to customized the home page as per their liking and empowers them with the choice to integrate social applications such as Facebook with their Yahoo homepage. This whole idea was conceived by NetworkPlay, right from design elements to execution and thanks to Mindshare for buying into the idea and flawlessly helping people execute it. 24
  • 25. Tata Teleservices Limited has announced a technological breakthrough—a first-of-its- kind innovation in India with the launch of TATA Photon TV, a new application that allows Tata Photon Plus subscribers to watch live television channels on their laptops while on the move, and on their personal computers at home and in the office. The Photon TV service is exclusively available to Photon Plus users. “With its growing popularity, Photon Plus has caught the admiration of millions of users across the country, with its high-speed data access capabilities and the ease of mobility. TATA Photon TV is a personal computer- and laptop-based video-streaming application, which allows Tata Photon Plus users to view live TV feed from various sports, news, entertainment and regional channels, and to watch recorded TV shows from the library (viz Coffee with Karan, Zoom, Pogo, etc), movies, music and videos on demand. Internet Browsing charges will be charged as per your Photon+ tariff plan and it would be applicable while viewing Photon TV. These charges would be over and above the subscription charges for the Photon TV. (approximate data usage is 1-2MB per Min). Rate of innovation in this sector is growing at a faster rate in the recent years where as it is not very impressive before this period. The reason for this is the fair competition between the all players in this DTH industry. It led to the development of new products in this sector which also led to the diversification of products as there is abolition of entry of foreign industries into Indian industries initially. It also made the industries in this sector to establish their own R&D departments for successful product innovations like Airtel Live, Vediocon d2h. The brand loyalty for each and every company is very high, so there is no need of lot of costs to be pored in marketing and promotion of the service and product. Every function that is performed by the players is a well planned and executed properly. So in all the areas those players are using the expertise people in the industry and performing operations in DTH industry very economically. 25
  • 27. Strategies and competition in the industry Competitors, Strategies used in the industry, Porter’s generic strategies model, porter’s five forces model and analysis using it, element of industry structure, porter’s value chain model analysis, swot analysis, concept of generic value chain, concept of growth share market matrix, company position . Competitors Every company has its own goal, every company wants to achieve and full fill its goals, many companies like the big players in the industry wants to grab most of the market share. Some of the companies want to achieve 10million customer base by 2010 they are Dish TV, Tata sky, Sun direct, BIG TV etc. The industry’s objective is to achieve 60million customers buy ‘2012’ i.e., nearly 50% of the present existing customers. Strategies used in the industry Technology transfer is one of strategy used in the industry and it is existence for a long time. In recent decades, concerted effort has been made to exploit the existing technology to a larger extent by transfer of technology, to generate greater economic impetus. It provides opportunity to generate larger returns on the investments made in R&D. Its importance lies in its ability to stimulate and strengthen the innovation process. Porter’s generic strategies model Generic strategies were used initially in the early 1980s, and seem to be even more popular today. They outline the three main strategic options open to organization that wish to achieve a sustainable competitive advantage. 27
  • 28. The generic strategies are: 1. Cost leadership, 2. Differentiation, and 3. Focus 1. Cost leadership In the case of media products, means they should be offered at a price lower than their competitors’ but with as good benefits, or, the unique benefits the media products offer can over-offset the premium. 2. Differentiation Differentiation in DTH refers to when a organization provides unique benefits to the users through product innovation. This is to increase the probability of the media users to choose the product. A media organization with a target user loyalty can concentrate more on how to fully meet the target user’s needs rather than on product cost saving. 3. Focus Focus strategy is also known as a 'niche' strategy. The clutter of ads has now spilled out on the number of channel availability due to which people are spoilt for choice. Thus Niche channels are the only way to maintain viewer loyalty. TATA Photon plus is more niche oriented. SWOT Analysis STRENGHT Growing number of player and competitive advantage. Supply creates its own demand. Brand name Service and flexibility. 28
  • 29. WEAKNESS Skilled labor Satellite technology Signals Viewer migration. Uncertainty in viewer ship. OPPORTUNITY Technology Distribution Innovation Value adding THREAT Economic downturn. Climate Radio Cinema halls Broad casting of channels New entrants Porter’s five force model The five forces which one must consider to analyze any industry are the rivalry between the firms within the industry being analyzed, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products or services, and the threat of new entrants (also known as barriers to entry). They are also shown in the diagram below. Initially propounded by Harvard Business School Professor Michael Porter, the Five Forces framework has been accepted as a strategic framework which one can apply to analyze any industry. 29
  • 30. Threat of substitutes DTH gives stiff competition from the terrestrial, cable & IPTV. As per the industry estimates, there are 130 million TV homes of which 71 million are served by cable and around 6 million served by DTH with the remaining taken by terrestrial transmission. As IPTV is a new entrant there is not much data on its subscriber base. Bargaining power of suppliers DTH industry relies on three major suppliers. Customer premise equipment (CPE) Comparing of the satellite Dish, Set Top Box with the necessary Access Card, the Ku band transponders are obtaining satellites and content. With India set to overtake Japan as Asia’s largest DTH by next year, the bargaining power of India DTH operators with CPE suppliers have been steadily increasing. Bargaining power of buyers With enough operations to choose both from the point of alternate mediums like cable, IPTV and terrestrial broadcast and from the point of increasing DTH operators, the 30
  • 31. consumer is at his will to decide. Customers will continue to have a high bargaining power until DTH platforms try to differentiate them as superior players with better content and clarity. Rivalry among existing firms With 3 operational players and 4 players in the queue, inter firm rivalry is quite high. The competition from state owned DD-Direct to private players in negligible from the content point of view as the number of channels offered by DD-Direct is very limited. However, DD-Direct does not change any monthly subscription charges. Between Dish TV is Tata Sky there is an intense rivalry exhibited by price war and discount schemes offered to new connections. Being the first mover, dish TV had price advantage in both the STB offers superiors DVD quality Video to its advanced STB. While Dish TV is planning to spend Rs. 850crs over the next 3 years, the rival TataSky is willing to spend Rr.2000crs over the medium term. The companies have also set ambitious targets with Dish TV aiming to reach 5 million subscribers in the next 18 to 20 months while Tata sky aiming to reach 8million subscribers in the next 18 to 20 months while Tata sky aiming for 8 million subscribers by 2012. Threat of new entrants With already 7 player’s space in the DTH space, threat of new entrants is low. There is already enough competition which will discourage new firms to enter this business. While getting a licensee is relatively easy, the barriers to entry are high when it comes to pricing of CPE and getting the required transponder. There is a definite, first mover advantage. Analysis of the Industry using Porter’s value chain model Porter’s value chain analysis is considered with the value analysis of the several functions of the DTH industry, it makes to understand the importance of this model to develop and add on value to the present features of the industry and it’s functioning. 31
  • 32. Value analysis says that an effective logistics should be undertaken to commencement of the business in cost effective way. The most the cost effective, the more value is added to the process. It is noting but proper or optimal use of the resources present and using the technology. This value addition is not only in the logistics, it should be carried in all areas of the management, production, distribution and etc. Thus DTH industry can increase its value addition to the customers and the features and of industry. Concept of growth share matrix (BCG model) The BCG – GROWTH SHARE MATRIX is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the observation that a company's business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name” growth share”. Under the BCG GROWTH-SHARE MATRIX, as an industry matures and its growth rate declines, a business unit will become either a cash cow or a dog, determined solely by whether it had become the market leader during the period of high growth. While originally developed as a model for resource allocation among the various business units in a corporation, the growth-share matrix also can be used for resource allocation among products within a single business unit. In the DTH industry when the market share is obtained then it is automatically treated as the market leader, and also it needs maximum market share to extent, when the market is 32
  • 33. not in incremental state then the growth rate of the industry will retain. Again this industry follows all the variables in the all areas till the both will come into normal level. 33
  • 39. Appendices MEDIUM 2008 TV 40.7 PRESS 46.9 RADIO 3.2 CINEMA 0.7 OUTDOOR6.8 INTERNET1.7 GROWTH RATE OF ADVERTISEMENT REVENUE IN DIFFERENT MEDIUM: Medium Year of growth in 2008(%) TV 22 Press 18 Radio 40 Cinema 50 Outdoor 14 Internet 45 Total 20 39
  • 40. Indian TV channel broadcast 15.7-mn advertisement every year, which totals to 362-mn seconds of TV advertisement every year. India currently has over 400 channels. TV viewer ship has declined by 5% since 2001. TV broadcasters are expected to go hike in advertisement rate this year by 16-18%. Yearly results of dish tv In Rs (crores) Mar '06 Mar '07 Mar '08 Mar '09 Sales Turnover 31.46 190.94 413.28 737.69 Other Income -- 3.40 2.43 1.27 Total Income 31.46 194.34 415.72 738.97 Total Expenses 114.44 376.11 632.34 926.41 Operating Profit -82.98 -185.17 -219.06 -188.72 Profit On Sale Of Assets -- -- -- -- Profit On Sale Of Investments -- -- -- -- Gain/Loss On Foreign Exchange -- -- -- -- VRS Adjustment -- -- -- -- Other Extraordinary Income/Expenses -- -- -- -- Total Extraordinary Income/Expenses -120.34 -- -- -- Tax On Extraordinary Items -- -- -- -- Net Extra Ordinary Income/Expenses -- -- -- -- Gross Profit -82.98 -181.77 -216.63 -187.45 Interest 1.67 11.78 46.95 72.70 PBDT -204.99 -193.55 -263.56 -260.14 Depreciation 2.84 57.53 149.05 215.41 Depreciation On Revaluation Of Assets -- -- -- -- PBT -207.83 -251.08 -412.61 -475.55 Tax 0.03 0.25 0.59 0.73 40
  • 41. Net Profit -207.86 -251.33 -413.20 -476.28 Prior Years Income/Expenses 0.03 -0.55 -- -- Depreciation for Previous Years Written -- -- -- -- Back/ Provided Dividend -- -- -- -- Dividend Tax -- -- -- -- Dividend (%) -- -- -- -- Earnings Per Share -- -- -- -- Book Value -- -- -- -- Equity 71.57 42.82 42.82 68.73 Reserves 45.97 -82.30 -495.50 279.23 Face Value 1.00 1.00 1.00 1.00 Reference: Bibliography: 41