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Direct to home

Marketing Management

Assignment 1

Competitor Analysis
Direct to Home

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Marketing Management Page 1

Direct to home

Industry Analysis: Direct To Home

In earlier days there was only one TV channel in India the “Doordarshan”, Channel Doordarshan
was owned and operated by government of India. In this era, every home which had a TV set used
to have its own antenna to capture the signals.

The Cable Television Ordinance Law was passed in January 1995. This enabled cable operators to
feed channels and later on private companies were allowed to air their own channels and this led to
the explosive growth in number of TV channels and number of cable operators. The growth of TV
channels & cable operators created a big industry and market opportunities. Until few years back
there were as many as 1,00,000 cable operators across India. However the services provided by
cable operators were poor. The strikes, increase in tariff plan, selective broadcast and poor services
were major cause of dissatisfaction among the customers. This has created an opportunity for DTH,
which serves an immediate threat to the high-end cable networks

India has about 130 million TV homes of which, Cable & Satellite (C&S) services are present in
97 million (74%) of the home. The DTH market in India comprises 11% of the total market with
almost 15 million homes. The DTH industry growth lagged to 10.3% in 2008 from 16.7% a year
earlier. But industry players agree that the digitization drive is expanding by 35-40% annually.
However, industry estimates DTH to touch 35-40 million subscribers by 2012, and that’s the
number that every DTH brand has set its sights on.

DTH Homes,
Non Cable
Homes, 18

Cable Tv
Homes, 97

By 2015, DTH will enjoy a market share of 40%, digital cable 40% and analog cable will follow with only
20% market share. 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, instead, proved a
boon for the Indian DTH industry as people started to cut on their entertainment expenditure and instead of
viewing movies at theatres, they preferred to stay at home with their television sets.

The industry added nearly 5 Lakh subscribers per month during 2009 and the numbers are
forecasted to surge further at around 30% through 2012. The perception that Direct-to-Home (DTH)
television technology is an urban or a metro phenomenon, 70 per cent of its DTH subscribers reside
in rural areas and towns with a population under a million. And metros like Delhi or Mumbai
contribute only 2-3 per cent to the overall DTH subscriber base.
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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. Still, as DTH is still a relatively new category and most people are hesitant to experiment with
it. It is therefore imperative for companies such as Tata Sky, Dish TV, and Reliance BIG TV to
educate the consumers about the advantages of the service and in turn create an urge to invest in it.

Major Players:

Within the rural markets, it is Dish TV DTH service that has the most penetration. Tata Sky, Dish
TV and Sun Direct DTH services are preferred brands in top metros. The southern market is
dominated by Sun Direct DTH services, while in high-income households (monthly income above
Rs 50,000), Tata Sky is the dominant DTH brand, while the new entrants are BIG TV, Airtel DTH
& Videocon D2H.

But if we take into consideration the number of subscriber that each Direct to home companies
claims to have, then the current big players in DTH industry would be as follows:

Company Subscribers Revunue Launched In Distance from

(in millions) (in RS cr) Ebitda
(till sep 09) (FY09) breakeven

Dish Tv 5.92 737 Oct ‘03 Q1-2010

Tata Sky 4.5 800 Aug ‘06 NA

Sun Direct 4.3 NA Dec ‘07 2.2 mn subs later

Airtel DTH 2 NA Oct ‘08 NA

Big TV 2 NA Aug ‘08 2010

Videocon NA NA May ‘09 NA

Source: http://www.business-standard.com/india/news/dth-industryglimpseprofits-at-last/375821/

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P o r t e r ’s F i v e C o m p e t i t i v e f o rc e s : D i re c t t o H o m e

Porter’s model is based on the insight that a corporate strategy should meet the opportunities and
threats in the organizations external environment. Especially, competitive strategy should base on
and understanding of industry structures and the way they change. Porter has identified five
competitive forces that shape every industry and every market. These forces determine the intensity
of competition and hence the profitability and attractiveness of an industry. The Five Competitive
Forces as applied to Direct to Home industry are described as follows:

• Buyers: Bargaining power of buyers

With enough options to choose both from the point of alternate mediums like Cable, IPTV and
Terrestrial broadcast and from the point of increasing DTH operators, the 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.

• Suppliers : Bargaining power of suppliers

DTH industry relies on three major supplies: Customer Premise Equipment (CPE) comprising of
the satellite dish, Set Top Box with the necessary Access card, the Ku band transponders in the
orbiting satellites and content. With India overtaking Japan as Asia’s largest DTH, the bargaining
power of Indian DTH operators with CPE supplies have increased. However, the availability of
transponders is increasingly becoming difficult. The Ku band transponder is generally provided by
Astrix, the commercial wing of ISRO either through its own satellites or by leasing transponders
from suppliers. With only two domestic satellite launches between 2007 and 2010 an d increasing
DTH players, Astrix is in a better position to use DTH as its cash cow for the next 5 to 10 years.
Also the crash of INSAT 4C and NSS-8 has worsened the situation of DTH players. As there is not
much of regulation particularly in terms of channel pricing, a c q u i r i n g c o n t e n t f r o m t h e
broadcasters is also difficult. DTH vendors are at the mercy of the broadcasters.

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• P o t e n t i a l E n t r a n t s : Threat of new entrants

With already 7 players in the DTH space, threat of new entrants is relatively low. There is already
enough competition which will discourage new firms to enter this business. While getting a license
is relatively easy, the barriers to entry are high when it comes to pricing of CPE and getting the
required transponders.

• S u b s t i t u t e s : Threat of substitutes
DTH faces stiff competition from the terrestrial, cable and IPTV. As per the industry estimates,
there are 130 million TV homes of which 97 million are served by cable and around 15 million by
DTH with the remaining taken by terrestrial transmission.
• Industry competitors: Segment rivalry
Presently as on 2010, these are the main DTH service providers in India:

 DD Direct – state owned free service provider

 Dish TV - owned by Essel Group, was the first commercial DTH service provider.
 TATA Sky – owned by TATA group, largest DTH service provider presently in India.
 Sun Direct – owned by Sun group, primary focus is on low income groups and regional viewers.
 Reliance Big TV - Owned by Reliance group, new entrant into the market.
 Airtel Digital TV – Owned by Bharti group, new entrant with aggressive marketing strategies.
 Videocon D2H – Owned by Videocon group, new entrant into the market.

With 7 operational players, the segment rivalry is quite high. The competition from state owned DD-Direct
to private players is negligible from the content point of view as the number of channels offered by DD-
Direct is very limited. However, DD-Direct does not charge any monthly subscription fee which poses a
threat to the private players. Between Dish TV and Tata Sky there is an intense rivalry exhibited by price
wars and discount schemes offered to new connections. Being the first mover, Dish TV has price advantage
in both the STB as well as procuring the transponders. On the other hand, Tata Sky claims its STB having
superior DVD quality video. There is also a competition at acquiring the content.

Competitors Analysis:

Competitors Product Customer Pricing Product Promotion Place

Awareness Availability

Dish TV E (excellent) E VG VG E E

Tata Sky VG E VG VG E E
(very good)
Sun Direct E G (good) E VG VG G

Airtel DTH VG VG A (average) VG VG E

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Brief Analysis about the top four players:

1. Dish TV - Zee group

• Dish TV was the first private entrant in the DTH which gave them advantage of higher
market share.
• As it is a business unit of the Zee group, Dish TV has built itself as a commendable brand in
the market.
• Dish TV has are a strong presence all across the geography of India with consumer and
pocket friendly gamut of services.
• Its unique offerings of mobile dish with presence in all Kingfisher Airlines, navy war ships,
mobile vans and selected railway stations in India shows the technological edge and
differentiation it having with respect to other brands, stands exemplified.
• Dish TV has main advantage as 70% of DTH users are in rural and small towns. These rural
and semi-urban towns are expected to contribute bulk of sales in the industry.

• The subscriber acquisition cost is still very high.
• Confusing channel packaging for beginner users.
• ARPU continues to be an area of concern with the constant endeavor to monitor, upgrade
and enhance the revenues.

2. TATA Sky – Joint venture between Tata Group and UK-based British Sky


• Leveraging on brand TATA and High brand recall

• Superior Picture quality
• Leads in introducing new packages & Services
• Customer service
• Rural penetration through ITC E-Choupal and Godrej Aadhar
• Interactive channels and program guides
• Innovative Product offering Tata Sky Plus

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• Second Mover after Dish TV who captured Market Share
• Low flexibility in choosing extra channels.
• Currently Does not offer free Set Top Box like Dish TV
• Dependency on broadcaster and had issues with Sun TV

3. Sun Direct - Sun group.


• First operator to use MPEG-4 encoding so can carry more channels,

• South Indian market targeted- Carry’s more South Indian channels then other operators.
• Receives some DD Direct Plus channels as both use same satellite.
• Gives Dish + Set Top Box Free.
• Monthly Expense as low as Rs.99/- per month.
• Pay for what you watch


• Less presence in other parts of India.

• No interactive services.

4. Airtel DTH - Bharti Airtel Limited


• As it is a business unit of the Bharti group, Airtel digital TV has built itself as a
commendable brand in the market.
• Offers hosts of Interactive services.
• Highest Set Top Box memory - meaning more interactive applications
• First DTH provider to provide a universal remote.
• Nationwide presence.
• The Dish antenna of Digital TV is considerably bigger than other DTH dishes. This makes
sure that you don’t loose connectivity even when it rains wild.

• Late entrant – Most of the market has already been captured by other players.
• The price is comparatively higher than any other DTH players.

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