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issue: March 2007 APPLIANCE Magazine

New Delhi Report
Business Booms in India for DTH Players

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by Adite Chatterjee, India Correspondent

A new development in the Indian television broadcasting market has opened up a new opportunity for makers of set-top boxes, including direct-to-home (DTH) players.

These makers offer service packages of television channels through a personalized system of digital set-top boxes and a satellite dish antenna.
The Indian government has put a conditional access system (CAS) in place in some of the major metropolitan cities, aimed at protecting the interests of television viewers. Viewers on the system only pay for the channels they watch, and not for the entire package of channels offered by the cable operator/multi-service operator. The government made it mandatory for all service providers in three major cities to switch to the CAS in January 2007. Given that India is the third-largest market in the world for cable TV, with an estimated 65 million homes subscribing to cable TV services, the switch created a tremendous opportunity for makers of digital set-top boxes.
The three cities—Mumbai, Delhi and Kolkata—account for nearly 15 percent of all cable TV homes in India.
The two companies that benefited the most from the switch are Tata Sky and Dish TV, the two major DTH service providers in the country. In the first few days after the CAS became operational, Tata Sky said it was receiving as many as 25,000 calls per day from customers inquiring about their services. Multi-service operators are currently importing most of the hardware—or the set-top boxes—into the country. However, Tata Sky has an edge as it manufactures these set-top boxes in its own facilities within India.
Both Tata Sky and Dish TV are enjoying the benefit of the mismatch between demand and supply of hardware. Both have launched huge advertising campaigns to attract consumers with their service offerings. They hope to attract many consumers who would otherwise have purchased just a set-top box to access their favorite television channels. Instead, they hope to convince buyers to pay a little extra to get the DTH player as well as the additional software for hundreds of pay-channels. Dish TV estimates it has already added 150,000 subscribers to its roster.
According to the Cable Operators Federation of India, over 200,000 set-top boxes have been installed in the CAS areas of Delhi and Mumbai. But the demand for set-top boxes is bound to grow as hardware prices are expected to plummet. As it is, prices of set-top boxes have declined rapidly from 10,000 Indian rupees (approx. U.S. $225) last year to 3,300 rupees (approx. $75) this year. Currently, DTH penetration is estimated at 3.5 million, which includes 1.7 million subscribers of Dish TV, 300,000 for Tata Sky and the rest accounted for by the national broadcaster’s DTH service, Doordarshan. Industry sources estimate that by 2015, the DTH market will grow to 30 million. While the largest company in the business, Dish TV, has so far been concentrating on rural areas and the smaller towns, it is now changing its strategy to target larger metropolitan cities with a range of value-added services. Dish TV will be investing 5 billion rupees (approx. $114 million) to upgrade its facilities, including production of set-top boxes and satellite infrastructure.
As DTH services improve and demand swells, it’s likely that new companies will emerge in the manufacture of set-top boxes to cater to the growing market.


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