First shot fired in digital TV price war

Dish TV offers 70 channels free in four metros

The country’s largest direct-to-home (DTH) television content provider, Dish TV, on Wednesday unleashed an aggressive pricing scheme. By offering 70 channels in the basic tier free to its subscribers in the four metros, the company is likely to have triggered a price war in the digital TV segment.

The basic tier includes only free-to-air channels. The move is aimed at wooing the 10.5 million cable TV households in Delhi, Mumbai, Kolkata and Chennai that have to mandatorily buy a digital set top box for cable TV from November 1.

Rival DTH players and cable operators say the move is merely a marketing ploy and will have very few takers. DTH operators have less than three million customers in the four metros. The average revenue per user in the metros ranges from Rs 220 to Rs 250 a month.

Under Dish TV’s offer, customers will be eligible to receive a basic tier comprising 70 channels free of cost for five years. However, viewers availing themselves of Dish TV’s free offer will have to remain active by subscribing to a regular pack at least twice a year, at a price of Rs 200. Multi-system operators providing cable TV will charge Rs 100 per month for a similar package, as recommended by the Telecom Regulatory Authority of India (Trai).

Explaining the offer, Dish TV COO Salil Kapoor told Business Standard, “It is a unique facility, and we are expecting consumers will shift from cable to Dish TV. Those on analog cable will have their connections cut on the 31st this month. But, they can continue to watch their free-to-air channels without paying. They will also subscribe to other channels in news and entertainment which are paid and that will help us strengthen the ARPU (average revenue per user).” The company is hoping its average revenue per user will go up 15-20 per cent.

Competitors disagree. Says a top executive of a key DTH company, “Those who want to see free-to-air channels go and take DD Direct, for which they do not have to pay the recharge fee of Rs 400. They have to buy a box that costs Rs 1,000 and that is all. So, why should they want to spend more money? It does not work. We are in the pay market. Dish is fighting with DD Direct.”

Videocon D2H CEO Anil Khera said, “Videocon D2H will not follow any such move as it may adversely affect the ARPU.”

Dish TV’s arch rival Tata Sky’s CEO Harit Nagpal said, “Tata Sky has always offered the best value for money to customers from all segments and will continue to offer the same.” Insiders say it might offer a similar package.

Multi-service operators are not worried. Says a top executive of a leading Mumbai-based operator, “Our revenues come from consumers using pay channels, and digitisation will only enhance the number of pay channels on offer. Consumers will not take the box to watch free-to-air channels.”