What a Dish

How DTH operators are entering Indian homes?

There was more to the recent India-England cricket match than just sports. Off the field, two direct-to-home (DTH) satellite television players were slugging it out "" if the commercial breaks during the match telecast were peppered with ads for dish tv, a match commentator was endorsing Tata Sky's "active sports" feature.

The rivalry is apparent on the streets as well, where Tata Sky and dish tv hoardings jostle for space along Delhi roads.

Online, Tata Sky ads are on shopping sites like fabmall.com while dish tv "" apart from its regular online advertising "" has created an innovative "dish tv digital edge page" on media site indiantelevision.com where people can get regular updates on DTH.

The DTH arena was thrown open by the government a couple of years ago and two players "" the Essel Group's dish tv and Doordarshan's DD Direct Plus "" promptly threw their hats into the ring.

But the action really heated up only a couple of months ago after the entry of Tata Sky, an 80:20 joint venture between the Tata group and the Star network.

For the uninitiated, DTH is a satellite television system in which subscribers receive broadcast signals directly through a small dish antenna on their terraces or balconies. The dish connects to a set-top box attached to their TV sets. The advantages to the consumer are obvious: DVD-quality picture and CD-quality sound, many more TV channels and a host of interactive features.

For the service provider, it is an opportunity to redress the revenue-share balance.

"The reason broadcasters like Zee and Star are getting into DTH is to capture the distribution revenues that are otherwise lost to the local cable operator," says Farokh Balsara, industry leader, media and entertainment, Ernst & Young (E&Y).

According to industry estimates, just 10-12 per cent of revenues are passed on to the broadcaster. Even those with their own cable networks "" for instance, Zee's Siticable "" get only 20-25 per cent of the revenue earned through distribution.

The Indian DTH market is obviously small yet: just 2.26 million homes, of which 88 per cent are in rural India (source: IMRB and TAM S-Group). But here is why DTH service providers are already drawing the battlelines: the DTH universe is expected to expand to 9.8 million (excluding the free-to-air DD Direct Plus) by 2010 and 16 million in 2016 (source: Media Asia Partners, Hong Kong).

The two private players offer very similar offerings, at fairly similar prices, to similar target customers. Meanwhile, the marketplace is also getting crowded, with Reliance and South India media biggie Sun TV slated to set up their stalls soon. What are the three incumbent players doing to ensure their slots are secure?

The selling game
Tata Sky targets customers across three distinct geographical regions: those in Tier II and III towns who are unhappy with just 15-20 channels and poor picture quality; TV-owning homes in rural India with no cable connections; and metro consumers who want better customer service and more features from their TVs.

"We're a mass player," contends Vikram Kaushik, CEO and MD, Tata Sky. That also explains the company's high decibel launch campaign "" television ads, roadshows, outdoors and online. The 60-second ad film, created by Rediffusion, shows people throwing out their existing TVs, stereo systems, DVD players and their spectacles and switching to Tata Sky instead.

The roadshows began with the metros and have been extended to smaller towns, while the mall promotions are, by their nature, restricted to the top eight cities. The on-ground promotions included demos and a huge bin for potential customers to junk their existing AV equipment.

In return, they stand to win free set-top boxes. The current communication focuses on Tata Sky's features and its pricing schemes "" hoardings and posters have been put up in high-traffic areas such as airports and the metro stations in Delhi, as well as ads on search engines like Google.

Apparently, the aggressive marketing, along with the combined weight of the Tata and Star tags, is already working: Tata Sky claims to have sold 100,000 set-top boxes within 25 days of launch.

For its part, dish tv has already been aiming for a similar rural-urban mix, across three customer segments: the cable-dry market where DTH is the only available option; those dissatisfied with the cable company's offerings; and satisfied cable customers who could enjoy the additional features of DTH. Since its launch in end-2003, the company has been conducting continuous one-on-one demos in malls across the top 15 cities.

Other, smaller cities are brought into the ambit during the buying season "" festivals like Diwali and major sports events.

To keep the excitement levels high, dish tv also uses the opportunity to introduce new features or schemes "" during the recent DLF Cup, for instance, it launched the "active sports" feature; special screenings were held in upmarket pubs and restaurants in the top 15 cities during the F1 races. Then, there are the regular ads on TV, print, websites, hoardings and points of sale at malls, shops and at dealer shops.

Sometimes, even these are customised to fit the market. At the Chennai launch last year, ads showed Hollywood star Keanu Reeves with the traditional vibhuti mark across his forehead, and international women tennis players with flowers in their hair.

"We're very flexible and adopt newer strategies, which are faster than anybody else, depending on the situation," says Jawahar Goel, additional vice chairman, Essel Group of Industries, and business head, dish tv.

dish tv also has tailor-made initiatives for rural and semi-urban areas. Since the launch of the service, Maruti Omni vans have been travelling across villages, carrying live dish tv broadcasts to help build awareness, Rural mandis in May and September are also high on the priority list, since farmers are usually cash-rich at these times and are more willing to spend on non-essentials.

Traditional media is also resorted to, but with a difference. Wall paintings instead of hoardings, ads in local, regional language publications, spots on All India Radio MW service (rather than FM) and humorous street plays help communicate product features. dish tv's dealers double up as salesmen and service staff.

They are paid a little extra for the added responsibility, but it still works out cheaper than setting up a separate customer care unit.

In sharp contrast to Tata Sky and dish tv is DD Direct Plus. The public sector free to air DTH service was launched to make television a pan-Indian facility "" Doordarshan's terrestrial network of 1,400 transmitters misses out about 22 per cent of the country.

DD Direct's tagline "" "Direct to home, direct to heart" "" underlines the difference between it and the private players: compare that with dish tv's "The future of TV entertainment" and Tata Sky's "Entertainment will never be the same again".

Initially, DD Direct Plus distributed over 10,000 DTH receiver systems across India to community organisations like panchayats, anganwadis , and so on.

Apart from fulfilling its social obligations, that also helped the service gain immense brand recognition in rural and semi-urban areas. Six months ago, the PSU built on that advantage with a video-on-wheels campaigns in rural areas of Gujarat, Rajasthan, Madhya Pradesh and Uttar Pradesh.

And Direct Plus viewers aren't restricted to just the usual Doordarshan fare: smaller entertainment channels such as Hallmark and smaller news channels, which may find the cost of joining a private DTH label prohibitive, are willing to be part of a free-to-air service. E&Y's Balsara agrees.

"Being a free DTH medium helps smaller channels increase reach for their advertisers and, thus, rake in additional ad revenues."

Battling on price
DD Direct Plus also has another price advantage. To get the service "" remember, most of these are people who don't have access to television at all "" consumers can buy the Igo TV (a Mirc Electronics product), which has a built-in DTH receiver.

Priced between Rs Rs 4,990 and Rs 7,990, the Igo works out quite economical, compared to the Rs 3,000-3,500 consumers pay just for the set-top boxes of private DTH players.

And that's not even including the installation and monthly fees. For 105 channels, Tata Sky charges Rs 1,000 as installation, in addition to a monthly fee of Rs 200. "Ours is not a price-led, but a value-led strategy," contends Kaushik.

In contrast, dish tv has certainly subscribed to a price strategy. When it launched with 40 channels, an annual subscription was a steep Rs 10,990. By April 2005, that crashed to Rs 3,990 for 100 channels and was followed by an extensive "dish har chhat par " campaign.

Even when it tailored its offering to regional preferences, dish tv has kept the price-value equation top of mind. When the service expanded to Chennai, regional channels such as Southern Spice Music and Jaya TV, as well as popular choices like ESPN StarSports, Cartoon Network and HBO were thrown in free of cost.

"We know where to spend our money. How else did we get such a huge customer base?" asks dish tv's Goel. "We've been buying our channels, hardware, and so on, very effectively. Therefore, our costs are lower and we pass on the price benefit to our customers."

The day after
Given the interchangeability of their product offerings "" and the fact that both promote their services as a way to achieve freedom from the cable-wallah "" Tata Sky and dish tv realise that customer care and follow up activities assume more-than-usual importance.

Tata Sky has invested Rs 3,000 crore in infrastructure and customer relationship management. Its three 24x7 call centres "" in Hyderabad, Chandigarh and Pune "" cater only to surrounding regions. Hence, a customer from North India, for instance, is greeted by an operator with a distinct North Indian accent, making him more comfortable with the process.

The call centres also support 11 regional languages, complete with various dialects: for instance, Bangla-speaking operators are present at the Hyderabad centre to attend to Bengali callers.

At present, Tata Sky receives more than 10,000 calls daily from across the country. Calls are made to either order a quick home delivery of the DTH service, order movies or are queries from prospective customers.

The company has about 3,000 service engineers and guarantees to solve all complaints within 48-72 hours.

Here too, the similarity with dish tv is remarkable (or perhaps not so, given the criticality of the function). The company has an exhaustive call centre network across the country; the largest is at its headquarters in Noida outside Delhi. At any given time, the company claims to have 500 operators on call. And then there's the dealer-service engineer network "" dish has over 10,000 of those.

D for DTH
Before any of their grand schemes can work, both dish tv and Tata Sky need to educate their target customer on what they were actually offering. (DD Direct Plus is a different proposition, since customers don't pay for the service.)

dish tv's tagline is followed by "Direct to home" product description, while Tata Sky's "Satellite Television" reiterate the fact that people still need to be made aware of what DTH is. Both players have dedicated, 24x7 channels that explain the use of the service. Websites, product demos and kiosks all help promote the cause.

Of course, the oneupmanship is evident here, too. Tata Sky claims full credit for taking "DTH" out of gizmo jargon and bringing it into common speech. "How many people had heard of DTH before we entered the space?" demands Tata Sky's Kaushik.

"If dish tv were not there, there would not have been any Tata Sky," dismisses Goel, whose family-owned Essel Group pioneered the DTH revolution in India, as well as introduced new products to India like Essel World and Siticable. Their strident claims notwithstanding, various studies show that less than 35 per cent of Indian households are aware of DTH.

No wonder media buyers aren't even considering different media buying strategies for DTH for now. Still, the situation may change.

"Viewers tend to get bored with too much advertising. But when there's just one ad break in 30 minutes, which is what some DTH operators could offer, the ad has better chances of being viewed and would work very well for advertisers," says an executive at media buying agency Carat. Clearly, though, that's still a while away.

THE CABLE GUY

A February 2006 study of more than 66,000 homes by TAM S-Group (an initiative from TAM Media Research and IMRB International) had some disconcerting results: more than 65 per cent had not even heard of DTH. Not only is this proof of the long road ahead for DTH players, it also shows just how well entrenched that irritating and seemingly insignificant cable-wallah is.

"He may be annoying, but at least there's a face you can complain to, instead of waiting endlessly on the phone and talking to insensitive call centre operators," says a Delhi-based cable operator.

Of course, many leading multi-service operators (MSOs) are now changing with evolving customer needs, with city-specific 24x7 call centres, helpline numbers and interactive channels.

Hathway, for instance, has a dial-in music channel, it advertises in print, FM radio and outdoors. And if DTH offers you interactive services and games, MSOs and big cable operators can give you cable TV and broadband Internet.

But the biggest challenge for DTH is digital cable, which matches DTH's picture and sound quality, as well as an equal number of channels "" but cheaper.

The digital cable set-top box costs Rs 2,500, almost Rs 1,000 less than for DTH. There's even the option of renting the digital set-top box. Granted, at Rs 10 rental per day, that works out to roughly the same cost as a DTH service, but the breakup makes it seem more affordable.

Then, under Conditional Access System (CAS), consumers pay specifically to watch pay-channels of their choice, such as HBO, Sony, and so on.

CAS is controversial and is, therefore, extant only in certain areas of Chennai but by end-2006, it is likely to be extended to other parts of the country. Once that happens, digital cable subscribers can benefit from Telecom Regulatory Authority of India's (Trai) schemes "" consumers can rent set top boxes for monthly rents as low as Rs 45, after paying a deposit of Rs 250.

Hathway, which operates in 13 cities, has already invested Rs 200 crore for digital cable TV and CAS. Last year, it had 75,000 digital cable consumers across the top six metros. By December 2006, it expects that figure to rise to 200,000. Clearly, cable service providers are moving swiftly to counter the DTH threat.