DTH industry: Requiem or rebirth? 

Even millenials will recall—perhaps not Generation Z as much—the Sunday morning primetime evening rush to grab that coveted spot on the living room couch. Everyone milling around the television set to watch the entertainment du jour. After all, till a decade ago, media consumption was a family or collective activity, playing out on the best and biggest screen in the house.

This scenario is folklore-ish now. As the number of screens has increased—and the cost of streaming decreased—so has the trend towards personal viewing. “I can watch, pause, and play at my own convenience. I am not stuck to an immobile position while consuming my content. That’s a great advantage,” points out 30-year-old digital marketer Saurabh Gupta, who does not remember the last time he watched television. “It might have been some 12 years ago.”

It isn’t just the hardware driving this structural (and cultural) shift. According to a recent PwC report, ‘Global Entertainment & MediaOutlook’, data consumption in India will only grow as mobile connections reach 850 million people by 2022, making India one of the 10 largest video streaming markets. Add cheap data to the picture and, experts suggest, traditional TV viewing seems fated to become a relic of the past—at least for the urban market.

A study called ‘Unravelling the digital video consumer: Looking through the viewer lens’ by KPMG in India and OTT (over-the-top) platform Eros Now ominously notes that “while the intent to cut the cord may not translate into doing so eventually, more than a third of the respondents are willing to actively consider it”. It emphasises the rapid growth digital video has made, and the threat that traditional video distribution could face in the long run, it says.

Simply put, the media and entertainment space is taking no prisoners. Ask the direct-to-home (DTH) player—a key stakeholder—which is sparing no effort to find relevance in the new normal.

The challenge is complex but the DTH industry has taken the critical first step in any recalibration process: Acceptance. “It is true that, in certain segments, there could be a situation where traditional broadcast linear TV consumption is probably dwindling,” acknowledges Sukhpreet Singh, corporate head-marketing, Dish TV. “But our job really is to bring new content to as many people as possible and at the best cost. That content could be coming from a broadcast channel or OTT platforms. It’s great that people are consuming more content and it opens up huge opportunities for media distribution players like us.”

That is the second step: Finding opportunities in a challenging situation.

Dish TV, for instance, recently introduced the DishSMRT Stick and d2h Magic Stick, which allow users to stream content from OTT services through their set-top boxes. The company is also creating premium short-format content for its own OTT platform, Watcho. Singh believes India is a “this and this” kind of a country, not “this or this”. “India is a huge country and there are all kinds of segments. It is not the death of anything because, every day, many people are still getting into TV watching as TV penetration in India is just about 66% right now,” he points out. “Out of this, a lot of people still do not use pay TV. Of those graduating to pay TV, there are many graduating to HD and eventually hybrid TVs [those with both traditional TV and OTT services].”

In fact, hybrid viewing in smart homes is one of the ways forward, the industry feels. It is a concept that makes sense with the idiot box having transformed into a smart TV, posing challenges but also offering solutions.

Reinvention will keep DTH relevant to consumers, says Sunil Taldar, CEO and director, DTH Business, Bharti Airtel. “Even in the West, there is a lot of discussion about how people will watch only OTT content. What has really happened is that the overall time spent in front of the screen has gone up. And people are watching both OTT and linear content. People will not stop watching live TV whether it is sports, news or live programming,” says Taldar. “The consumer comes back and says that I want to definitely watch satellite TV but I want to watch OTT as well. And I want to watch it on my large screen and, when I step out of my house, I should be able to stream it on my portable device—both through the same device. That is exactly what we have solved for the consumer.”

In September, Airtel, India’s third-largest operator, launched Xstream, its converged media platform which will enable users to access satellite TV channels, movies, shows, songs, OTT channels on the screen of their choice, with a unified user interface. “When it comes to OTT, it is in the best interests of every content provider [to remember] that the real habit-forming happens when you start watching the content on the large screen at your home,” says Singh.

His heightened pace of digital growth is more prevalent in the urban markets because television has reached a maturity level there, says Karan Taurani, vice president-research analyst (media), Elara Capital. “Today, there is definitely a threat to TV time spent. Because digital is something which is consumed on-the-go, as per convenience, there is a negative viewing experience among the urban youth audience,” he points out. “But if you see the mid-age kind of audience, they are viewing TV in their households very much even now. Almost two-thirds of the consumption of this OTT [content] is happening in the 14-30 age group.”

This is also why, for DTH adoption, the growth opportunity lies in the rural markets and smaller towns. As TV penetration increases, Taldar says, there is a real opportunity in the lower end of the market. “If you look at DTH, it is the most effective way to deliver content through satellites. As TV ownership increases, there is an opportunity for us to get more customers for the DTH business,” he says.

Taurani agrees: “80% of incremental subscribers today are from rural [areas]. And that’s primarily because these markets are under-penetrated.” Regional content, therefore, is primed for growth. “TV’s pie has remained stable for the last three-four years: It is 37%-38% of ad spends. But it’s not like TVs will grow incrementally or have a big delta growth. But regional is growing at 20%-25% and is a big game-changer for TV,” he says.

India’s biggest DTH player Tata Sky has already hopped on to this trend. It recently expanded in the south with the launch of regional HD channels across genres. The distribution platform is offering tailor-made packs starting at ₹199 per month. “Through our campaign, Aapka TV Banega Super TV, TataSky is educating and informing audiences in rural areas about the entertainment options available to them,” says chief communications officer Anurag Kumar.

None of this indicates any immediate threat of extinction for DTH, but the industry has to figure out why its subscribers are showing less enthusiasm. According to TRAI (Telecom Regulatory Authority of India), DTH services had an average active subscriber base of 72.44 million in January-March, which saw a 25% fall to 54.36 million in the following quarter. The regulator clarified that the drop is due to several factors, primary of which is the change in the definition of a subscriber. Earlier, operators were including inactive users or those that had been temporarily suspended for over 120 days. The new methodology asks for monthly active subscribers’ data from operators. Other reasons for the dip in numbers include the shutdown of the Anil Ambani-owned DTH service Independent TV and the increased price of packages after TRAI’s new tariff order, which came into effect last December.

At the same time, TRAI’s ‘New Regulatory Framework’ for broadcasting and cable services has also helped up the numbers. It allows customers to select and pay for individual television channels on an à-la-carte basis. After this order, Tata Sky added 3 million new active subscribers between April and June, Airtel TV 400,000 users, and Dish TV 200,000 users.

“We don’t know about the long term, but in the medium term linear television isn’t going anywhere. When the price of data goes up, as it will at some point, many consuming content on OTT platforms might switch back to linear television,” says Jehil Thakkar, partner and leader-media and entertainment at Deloitte India. He also points out that the competition to linear television in India isn’t as much from streaming platforms as it is from social media, WhatsApp, and gaming. All of these various media avenues are vying for an individual’s finite time, he says.

But the fact is it is all coming up roses for the overall Indian entertainment and media industry. The PwC report indicates a jump of 11.28% in value over the next four years, up to ₹4,51,405 crore. It is the prerogative of OTT operators and DTH players to capitalise on the fast-growing user base.

One of their approaches is to collaborate, instead of competing. This makes OTT content accessible to a wider, integrated television subscriber base. For instance, Netflix recently partnered with cable broadband provider Hathway; the latter will provide a set-top box with a remote which has a separate button for Netflix, making it convenient to launch the streaming service. Amazon, too, has collaborated with Dish TV to bring the Prime Video app to DTH subscribers through its set-top box. “We have further expanded the reach and access of Amazon Prime Video in India by our initiatives with the leading DTH operators, giving more customers the experience of watching our wide selection of Amazon Originals, blockbuster movies across languages and Indian as well as international shows, on their television sets,” says Gaurav Gandhi, director and country GM, Amazon Prime Video India.

But even though they are joining forces, OTTs continue to be a threat to DTH through their focus on mobiles. Netflix, which is counting on India delivering its next 100 million subscribers, recently rolled out a monthly mobile-only plan in India for ₹199—less than half the charge for its cheapest standard plan at ₹499. It also plans to launch 22 original movies and 11 series in India by 2020. Netflix’s emphasis on India and mobile-only users is understandable. A report by FICCI-EY says, “Indians spend 30% of their phone time and over 70% of their mobile data on entertainment.” The KPMG-Eros Now report adds that nearly 87% of daily online video content is viewed on mobile phones in India where, on an average, 70 minutes a day are spent per person on video and OTT streaming platforms.

Mobile video is the hot bandwagon to hop on to, affirms Taurani. Consider that even e-commerce players like Flipkart and Zomato are dabbling in original content. “TV penetration is already at [around] 68% in India today and growth in the number of households is merely 3% every year. TV penetration cannot be stretched beyond 80%-85% given the limited number of households. So incremental growth has to come from digital. Which is why [digital] advertising growth is at 35%-40% versus TV at 12%-13%. Advertising industry is the mirror of viewership patterns of the industry,” says Taurani.

The rush to the living room television may no longer be as frenzied as it was back in the day but, says Airtel’s Taldar, DTH still occupies prime real estate in most Indian homes. “It is right in the centre of living rooms and, tomorrow, this set-top box will act as a gateway to a smart home and be able to deliver connected home solutions,” he says. “This, by no means, is the death of DTH. As long as consumers want both linear and OTT content, DTH will remain relevant.”

(This story was originally published in the December 2019 issue of the magazine.)