DTH industry’s uphill battle with policies, competition

India is one of the largest direct-to-home (DTH) television markets globally in terms of subscribers. Of the approximately 197 million television viewing homes, 69 million are DTH subscribers. The significant increase in DTH subscribers in the last five years can be attributed to the successful digitization by the government of India across the country. However, the DTH industry’s teething troubles are not over yet, as many of them have been posting losses.

Content fee and non-exclusivity

DTH operators are locked in a perpetual battle with broadcasters and content providers on content fees. Broadcasters argue that their subscription component is approximately 30% of their total revenue, while the remaining 70% is accounted for by advertising. DTH players argue that because of the high consumer acquisition cost, the average revenue per user (ARPU), at ₹200-250 (US$2.9-3.6) per month for most operators, is perhaps the lowest in the world.

The sector regulator, the Telecom Regulatory Authority of India (TRAI), has regulated prices of subscription-based television channels at the retail level since 2004. Despite the increase in DTH subscribers and the increase in their toplines, it has not resulted in an improvement in their bottom-lines due to the steep increase in operating and customer acquisition costs. The revised tariff regulations issued by TRAI recently has aggravated the concerns of the sector. Furthermore, the TRAI regulations prevent DTH platforms from broadcasting any exclusive content, a deviation from international practices, thereby restricting them from offering any unique services.

Cyril Amarchand Mangaldas is India’s largest full-service law firm. Bharat Vasani is a partner at the firm.

Cyril Amarchand Mangaldas

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