ITV

Tag: DTH

  • FICCI’s report on the entertainment industry projects optimistic figures

    FICCI’s report on the entertainment industry projects optimistic figures

    The Federation of Indian Chambers of Commerce and Industry (FICCI) has compiled a report “The Indian Entertainment Industry: Strategy & Vision” with the assistence of Arthur Anderson. It was officially released at the “International Conference on the Business of Entertainment: India-Opportunities in the 21st Century” held in Mumbai on 30 March, 2000.

    The report presents very optimistic figures pertaining to the entertainment industry and makes some recommendations to the government to facilitate the growth of the industry. It expects the turnover of the entertainment industry to touch Rs 600 billion. The report says that the future of television broadcasting belongs to the satellite channels. The market of regional channels is huge with more and more players like Zee and Broadcast Worldwide making a foray into the regional channel market. Even the niche channels like Nickelodeon, Maharishi, Cartoon network, Fashion TV, ESPN, Discovery, Channel V etc have a tremendous potential and their huge success indicates the fragmentation of audience. Regarding the Direct-To-Home (DTH) mode of distribution of television channels, the report says that it too has a tremendous potential and if the segment is opened up, there would be 1 million DTH homes in India by 2002.

    FICCI recommends that the government should lift the ban on the use of KU Band reception equipments as it will be incongruent in a scenario of freely viewable television channels over the Internet. It also suggests that the government should privatise the terrestrial network along with introduction of DTH which will enable the smaller cities to receive satellite channels as the cable operators ignore that segment. Another important point highlighted is the ammendment in the conditions for the presumptive rate of taxation of foreign companies which stands at the rate of 10% of deemed profits. A legislation clarifying the taxation of foreign telecasting companies is demanded.

    Development of about two to three earth stations in India within the next six to seven years would generate revenues between $12 million to $23 million as Indian as well as foreign channels would consider uplinking from India. The Government can generate revenues between $12 million to $23 million by leasing a part of its terrestrial network. The level of employment can double from the existing 2,50,000 people in the next three to five years. The growth in the broadcasting industry will simulate a similar trend in industries such as the television software industry, film industry, the music industry and even the equipment and hardware manufacturing industry which directly depend on the broadcasting sector.

    In the cable television sector, FICCI has requested the government to rectify the hinderences in the growth of the cable television market due to restrictions on foreign equity participation and the short-sightedness of the Cable Television (Networks) Act, 1995 and the archaic Indian Telegraphs Act, 1885. The growth of the cable television industry would help the government in generating more revenues in the form of taxes. The penetration of Internet to the common man can also increase with the growth of the cable television industry. Employment in this sector stands at 2,50,000 people. Additional 4,00,000 peaple can be employed in the next three to five years.

    On the television software side, FICCI has requested the government to nominate a representative who would be an active member and assist in industry issues like hardware insurance, copyright protection, etc. The government should also facilitate the growth of training institutions focussing on software development that would help the students learn modern techniques on up-to-date equipment and be aware of the dynamic trends in the entertainment industry. The television software and entertainment companies should also benefit similarly from the 10% listing criterion currently enjoyed by infotech companies as it would help in giving adequate ESOPs. Another benefit of utilising 100% proceedings of funds raised through ADR/GDR issues to acquire overseas companies is enjoyed only by IT industries and this benefit should also be made available to other companies.

    Owing to the increase in revenues in this segment to $2,093 million by 2005, the government’s tax collections will rise to $318 million. If proper and adequate incentives are provided by the government, the export earnings from this segment will rise to $233 million within the next two years, from the current $81 million. The industry expects this figure to touch $1.356 billion by the year 2005. Direct and indirect employment will rise from the current level of 1 million to 2 million by the year 2005.

  • CAS Rollout: Three Months a More Comfortable Time Frame

    CAS Rollout: Three Months a More Comfortable Time Frame

    One after another, the complaints are gathering. Not enough set-top boxes (STBs); insufficient time to effectively and smoothly roll out conditional access system (CAS); and no marketing at all to generate a consumer pull.

    The pay TV broadcasters are at it again. Back in 2004, the government decided to withdraw CAS based on the backlash faced from broadcasters and consumers. Will history get repeated this time around?

    Looks unlikely. If the government decides to move the Supreme Court, it can at best get the implementation of CAS delayed by a few months. But the industry today is more or less settled to the fact that CAS is here to stay, sooner than later.

    A stockpile of STBs, imported in 2003 during the time government had mandated CAS, is waiting to enter into consumer homes. Unlike in the past, MSOs also have the support of their franchisee operators to push digital boxes
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    Valid, though, is the question thrown at the multi-system operators (MSOs): Can they implement CAS in the next four weeks?

    The MSOs say they can. There are several factors working for them this time. They have already deployed digital cable TV in small patches. A stockpile of STBs, imported in 2003 during the time government had mandated CAS, is waiting to enter into consumer homes and can by and large take care of at least the first phase of implementation (zone one) in the three metros.

    The MSOs also have the support of their franchisee operators to push forward the digital boxes. Unlike in the past, last mile operators have swung in favour of CAS for fear of losing subscribers to the direct-to-home (DTH) service providers. Concern over thrust of second and third bouquets by broadcasters has also brought them into the side of the MSOs in pushing for CAS.

    Still, a month’s time seems an impossible deadline to meet. MSOs will have to work out commercial agreements with broadcasters. In all fairness, this will take time as broadcasters have to negotiate and chalk out long term deals in an addressable system. Several considerations will have to be weighed in before arriving at a retail price structure of their TV channels. In the new era, discounts on volumes will also become an important part of the matrix.

    MSOs will have to work out commercial agreements with broadcasters. In all fairness, this will take time as broadcasters have to negotiate and chalk out long term deals in an addressable system
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    Though operators are in favour of CAS, there are several issues on the ground that have to still be sorted out. Flowing down the chain margins will have to be fixed for distributors and last mile operators. Commissions on sale and rental of STBs will also have to be worked out. MSOs, however, are confident that such agreements can be done in quick time. The problem is that everything can be “set into motion” once the commercial terms are settled with the broadcasters.

    A lot of ground has to be covered including launching promotional campaigns. Just looking at the logistics, one realises how Herculean the task is. A more comfortable time zone would be three months. But the ball game can change if support is extended by everybody including the government and a tough regulator to cut the errant stakeholders into size. Support from the broadcasters will also help in making CAS possible in quick time.

  • Murdoch on India visit this weekend?

    Murdoch on India visit this weekend?

    Is global media baron Rupert Murdoch coming to town? If reports are to be believed a visit is being planned for the News Corp chief to visit Bangalore, Delhi and Mumbai, (if possible) over this weekend. Murdoch last visited India, if reports are to be believed in a hush-hush meeting with the then Congress (I) strongman, Sharad Pawar in 1996 at an army base in Pune.

    His earlier visit to India was in 1993-94 which was much hyped up when he was seen with various politicians, dignitaries and businessmen. He was feted wherever he went. Since 1996 he has been unable to fly into India because of a flimsy obscenity case that was pending against him for the airing of a bit of skin on Star Movies. The case apparently took an ugly turn when summons were sent to his residences/offices in Australia and the US, and an arrest warrant issued against him. The situation was so bad that he was not permitted to enter the country and declared a criminal because he did not attend court when he was summoned. He would have been arrested had he landed in the country. Since then, however, the case has been set aside and Murdoch can visit India.

    During his current visit – if it takes place over the weekend – he is expected to meet the Prime Minister, information technology minister, Pramod Mahajan. His focus is expected to be on the information technology sector, in which he has suddenly begun to see lots of promise. He is also expected to give a direction to Star TV India CEO Peter Mukerjea as to how much he is willing to commit to India and in which areas. And obviously, he is going to be tomtomming Star TV’s forays into the information technology and convergence sector.

    Currently, hectic preparations are on within Star TV and his once Indian partner in Star TV’s Indian DTH project Pramod Mittal who is trying to smoothen his visit out here. Obviously, a meeting with his old mate Zee Telefilms chairman Subhash Chandra is planned. For sure, he is going to thank him, Chandra has helped Murdoch make more money on his investment in Zee Telefilms than he has made through his entire Star TV operations in the past six years, thanks to an appreciation in Zee’s share price over the past six months.

    Meanwhile, the media can expect to have a rollicking time. Murdoch is eminently quotable as we have known him to be.

  • CAS Rollout Could Provide Huge Push for DTH Operators as Well

    In business as in life, timing is everything. And despite all the expected noises from the government (state elections are due in Kolkata after all) and the broadcasters (re-dusting the same arguments against CAS that they offered in 2003), one lot who might not be so peeved by the developments are the DTH operators.

     

    IF, the CAS Dwitya rollout saga doesn’t get derailed again by the usual suspects, we have quite an interesting proposition that is on offer for the consumer. Tata Sky is quietly preparing its launch schedule and would more than likely advance its timelines if there is a definite direction from the powers that be that CAS is really going to take off.

     

    In the meantime Dish TV, at present the only existing private sector DTH service provider, would be expected to sort out programming contracts with SET Discovery before that and any and all contentious issues with the Star Network at least by the time Tata Sky launches.

     

    One could ask why is the CAS rollout timeline critical here? After all DTH retains the advantage of having a national footprint while CAS will be limited to the three metros in the first phase.

     

    There is of course Chennai, which is already under the CAS regime but that should be kept out of this debate. Why? Because despite SET India CEO Kunal Dasgupta’s comment on “the CAS experience in Chennai not having been a happy one” the fact remains that the biggest reason that set top uptake did not happen was because the channel that is most critical in the Tamil viewer’s scheme of things – Sun TV (and others of its ilk) – is available in the FTA package so there was and still is no compelling enough reason to invest in one.

     

    Coming back to the main discussion, crucial to our premise is the staggered rollout of the addressable system of transmission of pay channels that had been notified in 2003.

     

    As per the notification, each of the three metro cities (Delhi, Mumbai, and Kolkata) would be divided into four zones. Within a one-month time frame, in Zone A in each metro, pay channels can be watched only with the use of STBs. From the second month onwards, CAS will take effect in Zone B in each metro. And so it follows in Zone C from the third month onwards and Zone D from the fourth month onwards.

     

    For the government, there are two choices — implement the court order or appeal. For the purposes of this argument we are going with the implement premise.

     

    The court instituted deadline for CAS rollout is 10 April. Therefore, the government after due consideration would be expected issue its fresh updated notification on 10 April that within a month all pay channels in Zone A would have to be delivered through a set top i.e deadline for Zone A to be “set top compliant” 10 May. Taking that timeline forward, Zone B’s deadline would be 10 may, Zone C 10 June and Zone D 10 July.

     

    IF Tata Sky can launch by 10 April then it, along with Dish TV will be able to go to the consumer with their individual offerings as possible alternatives to cable delivered addressability. What is critical here is that the consumer is COMPELLED to take a set top box if he wants to get his daily fix of Star Plus or HBO (whatever the case may be). Since the set top is a given the only issue is which service he / she selects.

     

    It will all then come down to which of the three alternatives is the best as per consumer understanding. Who offers the best deal, who is perceived as being capable of delivering the best in terms of technological quality and viewer experience at the most competitive cost?

     

    We believe that of critical importance here will also be the perceptions and prejudices that are attached to the service providers. These issues could well guide choices if all other parameters remain basically the same.

     

    What we could see is more “sophisticated” Zone A consumers opting for the DTH option while the skew could well be towards the more familiar “cablewallahs” in Zone D for example. Whichever way the skew swings, STBs will move. That ultimately is what all the players in the digital delivery game want.

     

    A moot point though is this. IF the CAS rollout does go forward as per the Delhi High Court ordered schedule and IF there is a huge uptake of set top boxes (digital cable or DTH), one big loser could potentially be Anil Ambani’s Reliance, which is neither ready with its IPTV nor its DTH offering. Once there are a large number of boxes out in the market, to get consumers to make the switch to something else would take twice the effort.

  • CAS Ruling: MSOs now have the ammo to take on DTH

    CAS Ruling: MSOs now have the ammo to take on DTH

    It was one piece of news that cable TV networks were waiting to hear for long, too long in actual fact!

     

    Buffeted by potential competition from direct-to-home (DTH) operators, the timing of the Delhi High Court ruling that has ordered the government to enforce the rollout of conditional access system (CAS) in India within four weeks couldn’t have been more crucial. Tata Sky is preparing to launch in June and Dish TV, at present the only existing private sector DTH service provider, is expected to sort out programming contracts with Star India and SET Discovery by then.

     

    Cable TV can take DTH head on with its digital service. It has the firepower to do so, having built a rich battery of last mile operators (LMOs) who have serviced consumers over the years.

     

    Firstly, it can cobble together more channels than DTH can offer at the initial stage when the consumer is making the shift from analogue to digital. Already, some MSOs are making available a little under 150 TV channels. DTH operators, on the other hand, are limited by transponder space on satellite and can only ramp up under MPEG-4 compression technology.

     

    Second, cable TV can bundle broadband and, with preparation in future, telephony services.

     

    Third, it can develop interactive features with its fibre network.

     

    Fourth, it has manpower in place which can be quickly energised to push digital set-top boxes (STBs).

     

    Sure, MSOs and independent operators would have preferred the courts to have come up with the same verdict much earlier, after the government withdrew CAS in 2004. That would have given them a first mover advantage with a considerable time lag before DTH could kickstart operations.

     

    But there was one issue which had still to be sorted out for an effective rollout: LMOs felt insecure and did not back the rollout of digital cable. With competition from DTH looming large, they now have the support of their franchisee operators.

     

    But what if the verdict on CAS had come after Tata Sky’s launch and Dish TV’s content contracts had been stitched with Star and Sony? Cable TV operators would have been able to fight against DTH with two weapons in their armoury – analogue cable and voluntary digitalisation. On analogue cable, operators have the flexibility of dropping subscription fees drastically. With a price warrior in place through analogue service, digital cable could offer an alternate choice to consumers to combat DTH head on. On the flip side, the digital service would still remain unaddressable while DTH could provide consumers the choice of selecting channels and packages they want to pay for.

     

    Under CAS, cable operators do not have the flexibility of delivering pay channels on their analogue network. Consumers will have to select between DTH and digital cable for receiving these channels. They will, in other words, have to buy either a DTH or a cable TV set-top box.

     

    But delaying the direct knock-to-knock face-off between cable and DTH operators hardly serves any purpose. The business model for MSOs and independent operators can only get worse if no CAS is in place. Because the way out to stop DTH from invading into cable territory without a properly tiered and price-packaged digital service would have been possible only through rate drops. While LMOs would have been unaffected, the MSOs would have felt the pinch.

     

    Retooling business strategies and organising the sector is in the commercial interest of the cable operators. The hour has come to change the mindset and bring in quality and service-oriented practices. It will be meaningless to wish away competition from DTH and later IPTV providers.

     

    Several networks already have a stockpile of digital STBs. So far, they have been unable to place these boxes in consumer homes. Even Hathway Cable & Datacom, the more aggressive of the digital cable TV players, claims it has managed to distribute just 40,000 boxes. It would do better for operators to take a more positive view: that with CAS, digitalisation, either through cable or DTH or IPTV, would move faster.

     

    After all, the market is too big and diverse for any single player to cover it all.

     

    Ensuring a ramp up in supply of boxes, erecting a solid encryption system, and having a sound billing mechanism should be the focus areas. Also, it is crucial for operators to find more, better and premium content which can lure customers. They will also have to work out rental schemes and low up-front charges to subsidise the boxes in order to stay competitive with DTH.

     

    Another hard lesson to be learnt from this is that investments on old technologies won’t help. For those who have put their money on analogue STBs, the chances of surviving the battle look grim. Yes, there is a market for free-to-air analogue service. But no, not for analogue STBs as that will limit the channel offerings at a time when supply is growing rapidly.

     

    There will be competitive pressure for cable operators to upgrade their networks and services. Territorial monopolies will end and cable operators will also have to fight amongst themselves for retaining or acquiring subscribers.

     

    DTH, of course, retains one advantage. It has a national footprint while CAS is limited to the four metros in the first phase. This will give DTH economies of scale, but then it will still face the big hurdle of drawing in consumers to buy a box in the non-CAS areas.

     

    By bringing in CAS, the MSOs realise the entire business model changes in favour of them. Gaining control over the entire value chain across the network and having an addressable system will pump up valuation of cable companies and draw in global investors.

     

    The green signal on CAS couldn’t have come at a riper time. If there is any year which can drive digitalisation forward, this is it. In June-July, ESPN Star Sports will show live the football World Cup. The other key properties on the roster are ICC cricket Champions Trophy in September and the cricket World Cup early 2007 (both events on Sony).