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Tag: Star Cricket

  • ‘Pricing and creation of bouquets is our big differentiator’ Tony D’silva – Sun Direct COO

    ‘Pricing and creation of bouquets is our big differentiator’ Tony D’silva – Sun Direct COO

    Kalanithi Maran is building his DTH empire on one key proposition: pricing. Mopping up two million subscribers in his home turf, Maran expects to taste success in the northern pockets of the country with the very same recipe.

    Armed recently with Hindi content and sports channels, Sun Direct has launched in Mumbai and will be quickly moving to other markets as a pan India direct-to-home service. The target: six million subscribers by FY’10.

    Sun Direct plans to invest Rs 35 billion in the venture over two years, out of which Rs 20 billion will have been consumed by the end of this fiscal. A large chunk of this will be towards providing set-top boxes (STBs) free.

    Malaysia-based Astro has taken a 20 per cent stake in the company for Rs 5.90 billion. Sun Direct is a zero-debt company and there are no plans to raise further money through dilution of equity.

    Sun Direct’s ARPU (average revenue per user) is the lowest among all the DTH operators, ranging between Rs 85-90. But the costs are tightly controlled and the company hopes to break even in six years.

    In an interview with Indiantelevision.com’s Sibabrata Das, Sun Direct COO Tony D’Silva speaks about the company’s ambitious growth plans.

    Excerpts:

    How much is Sun Direct investing in the DTH venture?
    We have an investment plan of Rs 35 billion over two years. We would have consumed Rs 20 billion by the end of this fiscal. We are pumping in the balance Rs 15 billion by FY’10.

    How much has Astro put in so far?
    Astro had made a commitment of putting in Rs 5.90 billion for a 20 per cent stake in Sun Direct. The full amount has already come in. The promoters have invested the rest of the amount. We are a zero debt company.

    Is there a plan to raise further money through equity?
    We have no such plan. We are considering whether it would make sense for us to raise debt and sit in excess liquidity at a time when the money market is tight. No decision has been taken in this regard. The promoters are ready to pump in whatever it takes to grow the business.

    Since Sun Direct is offering STBs free, wouldn’t the company have to absorb huge losses?
    The loss for this fiscal would be in the region of Rs 4.50 billion. This is very much a part of our business plan. For anybody who wants to build scale, the only way forward is to acquire customers with high subsidy offers. We have already mopped up two million subscribers and are looking at ending FY’09 with a base of three million. High volumes will help us reach break even as our costs are not as high as the others.

    Even when Sun Direct’s ARPU is the lowest among all the DTH operators?
    We have grown in the southern region and our current ARPUs are at Rs 85-90. We don’t see them going up significantly even after our launch in Mumbai and the rest of India. In the volumes game, the margins will improve once you reach a particular threshhold of numbers. Our infrastructure cost is also less than the other DTH operators. We will break even in six years.
    ‘Astro has put in Rs 5.90 billion. We are a zero debt company and expect to break even in six years‘

    Is your content cost also lower than many of the other DTH operators?
    Our content cost is 45-50 per cent, one of the lowest in the industry. We have not done MG (minimum guarantee) deals with broadcasters. Our main strategy is a la carte pricing.

    What is your customer acquisition cost?
    When we made our initial purchases, the STBs were costing us $55. But the economic meltdown is driving down the prices and our STBs currently cost $45.

    The advertising budget for this fiscal is Rs 1.5 billion. We aim to spend a similar amount in the next fiscal unless the market dynamics changes drastically.

    Our customer acquisition cost is Rs 4500. But with our pricing strategy, we expect to garner six million subscribers by FY’10.

    The pricing strategy can attract wrong customers. Isn’t it a dangerous model to have if your churn rate is high while the customer acquisition cost is steep?
    We have a five per cent churn rate. We realise that it is important to have a lower churn.

    What is the strategy Sun Direct has adopted to repeat its success model outside its home turf?
    While 99 per cent of our current two million subscriber base comes from the south, we have an aggressive pricing policy which will help us garner subscribers from the other pockets of the country. Our regional package, “My Pack,” will create hype in the market and drive our growth everywhere. Our bouquet of packages are value for money as we have custom designed packages for every state and region. We spent considerable amount of time since our launch last December.

    We have also introduced a Hindi package. The ‘Shine Pack’ is available at Rs 499 and Rs 999 for five and 10 months respectively.

    We have the highest number of add-on packages, ranging from Rs 6 to Rs 195. And the sports channels are available on a la carte rates.

    Doesn’t it make sense to offer sports channels in packages?
    The rates are too high for us to offer the sports channels in basic tiers or in bundles. We recently added the three ESPN Star Sports channels into our offerings. They are available on a la carte rates – ESPN and Star Sports are priced at Rs 38 each per month while Star Cricket costs Rs 32. Ten Sports is priced at Rs 20 while Zee Sports costs Rs 15. We are in negotiations with Neo.

    Why was your launch in Mumbai delayed?
    Adding Hindi and sports channels in the bouquet took time and the launch in Mumbai was delayed by a shortage of supply in STBs. There has been heavy snowfall in China and Beijing Olympics also delayed the supply of boxes. So during the festival season of Diwali, we did not have STBs to sell. Now the supply is comfortable and we are in a position to launch in other parts of the country.

    Have you added more STB manufacturers into your list of vendors?
    Our STB suppliers are China-based Coship and Korean firm Homecast. We have just added Samsung into our list.
    Have you launched high-end STBs?
    We have, but only in the southern market. They are priced at Rs 10,000 and are made by Homecast. Only a couple of hundreds have moved and we are just testing the waters.
    Are you lining up premium content?
    We feel the market is too early for premium and interactive content. Our first task is to be successful as a pan India operator. The creation of bouquets and pricing has to be a big differrentiator.
    Some DTH service providers are advertising their Hindi movie offerings. Is Sun Direct going to create such content to grab viewers outside the south?
    We don’t have any such plan at this stage. We are examining whether we should do that or go for HD. We have space for 5 HD channels. This will be for the top-end of the market and give us higher ARPUs.
    Has Sun Direct approached Isro for more Ku-band transponders?
    We have asked Isro for two more transponders. We offer 200 channels including 23 radio channels and video-on-demand. We are fortunate that we are co-located on the same satellite used by DD Direct Plus and so can get their channels without consuming our own bandwidth.
  • ‘We have enough high quality relevant content to provide for each of the three channels’ : RC Venkateishi- ESPN Software India managing director

    ‘We have enough high quality relevant content to provide for each of the three channels’ : RC Venkateishi- ESPN Software India managing director

    Just when everyone was thinking that sports broadcasters might look to “de-risk” the cricket story, ESPN Star Sports has announced the launch of a dedicated cricket channel for Indian audiences. The new channel, christened Star Cricket, will commence transmission in June.

     

    Star Cricket will be making its bow with a big bang property to showcase because its launch coincides with the India tour of England that involves four Tests and seven One Day Internationals.

     

    Indiantelevision.com caught up with ESPN Software India managing director RC Venkateish in an attempt to get a feel of what was guiding this decision.

     

    Excerpts:

    Is this the right time to launch another cricket centric sports channel, particularly considering the disillusionment of the general public with the game in the country?
    Suffice to say that there is still no challenge to cricket as the single sport which has pole position in the Indian market. And I don’t see that changing anytime in the near future. So, from the perspective of timing, we really don’t think that is an issue.

     

    What is more important is the longer term picture and going forward we continue to believe that cricket will continue to hold its own and in fact strengthen as there is a lot of new talent coming in.

    Nobody’s is arguing that India will not continue to remain cricket-centric. But the fact of the matter is that for something like this to work, it has to be underpinned by high levels of interest in the domestic game as well, which is not the case in India. In fact, this is a problem that Neo Sports seems to be confronting as well.
    Which is a pity actually. In fact, if the local tournaments are properly marketed and properly packaged for the viewers, have the potential. We unfortunately don’t have the rights for that.

    Exactly, and isn’t that what Nimbus is hoping to leverage on Neo Sports. And you don’t have local Indian cricket to showcase, so what is the USP of your channel?
    What we will be showcasing in fact, apart from the international matches, is county cricket in England and domestic cricket in Australia, which also feature some of the best players in the world, including a lot of Indian players. There will also be a substantial effort to market that.

     

    In many ways we will be doing a parallel to things like English Premier League. Where it was four or five years ago to where it is today, it is really a result of the investments that we have done in promoting that property and making it interesting for the viewer.

     

    If you just pick up something and put it on the channel, it is not going to work. That is the job of marketing to popularize a particular sport. It has to be exploited and executed properly. Even the domestic Indian tournament, it needs to be put across properly to the viewer. It is not something that will happen automatically.

    There are two strands to the communication that you sent out on your upcoming channel. One is that you will showcase live India and non India cricket. You will also showcase feature programming, including reality reality shows?
    Reality shows are like we had recently Harsha ki Khoj Dream Job. That genre has lot of space. It has a lot of opportunities for us to create programming around that. We will be developing more such shows and putting them across to the viewer.

    Fair enough but the point is that now you have three platforms through which you have to transmute content. Is there enough content to go around?
    On the content side, over the last couple of years, we strengthened our cache, not just in cricket but in all other sports. We just recently renewed the English Premier League. We have the Spanish League, we have Euro 2008. Those are the big soccer properties. In tennis, we added the French Open so we now have it along with Wimbledon and the Australian. In motor sports we have Formula 1 and A1. In golf we have all the major properties.

     

    So, if you look at each and every sport and the key properties, they are all residing on our channel. Along with this, we have other smaller content also which has come on the network.

     

    As for cricket, for the next 14-16 months I have India’s tour of England, the Twenty20 World Cup, India’s tour of Australia, the Asia Cup and the Champion’s Trophy. That is five major cricketing events.

     

    So I don’t believe that we are in anyway falling short of providing high quality relevant content in each of these three channels.

    What about distribution? Right now we are in a very uncertain distribution market, both on analog as well as on digital cable, with Cas only in the beginnings of being rolled out. And in such a time you are launching a 3rd channel?
    I agree with you that there are a lot of people having trouble finding distribution. But ultimately, your bottom line is going to be content. I think we will be in a position to demonstrate it through cable and to the viewer that the content we have to showcase on the channel are of a quality that must be carried.

    Let us accept that you have great content, but today the reality of placement fees cannot be wished away. And it means that slots are booked on tunable bandwidths for one year, two years…
    I think that applies more to other genres. Unless people see your channel how will they get hooked on to it? They will not demand it. For my cricket channel, I don’t have to create a demand.

    There is the recent example of Neo Sports, which had great content but still faced distribution problems?
    The difference is that Neo Sports did not have its own distribution team.

    Well they had Star distributing them, which is as good as it can get?
    I don’t know what Neo Sports needed to do but they didn’t do, or what support they got, I don’t really want to comment on that. But as far as we’re concerned, we have the strongest distribution as well as distribution team in India, and I am completely confident that we will not have any issues with our channel.
    ‘We have been delivering higher and higher reach and we haven’t seen the proper monies for that as yet‘

    That still doesn’t explain how you’re going to find place in a tunable bandwidth if all the slots are already locked in.
    In case there is a cricket match happening, he (the cable operator has to put it in the prime band. I can’t see a situation where the matches will not be shown.

    There is the option of DD, where the matches are being shown because of must carry.
    Test matches are not going to be shown on DD. I agree with you that channels tend to go up and down, especially the ones who don’t pay money to the cable operator. That is a fact.

     

    Even then, we have always managed to be there in prime band even when we didn’t have cricket running. And you must understand that in regards to sports channels there has been a certain amount of consolidation. So the other channels which don’t have relevant content tend to be pushed onto the hyper band.

     

    There will be a little bit of juggling and we will have to manage that. But as a company policy, we will certainly not pay any carriage fee or any placement fee. We are a pay channel and we will get our price.

    What rates have you fixed for the new channel?
    We haven’t announced the final rate but it should be in the region of around Rs 28 to RS 30.

    Let’s talk about the ICC cricket rights. I take you back to a comment you’d made earlier to Indiantelevision.com that the crazy escalation in rights prices will start cooling down a bit. And yet you went and plonked $ 1.1 billion for those rights?
    If you do a bit of math, you’ll see that whatever I said earlier has actually happened. Let’s benchmark it with some of the other rights. The BCCI rights, which the previous version was for $ 50 million for five years, went for $ 612 million for four years. So that’s basically an escalation of 1,400 per cent.

     

    Now take the ICC, the last ICC went for $ 550 million. So that’s basically a 100 per cent increase. And the last ICC did not have events like the Twenty20 World Cup, which have been added on this property.

     

    What we have paid over eight years, is basically a 9 per cent per annum escalation in rights fee, as opposed to some of the other properties, which in recent times have gone absolutely berserk. The BCCI, as well as the BCCI offshore cricket rights package sold to Zee for over $ 215 million ($ 219.15 million).

     

    Even if you look at things like the Sri Lanka board for $ 50 million, or the Bangladesh board, which went for $ 56 million after going for $ 6-7-8 million last time.

     

    So what we have paid for are not just the World Cups and Champions Trophies, but also what is going to develop into a real cracker of a property – the Twenty20 World Cup. Not once, but thrice.

    From an average per day cost perspective, and if we compare the three properties that went for big bucks, how does such a payout work?
    Zee paid $ 8.71 million, BCCI went for around $ 3-4 million per day and we are around the same ball park.

    There are also the cricket rights that are coming up over the next 12 months for many big territories over the next year and a half. You have already committed $ 1.1 billion for the ICC rights as well as all the other rights you’ve mopped up recently, so where do you stand on that?
    We are quite comfortable with the levels of investment we’ve made thus far and what we have identified as key acquisitions for the future.

     

    But having the ICC rights provides us a very strong backbone of cricket over the next eight years. Whatever else we add on would be accretive to what we already have so it won’t be necessary to go out and buy everything under the sun.

    What of the territories that ESS currently own – England, Australia, New Zealand, South Africa? Will you be making aggressive bids to retain them?
    We haven’t formalised how we’re going to go about it yet.

    I again come back to the disaster that was the World Cup. Everyone was expecting 2007 to be cricket’s year as far as advertising is concerned due to the sheer volumes of A list properties that are coming up throughout the year. Now will all the calculations have to be reworked?
    On this I have a different take. I think the advertisers have had it pretty good so far. I have an argument we need to push more forcefully and that is something as a broadcasting community we haven’t done enough of. The fact of the matter is all the rates that advertisers have been paying us have been on the basis of CPRP at a time when overall reach has doubled.
    But this is an argument that Star’s Paritosh Joshi has raised, as too Zee’s Joy Chakraborty. Today we are faced with a situation where HLL has pulled out its advertising from Star. And the broadcasting community does not seem to have any unity on this issue so what are we talking here?
    There is unity developing on this issue and you will see a more forceful exposition of the point in the days to come. Certainly at IBF we are all seized of it in terms of a consolidation of our position.

    We have been delivering higher and higher reach and we haven’t seen the proper monies for that as yet.
    Coming back to the development of local sport, you’ve earlier stated that Sports federations need to get their act together. One of the biggest culprits in that sense is the IHF run by KPS Gill with whom you’re a partner. One could say that it is because of the mess the IHF is in that the PHL is not taking off. So doesn’t it make sense to encourage the IHF to get itself sorted out?
    Our experience with the PHL has been very positive. There wasn’t anything in PHL that we needed to do and have not been able to do because of lack of support from IHF. Suffice to say that we are quite happy, both with the way the PHL has performed and with the kind of partnership we have with the IHF.

    But you yourself have said one reason why PHL is not taking of is because they are not performing well internationally. I think it is interlinked. If the federation was being run properly, the teams would be doing better internationally. A follows B, one could argue.
    How federations are run is not something I would like to comment on. We stand ready to help the federation in any way we can but it is not our brief to tell the associations how they are to be run. Because, quite frankly, this is something they need to work out among themselves.