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With the launch of monthly subscription packs by four national Multi System Operators last weekend, Direct to Home (DTH) players believe they finally have the much needed level playing field with cable services.
Most of the basic packs offered by digital cable operators, which include popular channels, are priced similar to DTH packs after taxes, while some high-end packs may work out a tad cheaper than DTH.
This may not be a deterrent for the industry, as players believe a price war between DTH and digital cable is unlikely because of high content costs and taxes which include service and entertainment tax.
Vikram Mehra, Chief Marketing Officer, Tata Sky, said, “With digitisation coming in, the unfair pricing advantage arising out of structural anomalies such as under-declaration will go away, thus putting all-pay TV operators on level playing ground. With pricing becoming similar, the brand that provides the greatest customer experience will win.”
DTH industry has been suffering from losses due to high acquisition costs. This is because they offer the hardware and monthly packages at a subsidy to the consumers. Digital cable’s customer acquisition cost is estimated to be less than DTH. However, as MSOs share revenues with local cable operators besides paying taxes and content cost in the transparent digital cable scenario, subsidising their offering to consumers is going to be a big challenge. For instance, Mumbai has entertainment tax as high as Rs 45.
Salil Kapoor, COO, Dish TV, said, “With structured packages being offered from digital cable players, now one can look at increase in average revenue per user.
DTH has been attracting traction from consumers even after competing with cheaper analogue cable prices. Even if some packages work out to be cheaper than DTH, we believe we will continue to gain higher number of subscribers.”
While some MSOs say their pricing is 10-15 per cent cheaper, others believe digital cable will be coming out with more aggressive pricing in the future.
“Digital cable pricing, especially in a city like Mumbai, is not yet very aggressive, but in the future we might see more aggressive pricing from digital cable,” said Jagjit Singh Kohli, MD, Digicable.
MSOs also say they will be coming out with several other packages, especially focusing on a la carte , offering consumers the choice to pay for what they want.
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