Is OTT content cannibalizing DTH ?

When the cable television arrived in India the local ‘cable wallas’—the local cable guy—was no less than a king in the locality.

Then came the DTH (Direct To Home). In spite of being an old technology, it did not pick up in India, with the exception of Dish TV. Dish TV had been operating in areas where cable TV was not feasible to deliver and was never a large scale player during its early days.

Sometime around 2010, DTH started to acquire the spot in India. The end of the tussle between Zee and Star regarding carriage fee opened the floodgates for mass adoption of DTH in India. There were high-profile DTH launches by Tata Sky, Reliance’s Big TV, Sun DTH, and Videocon D2H, and that pushed DTH to the next level.

DTH took the lead

DTH operators stole the thunder by providing set top boxes (STBs) that could help in classifying channels according to genres. Users would know which show is running currently, what show would come next, set reminders, change languages, get monthly bill statements and a lot more. DTH operators clearly had a technological lead when they made their debut and some like Tata Sky had coupled that technological lead with above average customer care to make MSOs look even worse.

Ever since 2010, DTH operators have been growing at an upward trajectory in terms of customers with the top three DTH operators in the country easily having 10 million plus subscribers. However, this rosy period is coming to an end soon because of numerous factors.

Cost blues

As time has passed, Indian DTH operators have added more HD channels but HD offering comes at the cost of leasing more transponders either on the same satellite or from the different ones. With more transponders being leased, costs go up and this cost has been passed onto consumers in the form of high base tariffs. The remarkable increase in the tariffs of almost all DTH operators has not gone down to well with the consumers.

Arrival of 4K content

With the 4K content becoming readily available this cost is bound to go even higher. Currently, if a transponder is able to handle just 4-5 HD channels, then in the future it might be able to handle just a single 4K/UHD channel. Given the rise in the appetite for high-quality video streams, the demand for 4K videos will plummet.

Currently, there is no proper full-time 4K channel being provided by any DTH provider in India, but the amount of 4K content available on Netflix and Youtube has been spiking every year.

It would be economically unviable for DTH operators if were they to provide a lot of the current HD channels at 4K resolution considering the sheer number of transponders that would have to get leased.

DTH Vs IPTV

While the relay of DTH is limited by the capacity, that is not the case with IPTV or TV delivered over the Internet. Besides, the price for both fixed and wireless broadband has been decreasing constantly year after year.

There is almost negligible cost to deliver content over the Internet or at least bandwidth stops being an issue.

Delivering even a hundred 4K channels over an IP network is no big deal than by doing it using a satellite.

Simply put, as the resolution of the video content keeps increasing, the current cost structure of DTH operators would not be being viable in the long term.

Seismic shift in internet usage

While a Rs 300-350 plan initially used to provide just 1 GB of mobile internet per month, the same amount now provides people with 1 GB of mobile internet per day.

Reliance Jio also has big plans for offering fixed broadband. Some users in Pune & Mumbai are already beta testing Jio’s gigabit fiber plans.  Jio’s next big target in India is to launch the wired broadband.

DTH in the age of OTT apps

Over the top (OTT) apps have become increasingly popular in India – witness the rise of Netflix, Hotstar, Sony LIV and now Amazon Prime Video.

The companies behind these apps have signaled their intention to invest massively in them.

Amazon’s video streaming service has committed Rs 500 crore to creating original content in India. It has roped in country’s most high-profile production houses and filmmakers Farhan Akhtar and Anurag Kashyap.

Apart from Amazon, Hotstar has made a deal to license content from Disney. It is true that the amount of content available on various OTT apps is becoming steadily compelling.

Also, using these apps is not an expensive proposition at all. While Amazon Prime Video is available for free with a Prime subscription which costs a just Rs 500/year, the DTH operators are charging more than that per month. Similarly, HotStar’s premium membership costs just Rs 200/month.

The OTT operators are upping the ante and investing in original content that appeal to youth. The DTH operators are doing no such thing.

The DTH operators, are only licensing content, content which anyone else can license as well and deliver over an alternate medium.

If DTH operators do not want to invest in their own original content, they must at least provide a way for users to be able to access various OTT services from their set top boxes.

No such option has been made available. DTH operators are pouring money into VAS which doesn’t add any value in this age where so many cheaper apps perform much better than their VAS offerings.