"The Direct to Home (DTH) market in India has been growing steadily but continues to be a niche segment. Since its inception, DTH service has established its presence on a pan-India basis and is dominated by the northern and western regions. The growing middle-class and rising disposable income coupled with the rising number of television households over the years has assisted growth. Demand for enhanced viewing experience and various interactive services have been attracting investments in this market. The report begins with an introduction to DTH and its growth story. An overview of the DTH market has been given including figures for the market size, segmented pay television subscriber base and the distribution of DTH across television households. Major geographical regions have been marked. This section also highlights the revenue model adopted by players, the focus areas for players towards expanding revenues as well as the cost structure. The drivers and challenges explain the factors influencing growth of the industry including the growing middle-class and rising disposable income, increasing television penetration and sale of LCD monitors, price war and different package options which has been attracting consumers and the advantage over traditional cable operators. The key challenges identified encompass the acquisition of a share of the cable driven market and facing the new age IPTV, TRAI’s content guidelines, demand supply gap for transponders in a 7 player broadcast market and the cap on foreign investments. Key characteristics of the market has been highlighted covering technological innovations, shift from price war to offering exclusive value added services, combined retail of LCD and DTH connections and partnerships with movie distributors. The major government regulations such as taxation, custom and excise duty as well as tariff regulations have been mentioned. Competition section provides a summary of the competitive scenario including the segmented market share. It also includes profiles of the major players in the market. The section includes a brief company overview, various packages offered, business highlights and interactive services provided by each player."

1. DTH Market – India
December 2009

2. Executive Summary
Market is valued at INR XX bn in 20-- - -- and projected to reach INR YY bn in 20-- - --
Market Estimated subscriber base of U mn, expected to reach V mn in the next w years
Current overall share of DTH households among total TV households of India is pegged at a%
LE
Drivers: Challenges:
Growing middle-class and rising Getting a share of the cable driven market and
Drivers &
disposable income
MP
Increasing television penetration and sale
facing the new age IPTV
Trapped in TRAI’s content guidelines
A
Challenges of LCD monitors Demand supply gap for transponders in a 7
S
Price war and different package options
attracting consumers
Advantage over traditional cable
operators
player broadcast market
Cap on Foreign Investments
Technological Innovations
Trends Shift from price war to offering exclusive VAS
Combined retail of LCDs and DTH connections
Partnerships with movie distributors
Company 1, the first company to enter is the largest player, controlling ~t% market share
Competition Steep competition has led to a surge in advertising spend to improve penetration
Due to growing number of players in the market, Average Revenue Per User (APRU) will decline
owing to price war and discounts
DTH MARKET - INDIA.PPT 2

3. •Market Overview
•Drivers & Challenges
•Trends
•Regulations
•Competition
•Key Developments
DTH MARKET - INDIA.PPT 3

4. DTH industry in India has looked upbeat in recent years but
remains a niche segment
Overview Segmented Pay TV Subscriber Base
•Estimated market value of INR XX bn in 20--; Type 1
expected to reach INR YY bn at the end of 20-- Subscribers in mn Type 2
LE
100 Type 3
•In the Indian Pay-TV market, DTH penetration h3
g3 h2
is only a% (June 09), reaching U mn out of V 80 g2
f2 f3
P 60 d2 e2
mn paid subscribers
40
M
d1 e1 f1 g1 h1
•Current overall share of DTH households 20
at b%
SA
among total TV households of India is pegged
•c% of DTH subscribers reside in rural areas and
towns with a population under 1 mn and is
0
2006 2007 2008
Distribution across TV Households (HH)
2009e 2010e
largely dominated by free-to-air service HH (%age) Type 1
•The market has 6 private broadcasting Type 2
80
companies namely Company 1, Company 2, 60
Company 3, Company 4, Company 5 Free to Air
operator – Company 6 40
l1 m1 n1 o1 p1
New entrant: Company 5 in May 20-- 20
n2 o2 p2
0 l2 m2
2006 2007 2008 2009e 2010e
Source:
DTH MARKET - INDIA.PPT 4

5. Overall cost structure in the DTH Market and the
breakdown of the subscriber acquisition cost
Overview Subscriber Acquisition Cost
• Programming cost is the largest cost for a DTH
Parameter Cost (INR)
operator
LE
Determined as a proportion of subscription revenue that P1 C1
the operator collects from subscribers
P2 C2
by FY ’--
MP
• Growth in subscriber base is expected to lead to a fall
in advertising expenditure to a% of overall revenues P3
P4
C3
C4
SA
• Break-even point is estimated to be met in U-T years
Operators Cost Structure
P5
P6
P7
C5
C6
C7
P8 C8
h% Cost 1 P9 C9
Cost 2
P10 C10
b% Cost 3
g%
Cost 4
f%
Cost 5
e% Cost 6
d% SAC is borne by the DTH players affecting their
c% Cost 7
profit margins substantially
Source:
DTH MARKET - INDIA.PPT 5

6. Drivers and Challenges
Challenges
Getting a share of the cable driven
market and facing the new age IPTV
Drivers Trapped in TRAI’s content guidelines
The growing middle-class and rising Demand supply gap for transponders
disposable income in a 7 player broadcast market
Increasing television penetration and
sale of LCD monitors Cap on Foreign Investments
Price war and different package
options attracting consumers
Advantage over traditional cable
operators
DTH MARKET - INDIA.PPT 6

7. Key Trends
Partnerships with movie
Technological Innovations
distributors
Trends
Combined retail of LCDs and Shift from price war to
DTH connections offering exclusive VAS
DTH MARKET - INDIA.PPT 7

8. Competition in the DTH market has grown with 6 players on
a subscriber acquisition spree
Overview Market Share by Volumes
•Oligopolistic market structure
•Competition is high as market is saturated
LE
with 6 private players and 1 free-to-air Company 5
provider namely DD Direct e%
•Competition here like any infrastructure
industry is about scale and volume capture
MP Company 4
d%
a%
•Steep competition has led to a surge in
advertising spend to improve penetration
SA
•With greater number of players in the market,
Average Revenue Per User (APRU) will decline
Company 3
c%
Company 1
owing to price war and discounts
•Company 6 is planning to move to a paid b%
model increasing competition Company 2
Plans on offering 144 pay channels, 4 hi-definition
channels and 50 radio channels
•The scope for new entrants is limited as the
challenge posed by high cost of CPE and the
high costs entailed for leasing transponders
Source:
DTH MARKET - INDIA.PPT 8

9. Players in the Market (1/6)
Company Snapshot: Company 1
Corporate Information Packages Offered
Headquarters H1 Packages Cost (INR) Description
P1 C1 D1
Established Oct 20- -
P2 C2 D2
FY ’09: Revenue - INR - - mn; Loss – INR - -
Financials P3 C3 D3
mn
P4 C4 D4
Person 1 – Chairman P5 C5 D5
Key People
Person 2 – MD
Business Highlights Interactive Services Offered
• Offers largest number of channels with focus on strong • Service 1 – Watch movies any time on demand
regional content in linguistic zones
L
• It began providing up-front subsidy on set top boxes to
acquire subscribers
P E • Service 2 - Matrimonial & job search
• Service 3 - Planning tours on TV via Yatra.com
• Service 4 - Downloading mobile services
M
• Large sales and distribution network - A ‘Dish Shoppees’ to
provide demo’s to prospective users (Jun ‘- -) and wide reach • Service 5 - TV banking with ICICI Bank
to B towns and P dealers (Sep ‘- -)
Company L in Nov ’- -
SA
• Received a PE investment of INR T bn through GDR from
• Heavy capex investment has enabled the company to deliver a
high end audio-video quality
• Service 6 - Active worship
• Service 7 - Astro forecasts and predictions
• Service 8 - Interactive experience of sports/news
• Service 10 - Address regional language needs
Source:
DTH MARKET - INDIA.PPT 9

10. Thank you for the attention
The DTH Market - India report is a part of Research on India’s Media and Entertainment Series.
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