Direct-to-Home (DTH) in India: Direct to Loss?



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Code :BSM0044

Year :
2009

Industry : Entertainment

Region : India

Teaching Note:Available

Structured Assignment :Available

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Abstract: This case study is written to raise an interesting debate on Even for a disruptive innovation to be successful, a minimum scale is required. The minimum scale is a function of value offered and value perceived at least in the beginning.

After cable TV entered India in the early 1990s, the face of entertainment changed drastically. In a short time, Cable TV made rapid penetration in rural as well as urban India. However, the inherent nature of the industry, that operated like a cartel dominated by the Local Cable Operators (LCOs) created many problems operationally and otherwise. For the parties involved in the industry (broadcaster and cable networks), the major problem was the extent to which LCOs understated the subscription fees. Subscribers too were upset as the cheap and unbranded equipments used by LCOs resulted in poor program quality and frequent disturbances in signal transmission. The Conditional Access System (CAS) introduced in 2003, also failed to check the problem as many subscribers were unwilling to switch from the cheap cable alternative. In 2003, another option - Direct-to-Home (DTH) emerged to give a tough competition to the LCOs. In a short time, many DTH providers - Dish TV, Tata Sky and Sun direct - mushroomed in the country and succeeded in making a humble beginning through aggressive marketing. As of 2007, Dish TV had 1.9 million subscribers, while Tata sky had 1.5 million subscribers. However, these numbers were not sufficient to compensate for the losses that they were making. Despite such a scenario, new players - Reliance and Bharti Airtel are planning to venture in DTH business and capture a major pie of the market.

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Pedagogical Objectives:
The case has been structured to analyse and understand:

  • The reasons for the growth of Cable TV
  • Why a substitute for Cable TV was needed
  • The advantages of DTH over Cable TV
  • Why the DTH companies are incurring losses
  • The future potential of the DTH Industry
  • Whether DTH companies can pick up scale and be profitable in the future.

    Keywords : Competitive Strategy, Strategy, Competition, Disruptive Innovation, Economies of Scale, DTH, Tata Sky, Relaince, Airtel, Dish TV, India, Entertainment, Marketing

    Contents :
    Cable TV in India
    DTH in India
    The New Indian Consumer


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