Wednesday, June 23, 2010

Dish sees hi-def boosters in Commonwealth Games, soccer

The management of the leading direct-to-home (DTH) broadcasting service provider, Dish TV, expects the sports calendar of the year, especially the Fifa World Cup and Commonwealth Games, to help drive its high-definition (HD) service, according to a report by Citi Investment Research & Analysis, a division of the Citigroup Global Markets.

Dish TV recently announced the launch of its HD service through tie-ups with broadcasters such as ESPN/Star Sports and Zee.

In an analyst call after its fourth quarter results, the Dish TV management said the HD market in India was in its infancy with only 2,000 subscribers, out of a total size of 20 million DTH users.

For HD to succeed, it is first important that the entire value chain is in place - broadcasters should be able to offer content using the technology, the consumers should also have HD-ready TV sets and ready cable/satellite distribution support, the report said citing the company management.

Currently, only 5 to 6 channels have content in HD format and there are only 2.25 million HD-enabled TV sets in the market.

According to the Citi report, the HD launch is more a ‘preparation for the future’ strategy, as it is still in a nascent stage. But, the report states that HD has the potential to be a growth driver in the long term. Subsequently, it would result in higher Arpu (average revenue per user) subscribers and boost profitability.

The report said the other DTH players are also expected to invest in the technology to drive subscriber growth.

Arguing that pricing would remain under pressure till critical mass is achieved, the report said Dish TV initially planned to launch HD services at Rs 5,990 but is now pricing it lower at Rs 2,900, in line with competition.

Dish TV has 7 million subscribers and 33% of the Indian DTH market. Others in the DTH space include TataSky (a joint venture between the Tata group and Rupert Murdoch’s Star), Anil Ambani’s ADAG group, Videocon, Sun and Bharti.

HD set-top boxes offered by a DTH platform enable viewers to watch HD content offered by television channels. Besides Dish, some other DTH service providers too are offering HDTV format.

Replying to a question in a post-result analyst call, Dish TV managing director, Jawahar Goel, said that HDTV is a futuristic technology; however, the company is hopeful of this becoming a significant segment in two years or so.

Recently, a Morgan Stanley report said Dish TV was likely to be among the biggest gainers from the “favourably evolving pay TV market in India”.

The report said that Dish TV was “progressing fast to achieve a subscriber base level that can magnify margins and make it profitable by late financial year 2011, ahead of the Street expectations”.

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