Thursday, June 26, 2008

Why Tata Sky and others should start worrying...

Two new news items have generated world wide attention. This and this . In addition by the year end Reliance ADAG is going to launch its Big TV. RCom has also reportedly placed orders for 5-million Set top boxes (STB).

Till now the cable tv scene in India has been that people were at the mercy of their cable operators. The cable scene in India is unruly at best and a gangster's paradise at worst. The introduction of set top boxes and the entry of big players like the Hindujas (Incable), Subhas Chandra's Zee (Siticable) and Rahejas (Hathway belongs to Rajan Raheja Group) has cleaned up the scene a bit. But the last mile connectivity is still provided by the local cablewaala. That is where DTH comes in. You dont have to deal with the local cable operator. You deal with a reputed company. Either Government (Doordarshan), or Zee (Dish TV), or Tata (Tata Sky). Now with the entry of Reliance the customer has one more choice.

This is precisely why the existing operators should be worried. RCom has the pockets to survive the initial years till it breaks even. It with its deals with Steven Spielberg and Bachchan ADAG has in its kitty the power to give the viewers the choice to view just released and yet to be released movies. The average viewer will get to watch the latest movies without having to shell out huge amount for the multiplex experience. That is big bang for the buck.

Lets us face it, most of the viewers have a few chosen channels and that is what they watch. The operators on the other hand have to ensure that they offer something different from the run of the mill to get more people on to their network. The cable TV market is growing at 8-10% in India. With many state governments taking a cue from Karunanidhi, free color TVs will be distributed amongst a lot of people. With just two channels on terrestrial broadcast, these people will increasingly turn towards cable. That is where value packaging comes in. The distributor who can offer maximum value for money will rule the roost. And reliance with its deep pockets can afford to take a hit on the price of its equipments to lure customers. This is what was done when RCom launched its mobile service.

It is time to be worried for the other players. The big hulk is coming. Either adapt or perish. Let us now see which way the wind blows.

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