Zenterio reporting on the Indian pay TV market

Posted On: 30th November 2016

Zenterio reporting on the Indian pay TV market

Zenterio recently attended both Broadcast India and SCaT India – two broadcast technology shows that took place almost simultaneously in Mumbai in October. Zenterio had a booth at Broadcast India with local partner Skandha Media Services where we showed our latest pay TV software solutions. Around 20,000 people attended the show.

Now that we have returned from the trip, here are some thoughts on the Indian market.

The number of pay TV subscriptions is still growing fast

There are 1.3 billion people in India in around 250 million households. Not all households have television – around 63% – but amongst those that do have TV, pay TV penetration is high at around 80% – some 129 million households. The main technologies are satellite and cable.

India is currently in the process of switching off its analog cable TV, under a government mandate, following a plan consisting of four phases. Phases I and II, covering the major cities, have already been completed. Remaining urban areas are now being converted in a third phase which is due to complete officially at the end of this year. The final phase, Phase IV, will see all remaining areas converted, and is to conclude at the end of 2016.

The transition has added a boom in cable set-top box demand, as tens of millions of consumers are converted to digital cable, to the boom that has been going in satellite since Dish TV launched in 2004.

In the medium term the growth is expected to continue, with the total number of pay TV subscribers expected to increase to 183 million by 2025.

ARPU is low

In India, monthly ARPU is currently only around $3.3. Although this is low, because of the large numbers the industry will expected to generate around $9.4bn this year.

One way that some MSOs in India have found to increase this low ARPU figure is to sell space in the set-top box user interface to advertisers for the placement of simple banner ads. For internet-enabled devices such as mobile phones and connected STBs, more advanced systems are possible. Advertising can be tailored based on the subscriber’s viewing preferences and profile, and when a customer is engaged, the connectivity can be used to put the subscriber directly in contact with the advertiser for more information or to complete a transaction. Success can be accurately measured, forming a solid proposition for all parties.

Fixed broadband penetration is low

There are around 17.5 million fixed broadband subscribers in India. Penetration is low with most (132 million) receiving their internet access over mobile networks. For this reason, the OTT TV services that have launched so far have mainly been targeted at the mobile user, with little attention being paid to connecting pay TV STBs. The low ARPUs available have also encouraged a reliance on very basic boxes.

However in the medium term, encouraged by new entrants such as Reliance Jio with their soon to be rolled-out Giga Fiber FTTH broadband service, all new devices will be ‘connected’. As the analogue cable land grab subsides, it will become clear that the potential upside from connecting boxes to the internet cannot be ignored. Regulatory requirements for interoperability may also push in this direction. Even today, though broadband penetration is low, because of India’s size, the number of broadband subscribers in the country is already greater than the total for Italy, and there are almost as many as are connected in South Korea.

Operators need to take this future convergence into account when defining the user experience that they intend to offer. A solution is required that allows modern and consistent branding across all devices, whether fixed or mobile, and that will run comfortably even on legacy set-tops. For the set-top box, a middleware that has been proven to support integration of OTT services is also a must.

Big data is underexploited

The large numbers involved and the competitive nature of the Indian market mean that audience data will become a valuable resource. Measurement of the popularity of different content with different groups allows the service offering to be tailored more accurately to the viewer, thus aiding retention and supporting upselling of additional programming and services. Information of this kind also has direct monetary value to advertisers who need reliable data on who is, or could be, watching their ads.

With mobile devices forming the majority of connected screens, audience measurement will initially be implemented on these devices, and operators should take care to select a system that can also be integrated into the set-top box to consistently track behavior across all devices in their multiscreen world.

Indigenous set-top box production is growing

The STB market in India is reported to be worth around $750m but the vast majority of set-top boxes (80%) are imported. For example, it has been estimated that for the first phase of the cable TV transition only 5% of cable STBs were manufactured locally. This is in conflict with the government’s “Made in India” policy that seeks to encourage local manufacture.

There has been some progress, with the local share expected to reach 15% for Phase IV of cable’s transition to digital. However, to further this trend there is a need for a set-top box middleware that is not tied to a specific box manufacturer. A middleware of this type – that can easily be integrated by local manufacturers, is compatible with India’s home grown iCAS content protection system, and has been deployed on a broad range of networks – would greatly facilitate the transition to local production.

In conclusion, India is a unique market in that, for pay TV, it is already very large, but at the same time still immature. Its low ARPU combined with huge scale, in a world of increasing complexity, presents unique challenges for pay TV operators.

Zenterio has solutions to many of these challenges, and a proven track record in India.

To know more about how we can support your business, please get in touch.

Ashley Reid
VP Business Development
+46 13 36 39 50


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