Come New Year, and India will have the largest number of direct-to-home television viewers in the world, overtaking the US, currently the No 1 DTH market. Seven months, says a Media Partners Asia (MPA) report, is all it would take for the six-player domestic DTH industry to emerge at the top. FE has secured an exclusive preview of the keenly-awaited report from the leading international media analyst, set to be released on Friday.
The Indian DTH market will overtake US with both gross and net (paying customers) subscribers crossing the 42-million mark by 2012. The combined strength of Dish TV, Tata Sky, Sun Direct, Reliance Big, Airtel Digital and Videocon D2H will overtake the US' Direct TV and Dish Network, translating into a 20% lead over the American DTH market of 35 million users next year.
Sun TV, Zee Network and STAR India have already raced past Premier Media Group (Australia) and TVB Pay Channels (China) to emerge as the top three media firms in the Asia-Pacific, says the report.
On revenue terms, in less than 60 months, the Indian pay TV advertising market will overtake China with $5.6 billion in net revenues. Currently in revenue terms, India ranks third in the Asia-Pacific region in terms of pay TV advertising market, while China is the leader.
"India's fast-growing DTH sector will overtake the US next year as the largest in the world with an active subscriber base of close to 42 million (up from 23 million in 2010) versus a projected customer base of 35 million in the US," Vivek Couto, MPA executive director told FE from Bali, Indonesia. The active DTH subscriber base (including only paying customers) will grow from 23 million in 2010 to 64 million by 2015 and 83 million by 2020, implying a 44% share of the overall market by 2020, Couto said.
However, the road ahead is not all rosy. "The main challenges are transponder capacity, high churn, subscriber acquisition costs and limited pricing power but MPA sees four out of six DTH players generating free cash flow after 2015, driven by scale and cost control, Couto added.
The good news for the M&E sector comes from the leading groups - Sun, Zee and STAR - which have dislodged the top media firms from Australia, China and US to occupy the top three spots among the top-10 leading media firms in the Asia Pacific region based on profitability, the report said. Based on Ebitda, Sun ($330 million), Zee ($150 million) and STAR India ($130 million) occupied the top 3 positions among the leading 10 media firms across the Asia-Pacific region, the MPA report stated.
"Operating margins remain low for market leaders such as STAR and Zee (Ebitda margins trending at 20-25%, versus 30-40% in other emerging Asian markets), due to escalating costs across the value chain. This level of cost inflation is unlikely to moderate over the medium term, but operating leverage may improve as affiliate fees grow from digital cable and DTH," MPA report said.
For next year, MPA predicts exponential growth of mobile broadband anchored to 3G and broadband wireless access reaching 78 million users by 2015 and 126 million users by 2020.
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