India's Direct-to-Home (DTH) television market which features corporate majors such as Tatas, Bharati, Reliance, Videocon, Zee, and Sun at present, will consolidate to four platforms within three to five years, and ultimately be confined to three big players, executive director, Media Partners Asia (MPA), Vivek Couto, told Financial Chronicle on phone from Hong Kong.

He did not, though, specify the players that would survive the churn.

Couto said that as of end 2009, Dish TV with 5.4 million net subscribers led the pack followed by Tata Sky with 4.4 million, Sun 4 million, Big TV (Reliance) 1.8 million and Bharati 1.6 million.

He said the six-player DTH market "was simply untenable even as DTH subscribers would climb from a net installed base of 17 million in 2009 to reach 45 million by 2014, and 58 million by 2020". India would, thus, become the largest DTH market in the world in terms of subscribers by 2012, overtaking the US.

Asked to specify the timeframe under which DTH companies would turn profitable, Couto said, "Our estimate is that the top four will be making money at the Ebitda level by the financial year 2013. Dish TV would be the first to get to the mark and do so much earlier than 2013."

Couto said the DTH business model merited an urgent review. "The major risk to all our growth assumptions is regulation, which continues to commoditise and destroy industry value." The average revenue per user (ARPU) here has to improve vastly to expedite profitability. In the US, per DTH ARPU is $80 versus $4 here," he added.

MPA said 15 per cent of India's pay TV homes had at least one set-top box; this number would grow to 38 per cent by 2014 and almost 50 per cent by 2020 with HDTV gaining more traction after 2010, driven by DTH satellite networks.

Couto said the rural India segment had driven DTH growth in the recent past, constituting around 20 per cent of the total market.

Projections from MPA suggest that pay TV subscribers will grow from 105 million in 2009 to 149 million by 2014, and 173 million by 2020. This means pay TV penetration will grow from 78 per cent in 2009 to more than 90 per cent long-term. Cable will retain 70 per cent market share by 2014, falling to 64 per cent by 2020, while DTH will scale up to almost 35 per cent share long-term.

Couto said, "The future of pay TV in India will be driven by media owners and distributors expanding market share with an eye on profits, rather than at the expense of profits." The pay TV sector generated sales of $6.5 billion for FY10, says MPA, while Ebitda profits for the sector reached $800 million, implying a modest profit margin of 13 per cent.

MPA sees industry sales growing to $12.1 billion by 2014 and $18.5 billion by 2020. Margins will improve to 15 per cent and 23 per cent over the same period, with Ebitda profits reaching $2.3 billion and $4.4 billion.