16 March 2006

Chennai , March 15

India remains the most significant and accessible cable and satellite (C&S) opportunity in the Asia Pacific region, according to a report on "Asia Pacific Pay TV and Broadband Markets" by Media Partners Asia (MPA), a media research company based in Hong Kong.

However, the report states that the regulatory framework especially retail and wholesale cable TV rates foreign investment broadband competition and programme distribution has become increasingly uneven.

The report estimates a total of 65 million C&S homes in 2005 (cable 64 million, Direct To Home (DTH) pay TV 750,000) and 57 per cent penetration of TV homes.

AD REVENUE ,

Economic growth, higher multi-channel penetration DTH growth and the emergence of IPTV (Internet Protocol TV) will boost C&S advertising from $1.02 billion in 2005 to $1.8 billion by 2010 and $2.4 billion by 2015 according to the report.

The report expects cable TV to remain the core advertising platform for TV channels but also sees DTH generating advertising for various niche channels (including new channels programmed for DTH by Zee and STAR).

In the near term, C&S channel economics is expected to deteriorate further but a significant improvement is expected over the medium and long-term driven by both subscription and advertising.

SUBSCRIPTION ,

The report expects C&S channel subscription to climb from $353 million in 2005 to $1.2 billion by 2010 and almost $2 billion by 2015, driven by rate deregulation after 2008, DTH growth and investment in content, cable digitisation and IPTV deployment.

C&S channels are expected to increase their share of the cable TV distribution pie from 14 per cent in 2005 to 16 per cent by 2010 and 19 per cent by 2015, while their share of the total multi-channel video subscription pie could grow to more than 21 per cent by 2010 and 25 per cent by 2015.

According to MPA estimates, C&S industry turnover grew 18.5 per cent in 2005 to reach $3.6 billion, with $2.54 billion from subscription and $1.02 billion from advertising.

According to MPA forecasts, the market for multi channel video could grow from approximately 65 million in 2005 to 104 million by 2010 and 125 million by 2015. This implies that multi channel video penetration of TV household could grow from 57 per cent in 2005 to 67 per cent by 2010 and 71 per cent by 2015.

Driven by DTH competition and potential deregulation, the report expects cable to gradually consolidate last mile ownership, ramp-up deployment of bundled digital video and broadband Internet and corporatise industry practices. The report expects DTH growth to accelerate after 2006, driven principally by Dish TV and Tata Sky, followed by Reliance and Sun TV. Competition is expected to intensify between 2006 and 2010, led by aggressive retail pricing, promotions, packaging, set top boxes (STB) subsidies and increased investment in programming.

The report is conservative on IPTV deployment in the short-term but expects MTNL, BSNL, Bharti and Reliance to expand deployment over the long-term, as part of a triple play service bundle.

BROADBAND ,

MPA estimates that there were 855,000 broadband subscriptions in December 2005, representing 0.4 per cent of household penetration. According to regulator TRAI (Telecom Regulatory Authority of India), broadband subscription passed one million in January this year but this remains significantly below the Broadband Policy target of three million. Major telecom carriers have laid approximately 900,000 km of optical fibre in India but their last mile connectivity is limited

Cable, the report said will remain the dominant distribution platform for C&S channels over the long-term. However cable could lose substantial ground in both digital distribution and broadband especially if consolidation of the last mile does not occur and digitisation does not gather momentum.

Digital DTH services have yet to compete directly with cable due to various content and distribution issue. Most of Dish TV's 750,000 pay TV subscribers have come from "cable dark" areas. Once it obtains access to content from STAR (STAR Plus) and Sony, Dish TV subscriptions are likely to further accelerate and compete directly with cable.