02-01-2013, 02:27 PM
DIGITIZING INDIAN BROADCASTING-ANALYSIS
[attachment=46170]
INDUSTRY STRUCTURE AND CHALLENGES
From mere 400,000 in 1992 to around 90 million subscribers today,representing a CAGR of 35 percent in the last 18 years.
The channels seen on TV (pay channels or free to air channels) are created by
different broadcasters and transmitted from satellite to receiving stations (headends) owned by MSOs. The MSOs in turn re-transmit these signals through cables to the LCOs, who have their own last mile cable network to individual homes
Under-reporting of subscriber base by LCOs: LCOs declare only around 15 percent of their paid connectivity to MSOs and broadcasters.
Non-standard pricing:l ocal monopoly status enjoyed by most LCOs and small MSOs who are able to avert competition and thus prevent free market forces to keep prices under check.
Capacity constraints in analog cable:
IMPLICATION OF DIGITIZATION
Broadcasters Since digitization would bring about full addressability, it would
eliminate the menace of under-reporting of subscriber base by LCOs. This will
increase in subscription revenues for broadcasters, High bargaining power of LCO is minimized.
Investors Upon successful implementation of the digital mandate, gradual
consolidation of LCOs will become inevitable. Subject to
successful execution of the digitization roll out, similar rise in valuations for
companies in India is being assumed(as happened in US, korea, taiwan).
MSO: Having indirectly acquired end-customers, the MSOs
now face the challenge with respect to customer retention. For a secondary
point acquisition,the industry players face the risk of losing the acquired LCOs
to another MSO;and for a primary point acquisition,there is the risk of losing the
end-customer to alternate technology platforms like DTH and IPTV.Thus, it has
become imperative for cable distribution companies (MSOs) to pursue
digitization aggressively which could increase acquisition costs for competitors
and switching costs for customers.
Government and the economy: Digitization
will also help the government pursue India's broadband goals and thereby help to
boost economic growth. Potentially, a 10% increase in broadband penetration
would increase India's GDP by ~1.5%
CHALLENGES IN DIGITIZATION PROCESS
According to the data available,the number of households in which set top box is to be placed is around 80-100 million,which included both urban and rural area.
Both the areas are to be approached at the same time to avoid digital divide and any misinterpretation or lack of information.
Some key issues that may lead to delays in implementation:
Timely installation of set-top-boxes.
Availability of funding for smaller and regional MSOs(Can improve due to 74% FDI ).
Organizational preparedness: scale
up IT systems, build out call centers, and provide technical assistance to
LCOs.This would call for significant manpower preparedness.
Customer education
OPPURTUNITIES IN DIGITIZATION
There would be a high amount of pressure on free to air channels to remain in the competition and maintain the viewership:
Due to improvisation in content the standard of viewership will also improvise. Television will also attain the global standards.
Increasing FDI- better infrstructure for future and help MSO.
An adequate supply of well priced and upgraded technology is required for the success of such a futuristic project
[attachment=46170]
INDUSTRY STRUCTURE AND CHALLENGES
From mere 400,000 in 1992 to around 90 million subscribers today,representing a CAGR of 35 percent in the last 18 years.
The channels seen on TV (pay channels or free to air channels) are created by
different broadcasters and transmitted from satellite to receiving stations (headends) owned by MSOs. The MSOs in turn re-transmit these signals through cables to the LCOs, who have their own last mile cable network to individual homes
Under-reporting of subscriber base by LCOs: LCOs declare only around 15 percent of their paid connectivity to MSOs and broadcasters.
Non-standard pricing:l ocal monopoly status enjoyed by most LCOs and small MSOs who are able to avert competition and thus prevent free market forces to keep prices under check.
Capacity constraints in analog cable:
IMPLICATION OF DIGITIZATION
Broadcasters Since digitization would bring about full addressability, it would
eliminate the menace of under-reporting of subscriber base by LCOs. This will
increase in subscription revenues for broadcasters, High bargaining power of LCO is minimized.
Investors Upon successful implementation of the digital mandate, gradual
consolidation of LCOs will become inevitable. Subject to
successful execution of the digitization roll out, similar rise in valuations for
companies in India is being assumed(as happened in US, korea, taiwan).
MSO: Having indirectly acquired end-customers, the MSOs
now face the challenge with respect to customer retention. For a secondary
point acquisition,the industry players face the risk of losing the acquired LCOs
to another MSO;and for a primary point acquisition,there is the risk of losing the
end-customer to alternate technology platforms like DTH and IPTV.Thus, it has
become imperative for cable distribution companies (MSOs) to pursue
digitization aggressively which could increase acquisition costs for competitors
and switching costs for customers.
Government and the economy: Digitization
will also help the government pursue India's broadband goals and thereby help to
boost economic growth. Potentially, a 10% increase in broadband penetration
would increase India's GDP by ~1.5%
CHALLENGES IN DIGITIZATION PROCESS
According to the data available,the number of households in which set top box is to be placed is around 80-100 million,which included both urban and rural area.
Both the areas are to be approached at the same time to avoid digital divide and any misinterpretation or lack of information.
Some key issues that may lead to delays in implementation:
Timely installation of set-top-boxes.
Availability of funding for smaller and regional MSOs(Can improve due to 74% FDI ).
Organizational preparedness: scale
up IT systems, build out call centers, and provide technical assistance to
LCOs.This would call for significant manpower preparedness.
Customer education
OPPURTUNITIES IN DIGITIZATION
There would be a high amount of pressure on free to air channels to remain in the competition and maintain the viewership:
Due to improvisation in content the standard of viewership will also improvise. Television will also attain the global standards.
Increasing FDI- better infrstructure for future and help MSO.
An adequate supply of well priced and upgraded technology is required for the success of such a futuristic project