The explosive growth in the Indian DTH (direct to home) market has been well documented. From scarcely existing as recently as 15 years ago, the Indian DTH market is now the largest in the world by number of subscribers. Meanwhile, as this market develops, UHD (ultra high definition) is poised to become the next big thing in video broadcasting. But what impact will this really have on the bottom line of DTH platforms, once you take away the hype that surrounds this new format?
Within this market, UHD has thus far played a relatively limited role, and will continue to remain this way in the future. UHD is expected to act as a draw, effectively an appetizer, to the main course that is the dozen or so SD channels that the average Indian DTH subscriber would prefer to a single UHD channel. With ARPUs in India still well under USD 10, and with many platforms selling packages in the neighborhood of a few US dollars per month, there is limited real demand for UHD content. Given the diversity of India, and the subsequent requirement for diversity of content, it makes little sense for DTH platforms to occupy a significant amount of capacity with a single UHD channel, when the alternative is many more SD or even HD channels that would offer ability to capture new customers with better and more diverse content.
Two Indian DTH platforms currently do carry UHD content; at a time when many European platforms are yet to upgrade their content to this new form of delivery. India has been one of the early adopters of UHD in principle; however, this is much more a result of trying to capture market share than a reflection of real demand. India has over the past several years been undergoing a nationwide digitization program, a program that started in the country's major cities, before rolling out to secondary cities. After years of setback, it is expected that the digitization process will be complete in the coming year or two, which will mean that literally tens of millions of rural households will be digitizing for the first time. With DTH at an obvious infrastructural advantage, the carriage of UHD channels by a select few DTH platforms is viewed as a strategy to capture new subscribers in the newly digitized households.
Overall, NSR expects around 40 UHD channels to be carried in South Asia by 2025, with around half being broadcast on DTH platforms, and the balance on distribution. While NSR has noted that the Indian DTH market would benefit from consolidation, this has thus far been easier said than done. As such, by 2025, it is reasonable to assume that there will be only a handful of UHD channels per DTH platform.
The explosive growth in the Indian DTH market over the past decade has been largely a quantity-over-quality affair, with more subscribers than literally any other country (having surpassed the United States in 2014), but with lower ARPUs than just about any other market. In this context, it makes good business sense to treat channel blends the same. While UHD content is a clear differentiator in developed markets, and while a small percentage of Indian households may find this content worth shelling out a few extra rupees for, the fact of the matter is that near-term growth in India will be driven by newly digitized households, that is, households that almost universally do not have a UHD-compatible TV set. While UHD does present an intriguing opportunity to justify higher ARPUs, this would first require grassroots level economic growth and increases in spending power. Until that point, UHD remains a flashy niche in one of the world's flashiest DTH markets.