Sunil Kukreja , Sr. Manager Content , Hathway Cable & Datacom Limited

VAS is going to be a long-term game and will take minimum one to two years to attain critical mass. An increased focus on this segment can be expected in 2018.

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The Indian cable television market, having witnessed a remarkable growth over the last few years, continues to present high growth opportunities for players in this arena. It comes as no surprise then that the market is witnessing intense competition among players to capitalize on the high potential and offer differentiated service to their viewers as USP.

Value added services (VAS) are the emerging differentiators in such a scenario. They complement the value proposition of cable TV in home entertainment and establish it as an enhanced TV viewing option over cable TV viewing.

Cable TV is the future of home entertainment providing customers more choice, convenience, and comfort. With superior quality and interactive features, more and more customers are opting for this service.

The consumer truly is the king today with multiple avenues of content consumption spoiling him with choices. VAS act as growth drivers in this respect. With no differentiation in channels, players are banking on value-added services to stand out in intensely competitive entertainment space. All major players of the hyper-competitive Indian cable industry, have a surplus of interactive and VAS offerings across various genres ranging from music, movies, devotional, gaming, and learning. These services often involve tie-ups with establishments or portals.

VAS offerings are just add-ons to engage the customer. These value-added services, priced between 5 to 60, can help players increase their ARPUs (average revenue per user) moderately to significantly. Though the contribution of VAS in its revenue is negligible, the usage is growing at a very fast pace.

Surplus of Possibilities

Globally, niche content acts as the core differentiator but in India the regulator has ruled out content differentiation, so VAS has become the differentiator. It is more about giving the customer choice and growing the topline.

VAS is finding good acceptance among premium customers' due to their ability and willingness to pay and as a result, they are looking for additional services over and above regular broadcast channels. What adds to customers' stickiness is the fact that these services are ad free and are addressing certain focused requirements of the customers. Moreover, these services help us differentiate the product.

Typically, the deals are revenue sharing so the content, packaging, and creation/aggregation are the content provider's responsibility, while marketing, distribution, and revenue lie with the operator. Given that ARPUs from subscribers are limited, it is critical for MSOs to explore other avenues to leverage their access to subscribers. HD penetration amongst MSOs has not picked up the stream. This concept of VAS is new, but it is worth a try as it will help generate additional revenues.

The consumer base is expanding to newer markets including rural markets. With the introduction of digitization, cable TV offers the reach, customer service, better picture quality, and a host of value-added services, providing a whole new experience to customers. With low Internet penetration across the country, the provision of these Internet facilities on TV would further fuel the growth of cable TV and make these services available to masses. This is likely to be particularly more attractive in rural areas where cable TV has been able to make significant inroads.

Way Forward

With over half the country below the age of 25 and therefore adaptable to change, there is an underlying demand for VAS, which will become apparent once a plethora of options are available. Lots of work and efforts are required where market development is concerned; as such services have only started increasing in the last 6–10 months. As a result, one needs to give consumers time to experience the product. It is going to be a long-term game and will take minimum one to two years to attain critical mass. An increased focus on this segment can be expected in 2018.