Facing OTT heat, revenues of India’s DTH players continue to decline

India’s direct-to-home (DTH) industry is facing a decline in its revenue due to a shift in consumer preferences for more flexible digital content options.

This comes after the combined revenue of four major DTH operators fell from Rs 12,284 crore in FY22 to Rs 11,072 crore in FY23, according to Chandrasekhar Mantha, partner, media and entertainment leader, Deloitte India.

Tata Play, Airtel Digital TV, and Sun Direct did not respond to email queries sent by Business Standard.

Based on current trends, Pushan Sharma, director-research, CRISIL market intelligence and analytics, expects the revenue gap between DTH operators and over-the-top (OTT) platforms to further widen over the next two-three years.

“Before, people primarily watched TV through traditional DTH services, but the shift to hybrid models (mixing TV and streaming services like OTT) started before Covid and accelerated after the pandemic,” Manoj Dobhal, chief executive officer (CEO) and executive director (ED), Dish TV, told Business Standard.

He added, “People now prefer to watch content wherever it is within their budget. TV ownership has increased but the number of hours spent watching traditional TV has decreased. This is putting pressure on DTH revenues and subscribers.”

Dobhal further said that it is not the subscribers who have gone away from the platform (DTH services).

Subscribers still engage with the platform, but the number of days of viewership and the number of hours of viewership have gone down.

Industry experts attribute the drop in DTH operators’ revenue to a low subscriber base.

There were almost 70 million subscribers in March 2021, and this has gone down to 62 million in June 2024, according to data compiled from the Telecom Regulatory Authority of India’s (Trai’s) performance indicators reports.

The OTT market is projected to continue its upward trajectory, growing 10-12 per cent annually over the next two-three years.

It is driven by an increasing number of subscribers seeking diverse and high-quality content.

In contrast, DTH revenue is expected to grow marginally by 1-3 per cent, due to weak subscriber additions and the ongoing consumer shift towards other digital services, Sharma added.

Earlier, in another report, CRISIL highlighted that Indian media companies were slow to adapt to the growing digital influence.

For the April-June quarter, the number of active subscribers for DTH operators rose to 62.17 million compared with 61.97 million for the January-March quarter, according to Trai data.

This rise has been observed in the April-June quarter for the previous three years as well.

“Over 4 million subscribers have migrated from traditional DTH services to alternatives like DD Free Dish or OTT platforms,” said Mantha.

Both Mantha and Sharma said that the pricing strategy of OTT platforms is the major factor influencing consumers to switch away from DTH operators.

“Traditional DTH services mainly distribute content from broadcasters, with basic plans costing Rs 300-500. In contrast, bundled offerings by new-age fibre providers, which include high-speed internet, along with access to multiple OTT platforms, are priced at Rs 800-1,000. With a marginal increase in price, consumers gain more value with bundled options, making them a more attractive choice,” Sharma said.

Jio Fibre and Airtel Fibre are among the new-age fibre providers. They offer packages that include high-speed internet and multiple OTT platforms.

This bundled digital service is also one of the major reasons for the rise in subscribers for Airtel’s DTH service.

“Our focus on three key geographies — the southern states, Maharashtra, and Bengal — as well as the focus on convergence continues to deliver for us,” Gopal Vittal, managing director (MD) and CEO, Bharti Airtel, told analysts in the company’s earnings call for the quarter ended June 30.

“Net customer additions were over 190,000, the third consecutive quarter of positive net adds despite industry challenges and decline. We continue to gain market share as a result,” he added.

The company’s DTH service is part of the Airtel Black bundle, which combines multiple services like mobile, broadband, and DTH for the customers.

DTH service providers are also coming up with their own OTT platforms. For instance, Dish TV has launched its own OTT platform, Watcho, to cater to changing consumer demands.

Watcho has gained around 6 million paid subscribers since addition of the OTT aggregation service in October 2022.

“This is not the end of DTH services. DTH (only services) will remain but the growth will be muted. Companies (major DTH service providers) are going to shift towards hybrid,” said Dobhal. Business Standard