New Delhi: India’s direct-to-home (DTH) industry is seeking to drum up cash from streams such as advertising on its menu screens to stem losses of approximately $450 million (Rs2,097 crore) as current revenue from television subscribers isn’t enough to cover costs.
According to Hong Kong-based research and consultancy Media Partners Asia Ltd, the average customer acquisition cost for DTH operators in India is as much as Rs4,600, while the return on this investment ranges from Rs85 to Rs200, the monthly average revenue per user (Arpu).
India’s largest DTH service provider Dish TV India Ltd, promoted by the Essel Group, is keen to improve earnings, having posted a Rs56 crore loss for the quarter ended 30 September, compared with Rs154 crore a year ago, after six years of operation.
The big picture: Dish TV’s Salil Kapoor says though the company’s prime revenue is through subscription, it is now looking at capitalizing on advertising opportunities and making money from value-added services. Ramesh Pathania / Mint
“Our prime revenue is through subscription, but now we are also looking at capitalizing the advertisement revenue and making money from our value-added services,” said Salil Kapoor, chief operating officer, Dish TV.
Besides featuring ads on the interactive menu screens that come up when viewers turn on their televisions, the company is also planning to add widgets, or stand-alone Web applications downloaded directly to the device. Dish’s offerings will include weather report and stock market widgets, among others. Once downloaded, they will show as pop-ups on the menu screens.
Airtel DTH, a unit of India’s biggest mobile phone company Bharti Airtel Ltd, has also launched widgets and expects much from its interactive platform. The company, also an internet service provider, hosts nine interactive channels, including i-Travel (hosted by online travel company MakeMyTrip) and i-Matinee (with Bookmyshow.com) which offer a platform to advertisers.
“Four of our nine applications are subscription-based, including i-Sports, that comes at a price when a prominent tournament or sport is being aired,” said Sugato Banerji, chief marketing officer, at Airtel DTH. The company has tied up with advertisers that include Minute Maid, Yahoo Inc. and Maruti Suzuki India Ltd for long-term deals on these channels.
Operators have also launched full-fledged interactive advertising channels that offer clients a live billboard on which to put up slide shows or provide details on products, pricing, contacts, latest deals, discounts and other information, all of which can be updated as needed.
Dish TV, which tied up with ICICI Bank Ltd recently for its interactive platform ICICI Active on a trial basis, is now eyeing consumer goods firms.
“It is almost like a quasi-Internet platform except that it can be tailor-made to suit advertisers’ needs,” said Banerji.
Several of these recent offshoots may occupy a regulatory grey UK area.
Platforms such as video on demand, pay-per-view and other interactive services provided by DTH operators were not originally part of licence provisions. The Telecom Regulatory Authority of India (Trai) has proposed that such ventures be designated as broadcast channels, which may call for the imposition of a whole new set of norms for DTH providers.
Still, DTH operators are careful not to upload advertising films on any of their channels dedicated to advertising.
“If we upload video, we may require licences for the channels,” Kapoor said. “Currently, we do not need any regulatory approval since it is only data.”
While the number of menu screens that can be exploited by the DTH operator are limited, DTH companies are seeking to squeeze out as much as they can by using technology. Airtel DTH embedded promotions of the Hindi film Wake Up Sid, released in October, in collaboration with Maruti Suzuki India as a background for its channel guide. The company also leased its boot-up page to advertisers such as Yahoo.
“It’s the best way to reach our 1.5 million customers,” Banerji said.
The medium is also sophisticated enough for advertisers to get a clear idea of whether they’re getting enough bang for their buck.
“Since the medium is digitized it gives the advertisers an exact picture of their return on investment, and guaranteed reach to our 6.2 million customers,” Kapoor said. “Also, this will enable advertisers to get into state-specific and language-specific advertising.”
Second-ranked Tata Sky Ltd, the DTH venture of the Tata group and News Corp., which owns the Star Group Ltd in India, has already tested the waters with region-specific advertising.
“Localized advertising has been most popular for test marketing,” said Vikram Mehra, chief marketing officer, Tata Sky. “If a company launches products only in specific areas, then it makes huge business sense for it to use our DTH platform to advertise.”
Tata Sky viewers spend at least 34 minutes a day on interactive services such as Actve Cooking, Actve Games and Actve Astrology among others, offering scope for such localized advertising.
“There is huge potential for advertisers,” Mehra said. “We have big-ticket advertisers like Pepsi, Coke, Bajaj Alliance, Pizza Hut among a host of others that are on board.”
The DTH subscriber base, put at 16 million as per Trai, is still too small to make a serious claim on advertiser’s money, said Sai Nagesh, chief growth officer, Dentsu Media India, the media buying arm of integrated advertising and communications company Dentsu India.
“Even the big-ticket advertisers look at it as an add-on medium to increase their value base,” Nagesh said. “But DTH is growing fast. So within another 18 months, it should be an extremely viable option.”
Advertising, which currently contributes around 2% to a DTH operator’s revenue, will go up to between 3% and 5% in the next two-three years, Kapoor said.