Tata Sky CEO and MD Harit Nagpal on the plans for Tata Sky's growth amid the advent of online streaming services and its mantra of customer-centricity
New Delhi: Direct-to-home television company Tata Sky Ltd’s net profit has jumped to Rs408 crore in the fiscal ended March 2018 compared to Rs8 crore in the previous year. It’s profit margin also saw an improvement at 7.1% compared to 0.1% in the year-ago period. Buoyed by the performance of the firm that earned a revenue of Rs5,719 crore and a ratings upgrade by agency Crisil, Tata Sky managing director and chief executive officer (CEO) Harit Nagpal spoke about plans for the company and its mantra of customer-centricity. Edited excerpts from an interview:
How do you view your current performance?
This is a completely commoditized industry, it’s like selling coal or steel. The channels and technology that I have access to, the price that I can charge the customer, or the distribution that I have—everybody has access to these. If I drop prices, everybody will drop prices. So, there is really no differentiation. The only sustainable differentiation is process-centred, which is largely service. So, your boxes should fail less often, your picture quality should be good, your user interface should be better than anyone else’s, wherever there’s a failure, your response time should be the fastest. Our focus is customer-centricity.
How much is your current revenue?
It is in the region of Rs6,000 crore. These days, our run rate would be about Rs20 crore a day—run rate is what my customers recharge every day. That is what I collect from the market.
How many subscribers do you have today and what is the growth rate?
Let’s just say we are adding about 15-20% subscribers every year. And even the revenue is growing at a similar rate. And so is the profitability.
Where is your growth coming from?
There is a perception Tata Sky is a premium service and only high-end customers subscribe to it. Yes, we have a disproportionate share of premium segment, be it high-definition subscribers or subscribers who are paying Rs500-600 every month. But, in 4-5 years, about 60% of my new subscribers are coming from villages and are paying Rs200-220 a month. So, while we have the largest share of more paying subscribers, the number of those subscribers are limited. But we get growth from them by selling more services. A firm can survive only if it has all three—premium, middle order and low-end—customers. If you have only low-end customers, you will not be profitable. If you have only high-end customers, you will not be growing. You must have heard that our competitors (Dish TV and Videocon) are merging and say they will be the No.1 operator in the country instead of us. The fact is on financial parameters, our numbers are equal to theirs or higher. Even if we are lower on some parameters, we will catch up soon as our growth momentum is higher than theirs.
Is cord-cutting in India a reality right now?
Cord-cutting happened in America as cable prices were much higher compared to OTT (over the top) prices. Cable cost $100 per month. And OTT, let’s say, Netflix, came at $10. So people switched. In India, cable TV is $5 a month. So, when Netflix or something comes at $10 and to watch that product you have to consume $15-20 worth of broadband, the cost rises to $30. How many customers can afford that? India will always be an “and" and not an “or" market. We have OTT, we watch online but we have not given up our TV.
But you announced a tie-up with Netflix.
We are going to be the supplier of Netflix, Hotstar, YouTube and Amazon Prime. We can change the box which can receive both the signals—from the satellite and from the broadband. So, I will change the hardware in your house which will enable you to watch on your TV screen, live TV via satellite whenever you want to, and OTT via broadband whenever you want to.
So, DTH is feeling the heat from OTT.
It is not out of pressure. It is because I am in the content business. My life depends on the customer. I was buying content from broadcasters earlier and supplying it to customer via satellite. Customer sometimes wants to watch the content of his choice, my job is to fetch that content for him. I am not wedded to the satellite.