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The innovation revolution on TV

VAS or value-added services are the future of TV in India, and the DTH operators have already taken the lead

In July, Bengaluru-based start-up Lukup Media Pvt. Ltd got a licence from the government to offer cable television services to consumers. The company is now a full-fledged multi-system operator (MSO) and plans to deliver television channels to homes through an Internet protocol (IP) network.

Lukup Media’s chief executive officer and founder Kallol Borah makes a pointed sales pitch: he makes you believe that a whole new world of value-added services will open up for his company’s cable customers once he starts operations. Apart from linear television viewing, consumers will be able to watch their favourite shows any time through Catch-Up TV, which allows you to go back in time and pick the shows you missed when they were telecast.

His network also offers home security solutions. To keep an eye on your property while you are away, keep the Lukup player (set-top box) and the cameras installed at home switched on and watch over the place on your tablet, mobile or any online device. “Our network is an all-IP network offering, not just linear TV but a whole host of IP-enabled services," says Borah. Besides, there will be a host of niche video-on-demand channels and other interactive services available in education, shopping and video calling.

To be sure, VAS or value-added services are the future of television in India, and the direct-to-home (DTH) operators have already taken the lead. At least two of the six DTH firms—Tata Sky and Dish TV—are coming up with a new range of services that are currently under wraps. What several of them already have on offer though are on-demand movies, audio music channels, karaoke facilities and anywhere TV, among others. Anywhere TV is linear television viewing on the go.

The MSOs are not lagging behind DTH operators either. Some have already launched their broadband services. Shares of Ortel Communications surged 18% last month when it announced the introduction of free broadband (with a ceiling for usage) for its cable TV subscribers for a year. The special value-added service has been launched in Odisha, West Bengal and Chhattisgarh.

Hathway, too, offers broadband as well as other special services like a H-tube channel. H-tube is like a personal TV channel that allows you to showcase your home videos. The videos can be shot on your smartphones, tablets, handycams or cameras and uploaded on the television channel.

At the end of December, India had 41.1 million active subscribers of DTH and 99.3 million subscribers of cable, according to data from Media Partners Asia, the Hong Kong-based research and information firm. A law notified in November 2011 mandates that all television viewers be brought under the digital addressable system (DAS) and access television via set-top boxes. As a result, by 31 December 2016, cable operators and DTH companies are required to install between 80 million and 100 million set-top boxes to convert analogue homes into digital ones.

Mihir Shah, vice-president at Media Partners Asia, points out that beyond the next three-five years, as volume growth in the industry starts to taper, operators will have to focus on enhancing ARPU (average revenue per user) and subscriber retention. Investing in VAS will help them enhance ARPUs and bring in some degree of product differentiation. Currently, the ARPU in India remains low, at $3-4 per month.

As the market matures, consumers will demand richer value-added services. Eventually, Borah is keen to cater to a home where different members of a family can access multiple services and content on different devices and screens at the same time.

As per the latest Consumer Entertainment Index (CEI) 2015, conducted by ARRIS, a global innovator in IP, video and broadband technology, Indian TV viewers are among the biggest fans of binge watching across the Asia-Pacific region. The survey conducted among 19,000 respondents from 19 countries, including India, discovered that binge watching is a solo activity and Japan (80%) tops the list. It also revealed that 16-24-year-olds are power binge-watchers and that mobile-binging is on the rise. The ARRIS research focused on media content consumption on multiple devices.

The findings are a clear indication that service providers have to deliver a richer consumer experience to TV viewers. The service providers have an opportunity to personalize content and services for individuals across locations and deliver a more tailored customer experience, the report said.

In the short term, however, Salil Kapoor, chief operating officer at Dish TV, is not too optimistic about VAS. “The value-added services are still bells and whistles in India," he said. “The ARPUs come from linear television even though there are a plethora of value-added services. Consumers are slow on the uptake." Currently the revenue from VAS is less than 5% for the DTH industry.

VAS provides consumer stickiness. It will be deemed successful when it helps improve ARPUs. Borah should probably keep that in mind when he rolls out his services in the next quarter in Mumbai, Pune, Bengaluru and Hyderabad.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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