A PROJECT REPORT ON CUSTOMER BEHAVIOUR TOWARDS DTH (Direct to Home Services) SUBMITTED TO THE L.R.

INSTITUTE OF MANAGEMENT IN PARTIAL FULLFILMENT OF THE REQUIREMENT FOR THE DEGREE OF MASTERS IN BUSINESS ADMINISTRATION SESSION: 2011-2012

SUPERVISED BY: Mrs.SUPRIYA JAIN

SUBMITED BY: DEEPAKRANA MBA IV SEM ROLL NO.2208

L.R.INSTITUTE OF MANAGEMENT SOLAN (H.P)

CERTIFICATE

ACKNOWLEDGEMENT

I express my gratitude and thanks to Mrs. Supriya Jain for her invaluable co-operation, continued support and guidance as well as healthy criticism throughout resulting works. It is my privilege to express my indebtedness to my respected teachers, my parents and friends without those help, this project could not have been completed. Their able guidance, encouragement and valuable suggestions led my way pass easily through most difficult period the project. I would also like to thank Mr.Ashok Bansal faculty and staff of M.B.A. at the L.R.Institute of Management Studies without whose help this project would not have been possible. Deepak Rana M.B.A. IV Roll no.-2208

TABLE OF CONTENTS

CERTIFICATE ACKNOWLEDGEMENT LIST OF TABLES Chapter 1. Title Page

CHAPTER-I INTRODUCTION

Introduction Direct-to-Home satellite broadcasting (DTH ) or Direct Satellite Broadcasting (DBS) is the distribution of television signals from high powered geo -stationary satellites through a small dish antenna and satellitereceivers in homes across the country. Since DTH services are fully digital, it can offer value added services,video-on-demand, Internet, e-mail and lot more in addition to entertainment. DTH reception requires a smalld i s h antenna (60 cm), which can be easily mounted on the roof top, feed a l o n g w i t h L o w N o i s e B l o c k Converter (LNBC) and Set-top Box (Integrated Receiver Decoder, IRD) with CAS (Con ditional AccessSystem). A bouquet of 40 to 50 video programs can simultaneously be received in DTH mode

What is DTH? DTH stands for Direct-To-Home television. DTH is defined as the reception of satellite programmers with a personal dish in an individual home. DTH does away with the need for the local cable operator and puts the broadcaster directly in touch with the consumer. Only cable operators can receive satellite programmers and they then distribute them to individual homes. How does DTH work? A DTH network consists of a broadcasting centre, satellites, encoders, multiplexers, modulators and DTH receivers. A DTH service provider has to lease Ku-band transponders from the satellite. The encoder converts the audio, video and data signals into the digital format and the multiplexer mixes these signals. At the user end, there will be a small dish antenna and set-top boxes to decode and view numerous channels. On the user's end, receiving dishes can be as small as 45 cm in diameter. DTH is an encrypted transmission that travels to the consumer directly through a satellite. DTH transmission is received directly by the consumer at his end through the small dish antenna. A set-top box, unlike the regular cable connection, decodes the encrypted transmission. How does DTH really differ from cable TV? The way DTH reaches a consumer's home is different from the way cable TV does. In DTH, TV channels would be transmitted from the satellite to a small dish antenna mounted on the window or rooftop of the subscriber's home. So the broadcaster directly connects to the user. The middlemen like local cable operators are not there in the picture. DTH can also reach the remotest of areas since it does away with the intermediate step of a cable operator and the wires (cables) that come from the cable operator to your house. As we explained above, in DTH signals directly come from the satellite to your DTH dish. Also, with DTH, a user can scan nearly 700 channels!

Does one need to put two dish antennae and pay double subscription per month if one has two TVs ? For multiple connections in the same premises, one can use the same connection. However, every television set will need to have an individual STB. Also, DTH is a national service and the STBs enable a viewer to change service providers without changing the STB, even if one moves from one city to another.

Can a CAS set-top box be used for DTH? Is DTH superior to cable TV? Yes. DTH offers better quality picture than cable TV. This is because cable TV in India is analog. Despite digital transmission and reception, the cable transmission is still analog. DTH offers stereophonic sound effects. It can also reach remote areas where terrestrial transmission and cable TV have failed to penetrate. Apart from enhanced picture quality, DTH has also allows for interactive TV services such as movie-on-demand, Internet access, video conferencing and email. But the thing that DTH has going for it is that the powerful broadcasting companies like Star, Zee, etc are pushing for it. So why are broadcasters pushing for DTH? In DTH, the payments will be made directly by the subscriber to the satellite company offering the service. A big problem that broadcasters face in India is the issue of under-reporting of subscribers by cable operators. Consider the cable operators pyramid. Right at the top is the broadcaster. Next comes the Multi Service Cable Operator (MSOs) like City cable, In Cable, etc. Below them are the Access Cable Operators (ACOs) or your local cable guy who actually lays the wires to your house. The local cable operators or the ACOs then allegedly under-report the number of subscribers they have bagged because they have to pay the MSOs something like Rs 30-45 per household. Showing a lesser number of households benefits ACOs. With no way to actually cross check, the MSOs and the broadcasters lose a lot. Broadcasters do not earn much in subscription fees and are mostly dependent on advertisement revenue to cover their costs, which is not sustainable and does not offer high growth in revenues for broadcasters. The way out of this is to use a set-top box so that it will be clear how many households are actually using cable or going for DTH where broadcasters directly connect to consumers and can actually grow revenues with a growth in the subscriber base. Why do Doordarshan, Zee, Star think DTH will work in India? Today, broadcasters believe that the market is ripe for DTH. The prices of the dish and the settop box have come down significantly. Overall investments required in putting up a DTH infrastructure has dropped and customers are also reaping the benefits of more attractive tariffs. The major thing that DTH operators are betting on is that the service is coming at a time when the government is pushing for CAS (conditional access system), which will make cable television more expensive, narrowing the tariff gap between DTH and cable. Will DTH be cheaper than cable or more expensive?

DTH will be definitely more expensive than cable as it exists today. A set-top box is a must for DTH. Earlier, when CAS made set-top box mandatory for households, the costs between DTH and cable would not have been too wide. But CAS on the backburner now -- which means no set-top box (a must for DTH), the price gap between DTH and cable will be wide. In Oct 2002, Siticable, which is owned by Zee, said that the cost of the installation equipment, which includes the receiver dish and the set-top box, would be priced at around Rs 3,900. Siticable is looking to rope in 1 million subscribers in 15 months. Other estimates say that digital cable set-top box may cost Rs 4,000, a DTH decoder dish is unlikely to cost less than Rs 7,000. DTH's minimum subscription could be priced around Rs 500 per month. Some reports say that an entry level DTH STB will cost about Rs 7,000 (including taxes and installation cost at consumers end). A more advanced STB with value added features like PVR (Personal Video Recorder), PSTN connectivity, Gamming console, channel management system, etc. may cost as much as Rs 15,000. What is the history of DTH in India? DTH services were first proposed in India in 1996. But they did not pass approval because there were concerns over national security and a cultural invasion. In 1997, the government even imposed a ban when the Rupert Murdoch-owned Indian Sky Broadcasting (ISkyB) was about to launch its DTH services in India. Finally in 2000, DTH was allowed. The new policy requires all operators to set up earth stations in India within 12 months of getting a license. DTH licenses in India will cost $2.14 million and will be valid for 10 years. The companies offering DTH service will have to have an Indian chief and foreign equity has been capped at 49 per cent. There is no limit on the number of companies that can apply for the DTH license. History of Indian Broadcasting In 1959, launch of Doordarshan, Indian national television In 1991, influx of foreign channels and domestic channels In 1992, cable TV industry started In 1995, Govt. passed the cable TV network(Regulation) act In 2003, first private DTH license was awarded Dish TV In 2010, no. of players in DTH industry increases to seven

So, what's the buzz? Will DTH finally be the one that rules?

The cable system is well entrenched in India and is showing quite rapid growth. If DTH had come to India in 1996-97 (like Star had originally attempted), then it could have made a significant breakthrough. Europe is an example of this. DTH developed there before cable and now controls nearly 80 per cent of the total satellite television subscriber base. But in US, cable rules because it came before DTH. DTH will definitely cut into the existing cable user base. It will make the local cable operator less important and take business away from him. It will give consumers greater choice. But it is likely to be an up market premium product and most middle class households will stick to cable.

DTH in Indian Scenario India has a total television population of close to 135 million, out of which 80% have access to cable and satellite (i.e. 108 million). The total DTH subscribers are close to 22 million. Thus the DTH has a market share of approximately 20%. The subscriber base for DTH in 2006 was meager 1 million. Now for an industry which is just 5 years old, it is a great achievement. Lets have a look at how the DTH industry has grown in these 5 years. In 2005 Dish TV was the only player in the DTH industry and was registering subscriber growth mainly in the areas where cable TV was not available. The subscribers were not ready for the cost of set top box. In 2007 CAS mandate was introduced in selected metro cities, where users had to invest in a set top box. Though the initiative was not very successful, it gave a wider acceptance to the DTH and consumer became ready to pay for the set top box. Spotting the opportunity Sun Direct launched its services in 2007 with a drastically low one time cost involved for DTH subscriber. Followed by this Reliance, Big TV and Air-Tel and Videocon launched their services. The market became competitive. Every player came with innovative offerings, Dish TV offered Movie on Demand free worth the cost of set top box, Air-Tel and Big TV offered free subscription for first few months etc. All these things were coupled with aggressive marketing campaigns. Tata Sky gained the maximum subscribers during this period. Today the market shares of various players are as follows

DishTV : 30% Sun Direct: 25%

Tata Sky: 22% BIG TV : 13% Airtel : 8% D2H : 2% So where is the real growth happening for the DTH industry. Is it the urban areas or rural? Though DTH is comparatively expensive than cable service, the growth is coming from the rural area. If we see statistics the growth for the digital segment in rural areas were 34%, 49% and 64% in the past three years.(source:- TAM Annual Universe Update 2010). The growth in the rural segment can be attributed to frequent power cuts in the rural areas. DTH platform gives the rural consumer access to their favorite programs, with the help of generator/ invertors, which is not possible with the cable service in most of the areas. Though DTH has certain advantages such as better picture/ sound quality, better customer service. It also has a disadvantage of price. The DTH player have to pay various taxes such as Adjusted gross receipts @ 10%, service tax @ 12.36%,VAT @ 12.5%,CST@3%,corporate tax, Excise duty@ 16%, Customs duty, CVD ,customs duty etc. Whereas the local cable operators easily get away with government taxes by underreporting the subscriber base. Thus gaining a clear cost advantage. The regulator should take a note for the same and provide regulations for the same. At the same time in Indian market One size fits all strategy doesnt work for long. So, the DTH players have to design packages suitable for rural consumer enable them to enjoy the digital content (For eg. Levis jeans had enabled consumers to buy their jeans with an EMI scheme). The DTH industry is expected to grow at a CAGR of close to 24% .The future of DTH industry will largely depend on innovative marketing tactics adopted by the DTH players. The stage is all set for DTH industry. Let the real game begin. Indian DTH Market Forecast to 2012 The direct-to-home (DTH) TV industry has been witnessing tremendous growth in India for the past few years, thanks to huge investments by existing as well as new players. The Indian DTH industry has already crossed the 30 Million-mark for subscriber base as the quality of service delivered by DTH is superior, compared to cable or any other medium. As per our research report, the Indian DTH TV industry is currently in the growth phase, and expected to attract a large number of subscribers in near future.

According to "Indian DTH Market Forecast to 2012", the entry of new players is intensifying competition in the Indian DTH market, and this has led to a fall in installation prices and availability of a wide range of options for users. The decline in Set-Top Box (STB) prices has also made DTH services viable for the Indian users. Besides, the mandated introduction of CAS on cable networks is expected to make cable television services more expensive and contract the gap between overall costs of DTH services and cable services. With such developments, the number of DTH subscribers in India is projected to increase at a CAGR of around 23% during 2011-2014. Our report contains comprehensive information about DTH service providers in India, including an in-depth analysis of their strengths and weaknesses. It also covers information about various recharge payment modes, offered by the service providers, and their percentage share. The research also looks into the reasons for which incumbent players have been investing huge amounts of money in promotion and marketing of DTH services in the country. The study highlights current industry trends and certain key marketing strategies, which could serve as a benchmark for the anticipated future growth of the Indian DTH market. Overall, the report aims to help clients recognize/identify factors which will drive the industry in the coming years. It also studies the Indian consumer behavior and elaborates various factors that will enable people to switch to DTH services in near future. Leading DTH Players in India