Television and Beyond
Sanjay Rohatgi,Senior Vice President,Service Provider, Cisco India and SAARC
The most talked-about topic today as far as the cable industry goes cable digitization is set to become a reality in India going by the government mandate that the entire country has to get digitized by December 2014. The timeline to complete the first phase of digitization in the four metros has recently been extended to November this year. This is no doubt a positive move from a policy perspective because it opens up a world of innovations for the Indian entertainment industry.
A game changer in every sense of the word, digitization will ensure that end consumers get access to better quality content through a platform that is truly world class. Consumers can look forward to a far better entertainment experience because it signals the convergence of high-definition content and broadband accessibility. While consumers are in for a treat, the cable TV industry itself would undergo a sea change.
Digitization of cable network offers tremendous potential for cable operators and broadcasters because it will result in full addressability and eradicate under-reporting of any subscriber base. Consequently, there will be increase in subscription revenues for them, a boon for multi-system operators (MSOs). With greater bandwidth underground, the carriage cost paid by broadcasters to distributors will come down but that will be well compensated by the increased number of channels that the cable operators will carry. This will be a real good news to all players in the entire value chain.
Over the years, the local cable operators (LCOs) have been dominating the cable TV market by offering video/pay-TV services. Digitization will change all of that because billing relationship or end-user management will be controlled by MSOs. This will in turn streamline revenue distribution amongst broadcasters, MSOs, and LCOs.
According to the Associated Chambers of Commerce and Industry of India (ASSOCHAM), MSOs will get a share of revenue from a significantly larger volume of subscribers (as they will have the direct relationship with subscribers). In terms of average revenue per user (ARPU) they will see an upside because of subscribers consuming and paying for value-added services and the opportunity to bundle broadband to some digital customers.
According to the Telecom Regulatory of India (TRAI), there are over 200 broadcasters and about 600 television channels in India currently. Service providers include over 6000 MSOs, 60,000 LCOs, besides seven satellite television operators and many IPTV providers; the total number of TV households stands at 147 million. All this means a huge business opportunity for various players in the value chain.
Challenges and Opportunities
Alongside the benefits, cable digitization also brings some apparent challenges. As the biggest beneficiaries, MSOs will bear most of the execution challenges associated with meeting the digitization deadline. Considering the number of TV households in the main metros, which is 10 million, the MSOs need to deploy over 7000 STBs every day to meet the deadline. This is indeed a daunting task. One positive outcome of this is that financial pressures associated with digitization could drive consolidation among smaller MSOs having limited access to capital.
With nearly 20 percent of analog cable TV subscribers expected to turn to DTH (instead of migrating to digital cable) in order to avoid paying additional costs for set-top boxes (STBs), MSOs who fail to execute the digitization process successfully will be under tremendous pressure. Therefore, it is critical that MSOs forge alliances on the technical, financial, and operational fronts with players having global expertise, past experience, and come with a comprehensive product portfolio.
Capital availability and assuring a decent return on investment is also a major concern. Experts believe that ARPU rates would see a rise from presently '150 per month to about '180 per month and broadband bundling could increase substantially, going forward. Initial investment is still a cause for concern because cable TV distributors do not charge their consumers upfront for STBs. In order to tackle these issues, alliances are being forged that would help obtain financing for acquiring India-specific STBs and associated infrastructure.
Consumer Demand – STBs and More
With the number of available TV channels expected to increase from 70 to 500+, consumers can expect better services (HD, broadband) and a more personal, interactive, and social TV-viewing experience. This also means that the demand for the right kind of STBs will increase. STBs that come with a basic digital-to-analog converter, simple-to-use user interface with channel listing, favorites, parental control, and a remote control unit would be the most sought after one.
If these solutions can additionally address the concern of piracy and allow program tiering, they would help increase ARPU for MSOs. STB solutions, which are HD TV ready, provide high-definition TV viewing, and support video on demand, data apps, and over-the-top content, will enable a true home theatre digital experience to the viewers.
Given that consumers today are more inclined toward quality, the key driver is added value and high-definition picture quality. Consumers seek solutions that take advantage of intelligence through cloud, network, and clients to deliver a viewing experience of premium quality. Architectures that deliver on these expectations let consumers easily search, purchase, and play any content of their choice.
They enable consumers to communicate, share, and manage their content and services within the same immersive, multi-screen experience. The experience gets better when delivered through an open platform that supports common industry standards. Additionally, such solutions let service providers extend the experience across any managed or unmanaged network, to any managed or unmanaged device. This in turn helps them deliver a consumer experience that is:
- More intuitive, with a consistent interface across multiple devices and universal guide and search capabilities across all content sources
- More visual, with seemingly infinite content and applications available from a range of sources, made easy to navigate on the TV screen or the customer's screen of choice
- More social, by integrating social networking and telepresence capabilities that let consumers show, share, and engage with video
- More mobile, with the ability to extend this unified experience over the service provider footprint or over unmanaged networks, to almost any managed or unmanaged device
At the same time, these solutions help service providers unlock new revenue opportunities, monetize online video, and reinforce the value of their networks in the content delivery ecosystem.
Future Growth Prospects
What is being witnessed is actually just the beginning; it is expected that after completion of Phase I digitization, an entirely new industry will emerge as a well-capitalized one that will help creates incentives at each end of the value chain from content production to distribution and consumption. Experts also agree that the quality of content will significantly improve as digitization progresses. Time then, for us to wait and watch.