Saturday, May 15, 2010

Digital TV: The current Landscape


Abhijit Kamra, Jeeta Das, Jitin Sharma | NITIE, Mumbai
The Digital segment, though largely untapped, faces intense competition on the basis of content, price and quality. Decreasing ARPU is a reality and the only way to increase revenues is to capture more market-share in the short run and then slowly increasing ARPU over time. However, to increase market share it is paramount to identify the target audience and what is relevant to them.

Methodology
Questionnaire based survey conducted to come up with the following:
The Targeted Consumers:19-35 yr olds, both in metros and non-metros
Gap Analysis: Expectations from a channel of entertainment and communication an entertainment and communication channel together with the current offerings.

Adding to the further woes of DTH players are:
High operating costs
Extremely high last-mile costs

What is required?
A “convergent medium” backed by good customer services and meeting the consumer’s expectations.
Our Proposition
Aggressive Marketing of IPTV even at the expense of De-Marketing DTH
1. Full triple-play gateway with broadband access, Voice over IP and Quality of Service (QoS) features supporting IPTV delivery and Wi-Fi home networking
2. Bouquet of video (IPTV), audio (telephone) and Data(broadband internet)
Key Parameters
Financials
The fixed and operating costs of IPTV over DTH are considerably lower. To capture larger market shares ARPU would be lower.

However with time, subscribers can be expected to graduate to more value added packages and hence leading to increase subscribers and ARPU.
Competitive Advantage
a. Threat of new entrants: LOW
The big broadband players (Reliance, BSNL, MTNL have already entered)

b. Threat of substitutes: HIGH
DTH- Very high
Cable TV- High
Online- Medium
Terrestrial- Low

c. Bargaining power of suppliers: HIGH
CPE suppliers- Medium
Content- Very high

d. Bargaining power of Buyers: HIGH
Price sensitive
Numerous options

e. Inter-firm rivalry: HIGH
Price wars

Litigation and fight for content
Although all the four forces appear to make the scenario highly competitive, Airtel has the inherent advantage over its competitors of having a vast Broadband network.
Scalability and Current offering
The proposed scheme for scalability is explained in brief, diagrammatically.

Essential Capabilities

1. Human Capital
The cost implications of a training program for the workers would be offset by consumer lifetime revenue streams over a long term relationship.
Our survey showed that one of the biggest grievances customers had was of poor and ill-addressed customer care. Redressing this would go a long way in building customer loyalty.
82% of respondents do not complain because they do not know whom to complain and whether their complaints would be answered.
67% of these said they would re-purchase if their complaints were resolved promptly

2. Technology
Provide the user with excellent Quality of Experience (QoE) which is the overall IPTV user experience:
Application responsiveness
Functionality usability
Surrounding Service context
V-QoS (video quality)

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