India will become largest market for DTH satellite pay-TV by 2012:MPA

The future of pay-TV in India will be driven by media owners and distributors expanding market share with an eye on profits, rather than at the expense of profits, according to a new report published by Media Partners Asia (MPA).

The Indian pay-TV sector generated sales of US$6.5 bn for FYE March 2010, says MPA, while EBITDA profits for the sector reached US$800 million, implying a modest profit margin of 13%. MPA sees industry sales growing to US$12.1 bn by 2014 and US$18.5 bn by 2020; margins will improve to 15% and 23% over the same period, with EBITDA profits reaching US$2.3 bn and US$4.4 bn. In terms of volume, broadcasters and local cable operators (LCOs) will lead long-term, while LCOs and cable multi system operators (MSOs) will lead in margins. Most direct-to-home (DTH) satellite pay-TV operators will start making money after 2013.

MPA executive director Vivek Couto said: "Cable MSOs probably face the most challenging future as capital intensity and competitive dynamics are such that the premium placed on funding and execution skills is growing at an alarming rate. Nonetheless, most national MSOs will be able to forge stronger last-mile links with the consumer long-term, with positive implications for future funding as well as large-scale deployment of digital pay-TV and broadband. We are more positive on India’s DTH opportunity than previously, especially when anchored to consolidation and improved pricing power with continued growth. We suspect the DTH market will consolidate from six to four platforms within three to five years, and estimate four will be making money at the EBITDA level by FYE March 2013. Finally, the combination of a strong economy, a larger pay-TV audience and digitization will also boost the market for broadcast groups. Competition will remain intense, as the main theater of war shifts to regional markets. The major risk to all our growth assumptions is regulation, which continues to commoditize and destroy industry value."

Projections from Media Partners Asia (MPA) suggest that Indian pay-TV subscribers will grow from 105 mn in 2009 to 149 mn by 2014, and 173 million by 2020. This means pay-TV penetration will grow from 78% in 2009 to more than 90% long-term. Cable will retain 70% market share by 2014, falling to 64% by 2020, while DTH will scale up to almost 35% share long-term