MUMBAI: The Indian pay TV market is poised to overtake the US by 2012 according to a recent study by Media Partners Asia (MPA).
DTH subscribers will climb from a net installed base of 17 million in 2009 to reach 45 million by 2014, and 58 million by 2020. India will become the largest DTH market in the world in terms of subscribers by 2012, overtaking the United States. Digital cable will grow to 17 million subscribers by 2014, and 29 million by 2020. In 2009, 15% of India’s pay-TV homes had at least one set-top box; this number will grow to 38% by 2014 and almost 50% by 2020 with HDTV gaining more traction after 2010, driven by DTH satellite networks. Cable broadband, a key driver of future cable sector profits, will grow from 850,000 homes in 2009 to 3 million by 2014.
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 MPA.
The Indian pay-TV sector generated sales of $6.5 billion for FY March 2010, while EBITDA profits for the sector reached $800 million, implying a modest profit margin of 13%.
MPA sees industry sales growing to $12.1 billion by 2014 and $18.5 billion by 2020; margins will improve to 15% and 23% over the same period, with EBITDA profits reaching $2.3 billion and $4.4 billion. 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 million in 2009 to 149 million 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.
Total pay-TV subscription revenues will grow at an average annual rate of 14% over the next five years and 10% over the next decade, reaching US$8 billion by 2014 and more than $12 billion by 2020. Revenues from HDTV and VAS (including VOD, HDTV and PVR) will contribute more than $500 million by 2014, rising to $1.5 billion by 2020. A resurgent economy, an expanded pay-TV market and the growth of regional media should help bolster pay-TV advertising growth to an average annual rate of 14% over the next five years, and 10.5% over the next decade. MPA sees the total pay-TV advertising market reaching $3.2 billion in 2014, and $5.1 billion by 2020.