Reliance ADAG joins the DTH bandwagon

Reliance ADAG group has received permission to start its DTH operations, becoming the fourth player after Zee TV owned Dish TV, Tata-Star TV’s Tata Sky and yet to be launched Sun Direct. Prasar Bharti also has operations under the name of DD Direct Plus, but it has remained a non-starter owing to the quality of channel portfolio. With Bharti Airtel, also planning to start its operations soon, the sector would be see intense competition.

DTH services scores in the quality of picture, sound and interactive services on offer, but the biggest entry barrier still remains the high price of digital box and installation. DTH services competition from the existing cable operator, CAS and IPTV. CAS is present only in metros but the implementation has been far from successful, while IPTV is still to gather momentum. The local cable operator is still able to rake in the moolah and call the shots, as he has a control over a particular locality, and there is little left for the consumer to choose.

Reliance’s DTH venture was initially called ‘Reliance Skymagic’ but with objections from Rupert Murdoch (News Corp / Star TV owner), it had to change it to ‘Reliance Bluemagic’. Reliance would be able to leverage on its entertainment and communications business through this venture, and synergise its telecom, media and entertainment business running through Reliance Communications and Adlabs with the DTH services.

Reliance also has plans to launch IPTV (triple play consisting of Broadband, Telephone and TV) by next year (BSNL, MTNL and Airtel have already launched IPTV in select cities). The ADAG group has picked up stakes in TV Today, UTV, NDTV and Zee TV owned companies. This would help it in leveraging content and negotiate favourable interconnection agreements at cheaper rates, improving profitability. Reliance also stands to gain from its other verticals like multiplex, mobile content, gaming portal and FM radio segment.

And considering, Reliance’s penchant to be the market leader, the services should be priced below the other DTH players thus starting a price war and consolidation in the market. But, the DTH market in India is still at a nascent stage in India with little penetration and it would be a while before it becomes a service for the masses. Though it would do well in CAS applicable regions, but for other regions, it would require lower entry costs, rental cuts, customised channel packages and wider service network.