http://economictimes.indiatimes.com/News_by_Industry/Dollar_blues_come_to_haunt_DTH_cos/articleshow/3666239.cms
NEW DELHI: The price war in the DTH market may come to an end. The appreciating dollar may force DTH players to increase prices, as the industry completely depends on imported set-top boxes (STBs).
Market leader Dish TV is planning to increase prices, even though low-entry prices and attractive schemes helped it cross the 4-million subscriber-mark during Diwali. An industry expert said that other established players could follow suit.
Dish TV MD Jawahar Goyal told ET: “The appreciating dollar is making the DTH industry bleed even more. We are known to drive down DTH prices, but it may not be possible anymore as we import set-top boxes. Our costs have gone up significantly, and we have to pass it on to the consumers.” He said that the company was looking at innovative ways of increasing prices, so that it does not hurt the consumer. Dish TV has a subscriber base of 4.3 million.
Asked whether Tata Sky would also increase rates, company MD Vikram Kaushik said: “The desicion to increase or decrease DTH prices cannot be taken solely on dollar appreciation as one needs to factor in several other things. However, we are closely watching the market dynamics. A large player increasing prices is a signficant move and can change market dynamics.”
Most DTH players import their set-top boxes from foreign manufactures. The price of a set-top box varies according to the technology used by the DTH company. At the moment, all DTH players are selling STBs to customers below their cost price. With the dollar touching Rs 50 a few days ago, the cost of acquiring customers have gone up. None of the DTH companies are profitable and reeling under huge losses.
As per the industry estimates, a DTH player could buy an MPEG2 STB at about Rs 1,568-2,450, but it acquires a subscriber for Rs 2,600-5,000 per STB. Subscriber acquisition cost is calculated taking into account the cost of the set-top box, monthly content cost, advertising and promotion cost.
Similarly, a DTH player buys an MPEG4 STB (higher compression technology) for Rs 2,500-3,038, however its subcriber acquistion cost ranges from Rs 5,000 to Rs 5,600.
In the past few months, all DTH companies have reduced STB prices as well as subscription prices. The lowest monthly subscription fee hovers around Rs 99. The price war was largely due to new players like Reliance ADAG and Bharti Airtel entering the DTH space.
NEW DELHI: The price war in the DTH market may come to an end. The appreciating dollar may force DTH players to increase prices, as the industry completely depends on imported set-top boxes (STBs).
Market leader Dish TV is planning to increase prices, even though low-entry prices and attractive schemes helped it cross the 4-million subscriber-mark during Diwali. An industry expert said that other established players could follow suit.
Dish TV MD Jawahar Goyal told ET: “The appreciating dollar is making the DTH industry bleed even more. We are known to drive down DTH prices, but it may not be possible anymore as we import set-top boxes. Our costs have gone up significantly, and we have to pass it on to the consumers.” He said that the company was looking at innovative ways of increasing prices, so that it does not hurt the consumer. Dish TV has a subscriber base of 4.3 million.
Asked whether Tata Sky would also increase rates, company MD Vikram Kaushik said: “The desicion to increase or decrease DTH prices cannot be taken solely on dollar appreciation as one needs to factor in several other things. However, we are closely watching the market dynamics. A large player increasing prices is a signficant move and can change market dynamics.”
Most DTH players import their set-top boxes from foreign manufactures. The price of a set-top box varies according to the technology used by the DTH company. At the moment, all DTH players are selling STBs to customers below their cost price. With the dollar touching Rs 50 a few days ago, the cost of acquiring customers have gone up. None of the DTH companies are profitable and reeling under huge losses.
As per the industry estimates, a DTH player could buy an MPEG2 STB at about Rs 1,568-2,450, but it acquires a subscriber for Rs 2,600-5,000 per STB. Subscriber acquisition cost is calculated taking into account the cost of the set-top box, monthly content cost, advertising and promotion cost.
Similarly, a DTH player buys an MPEG4 STB (higher compression technology) for Rs 2,500-3,038, however its subcriber acquistion cost ranges from Rs 5,000 to Rs 5,600.
In the past few months, all DTH companies have reduced STB prices as well as subscription prices. The lowest monthly subscription fee hovers around Rs 99. The price war was largely due to new players like Reliance ADAG and Bharti Airtel entering the DTH space.
