India Pay TV Set for Long-Term Profitable Growth

NEW DELHI: Media Partners Asia (MPA) has released an upbeat new report on India’s pay-TV market, which is expected to deliver revenues of $12.1 billion by 2014 and $18.5 billion by 2020, up from $6.5 billion for the fiscal year ended March 2010.

In fiscal March 2010, EBITDA profits for Indian pay-TV hit $817 million, MPA reports, for a profit margin of 13 percent. By 2014, that margin will reach 15 percent ($2.3 billion), and by 2020 MPA sees a profit margin of 23 percent ($4.4 billion). 

As of the year ended March 2010, local cable operators delivered revenues of $2.9 billion, with an EBITDA profit of $801 million. Pay-TV broadcasters generated $2.6 billion, for a $410 million EBITDA profit. Cable MSOs delivered revenues of $600 million and EBITDA profit of $70 million. DTH operators had $551 million in revenues, with a $464 million loss. MPA sees DTH platforms reaching profitability after 2013.

“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," said MPA’s executive director, Vivek Couto, of the future of Indian pay TV. "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. 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 is regulation, which continues to commoditize and limit industry value.”

MPA’s latest research also notes that the number of pay-TV subs in India will rise from 105 million last year to 149 million in 2014 and 173 million by 2020. Cable will dominate, with a 70-percent market share through 2014, falling to 64 percent by 2020. The DTH pie is expected to rise from 17 million subscribers in 2009 to 45 million in 2014 and 58 million in 2020. By 2012, India will become the world’s largest DTH market with 36 million homes; ARPU, however, is expected to remain low, at just $4, as compared with $80 ARPU in the U.S. with 35 million DTH homes. Digital cable will also see steady gains, increasing to 17 million by 2014 and 29 million by 2020. Cable broadband, a key driver of future cable sector profits, will grow from 850,000 homes in 2009 to 3 million by 2014.

HDTV and value-added services will be key to the sector’s profitability going forward, contributing more than $500 million by 2014 and increasing to $1.5 billion by 2020. Pay-TV advertising, meanwhile, is forecast to growth at an annual average rate of 14 percent of the next five years and by 10.5 percent over the next ten years. The Indian pay-TV ad market will reach $3.2 billion in 2014, MPA forecasts, and $5.1 billion by 2020.