Indian Digitization to ‘Transform’ Market, Says MPA Report


MUMBAI: The digitization mandate for Indian cable operators will drive tax revenues for the government, boost consumer choice and accelerate subscriber takeup, bringing about a "significant transformation" of the country’s $7 billion TV industry, according to a new report from Media Partners Asia.

"India’s broadcasting and pay-TV market is on the cusp of a high growth value phase similar to North America between 1998 and 2003, Korea during 2003-7, and Taiwan during 2005-10," said Vivek Couto, executive director of Media Partners Asia. "Valuations of the domestic companies in these markets during the high-growth value stage typically skyrocketed, as networks were upgraded and services to consumers expanded. In India, domestic players and foreign investors will both do well, to the benefit of consumers, when the government’s policies take shape.”

Among the beneficiaries of the new policy—requiring Indian cable operators to be fully digital by 2014—will be the government, according to MPA’s Digital India: The Dynamics of Mandatory Addressable Digitization. If the current analogue model were to remain in place, tax revenue that the government would miss out on would total $11 billion over the next ten years. Digitization will also enhance broadband penetration in the country and drive economic growth. A ten percent broadband penetration increase could up India’s GDP by about 1.5 percent. The country’s National Broadband Plan sees cable operators as being key in the overall expansion of the broadband market.

Consumers will also benefit, gaining access to more channels, better tiers for local, regional and niche content, an improved viewing experience and an improved quality of service.

The MPA is forecasting a six-fold subscriber revenue increase for cable MSOs, even though there is estimated to be a 20-percent churn rate as cable subs switch to DTH. Sub reporting levels will increase from the current 15 percent to 100 percent, and ARPU will increase six times. Cable operators will also benefit from takeup of bundled broadband and HD packages. It’s not just the platforms that will see benefits, says MPA. Broadcasters will see improved subscription revenues, reducing their reliance on ad revenues.