D2H is Videocon Industries Direct To Home TV brand

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Videocon Industries, one of the largest consumer durables company in India in terms of sales, will start its direct-to-home (DTH) television services in mid-September 2008.

"DTH is a synergic business for any TV manufacturer. We have a 30 percent share in the television market, and an product line in the DTH service is very profitable for us." said Venugopal Dhoot, Chairman, Videocon Industries.

The DTH venture is headed by Anil Khera, who was earlier heading the operations of the company's Sansui and Kelvinator brands. The DTH will be known under the D2H brand, and is scheduled to test signals soon.

The set-top boxes of Videocon are also expected to be cheaper than the ones currently available in the market. Pricing will be an important strategy with Videocon across all its product lines.

Videocon is making a pitch for the direct-to-home (DTH) market through its media arm Bharat Business Channel. A couple of US funds led by Morgan Stanley have picked up 20% (FDI cap for DTH) in the venture for $200 million.

With access to Thomson technology, the company has developed a patented hardware and CAS system that will cut set-top boxes prices by half, people close to the situation said.

The letter of intent (LoI) for Videocon’s DTH licence has already been signed and a formal announcement is expected on Saturday. Videocon is looking at a competitive pricing, entry market strategy to push volumes and garner market share.

Venugopal_Dhoot,_CMD_of_Videocon_IndustriesVideocon CMD Venugopal Dhoot declined to comment on the stake sale.

The move is part of a business strategy to tap growth outside the conventional durables with a wider business portfolio, primarily in the services segment. The company is currently scaling its durables retailing business, across the country.

Although the DTH television service is at a nascent stage, several corporate houses want to tap the segment offering options for consumers who are dissatisfied with the service dished out by cable TV operators.

According to a company executive, if undertaken prudently, a DTH project can be put together at a cheaper cost than what has been touted till now by Tata Sky and the Subhash Chandra-controlled Dish TV, the two private sector DTH service providers in the country.

The synergies that Videocon Industries, manufacturers of TV sets and other consumer durables, sees in starting a DTH operation is that it already makes analog set-top boxes and has a widespread distribution network in India, which can be exploited for sale of DTH hardware.

However, with now six players eyeing the DTH space, in a market where cable has a strong hold, the going may not be very smooth for these companies. In fact, internationally, most market have a single or a maximum of two DTH payers. Most markets witness either a collapse or a consolidation where there were more than two players, as it seems to be economically unviable.

Moreover, in India DTH players are more at a disadvantage due to the current I&B laws, which do not permit any exclusivity of content. Hence, the entire strategy is dependent on pricing and distribution.
Sun Direct, the Bharti group and Reliance’s DTH venture Reliance Bluemagic are expected to hit markets by the end of the current year or in early 2008.

Last month, Videocon had approached the Indian Space Research Organisation (Isro) for six Ku-band transponders for launching its DTH service. After Insat-4B has gone to Kalanidhi Maran’s Sun Direct, the next Isro satellite providing Ku-band transponders will be up only in September-October.

Bluemagic is likely to get Insat-4CR (replacement) and can hope to launch its service earliest by December-January. Reliance has asked for eight Ku-band transponders and Isro is reserving the remaining four for other users like National Informatics Centre.

The Bharti group’s DTH launch can get delayed to early 2009 with Insat-4G launching only by 2008-end unless Isro approves of Measat-3, a foreign satellite launched from the Astro Group. Insat-4G has 18 Ku-band transponders but the demand from DTH operators could outstrip supply even at that stage.