Vikram Kaushik, Managing Director & CEO, Tata Sky Ltd., He brings with him over 30 years of experience in consumer sales and marketing. Mr. Kaushik commenced his career with FMCG giant Unilever. Over the course of 16 years with the Unilever Group, he was responsible for the growth and stature of some of the best brands in India including Lux and Fair & Lovely. After a brief stint in advertising as the Managing Director of a leading agency, he moved on to Britannia as Vice President - Marketing and Exports. Mr. Kaushik then moved on to become the Marketing Director of Colgate-Palmolive India and joined the Board of the Company as a full time Director. He was instrumental in reviving the fortunes of the brand Colgate in India.
Established in 2004, Tata Sky is a JV between the Tata Group and STAR, owned by the UK-based British Sky Broadcasting Group. Launched in 2006, Tata Sky has empowered every Indian viewer with ‘Choice, Control and Convenience’ by offering them the most comprehensive choice of over 174 channels ranging from movies, news, entertainment and sports channels in DVD picture quality and CD quality sound. In a short time, Tata Sky has carved a niche in the rapidly growing Indian pay TV market. It has also launched Tata Sky+, a new age service that used the breakthrough ‘Personal Video Recorder’ technology. It is the first and only Indian DTH Company to be awarded the ISO 27001:2005 accreditation for Information Security and also the first DTH brand to get the prestigious ‘Superbrand’ status.
In an exclusive one-on-one interaction with Hemant P. Maradia of India Infoline, Mr. Kaushik says, "About 8-10mn new DTH connections will be added every year. By 2015, there might be anywhere between 45-50mn DTH connections."
What is the rationale behind launching these new high-end services?
The three new features launched are clearly aimed at the high-end customers. We look at the DTH market segment-wise. The Indian market is pretty diverse and there are opportunities at every different end of the market. We believe that there are people who are more discerning who are more of premium consumers and are willing to pay more. Then there are others who are very price conscious and opt for a more basic service. We provide service to all these customers.
Tell us something about these new features?
The first one is called True Video On Demand (TVOD). This word has been misused a lot in India. If you look at the current services, nothing is given on demand. It is just ‘Pay Per View’ that has been made available to the DTH customers so far. We feel that time is ripe for consumers to get true VOD.
So, Tata Sky will download programmes into the customers’ STB. This can be movies, sports, features, etc. This content will reside on the hard disk of the customers’ STB. One can then choose any of the listed programmes at a time of one’s convenience.
TVOD will be available not only the new Tata Sky + customers but also to the existing Tata Sky + customers.
Second feature that we are launching is called Dual Access Remote Recording. One can record a particular programme of one’s interest either through a mobile phone or via the Internet. This again enhances the convenience for the Tata Sky + customers.
The third feature is called Auto Standby, whereby a Tata Sky + STB will automatically switch to a power saving mode unless a live programme is on or some recording is underway.
All the three features will be made available to the Tata Sky + customers by the end of the month.
How many subscribers do you have for Tata Sky +?
We have about 100,000 Tata Sky + customers. It continues to bring in significant volume for us on a steady basis. Tata Sky + accounts for close to 10% of our volume.
Are you satisfied with the Tata Sky + numbers?
The adoption of the personal video recorder service (Tata Sky +) in India has been similar to what it has been across the world.
We believe that if you segment the market properly then there are customers who are willing to pay a premium for high-end services like Tata Sky +.
What is your strategy on value-added or interactive services?
We have been working quite actively on our value-added basket of services since inception. We continue to have a lot of interactive programmes and value-added services even now. We recently launched an interactive service called Active English, which helps Tata Sky customers to learn the English language.
We have Active Darshan for older members of the family. We have Active Cooking aimed at housewives, etc. So, we have a whole gamut of interactive services which we keep updating every day.
We have collaborated with a number of domain experts for our interactive services. We have tied up with NDTV Good Times for Active Cooking. We have an alliance with Disney as well for a few of our Edutainment interactive services. For Active English we have partnered with the British Council.
How many subscribers have opted for the interactive services?
Today, at least two million out of our five million subscribers take some kind of interactive service. Also, out of the 180 minutes a day that the average customer spends watching television on Tata Sky, 34 minutes are spent on interactive services. So, clearly there is a lot of interest among the customers about these interactive services.
Could you throw some light on the difference between MPEG 4 and MPEG 2 technologies?
There is a lot of misinformation around this subject. MPEG 2 and MPEG 4 are basically compression standards. These standards determine how many channels a DTH player can put through the STB.
So, the only difference is that under MPEG 4 a DTH player can put some more channels. It doesn’t affect the quality of the picture or sound.
In fact, if you overload each transponder with too many channels, irrespective of MPEG 2 or MPEG 4, the quality of transmission will be poor.
How are you placed in terms of transponders?
All DTH players require more transponders as the number of channels are growing rapidly, particularly in the regional markets. Therefore there is a shortage of capacity.
What is your take on the rising competition in DTH space?
Every new industry in India is attracting more players than what it can absorb. It is true for what happened in the airlines industry, the mobile telephony industry and it is now happening in the DTH space as well. And, when that happens some players resort to predatory pricing to try and find some foothold. This is very dangerous and very unhealthy for the DTH industry. It destroys value rather than creating it.
Therefore, we are seeking some kind of intervention from the Government through a more rational tax policy. The DTH industry is overtaxed, with the cumulative impact in excess of 50%. So, some rationalisation is required.
The DTH industry is playing a crucial role in cleaning up the distribution of satellite television in the country. The cable industry doesn’t declare the true picture on connections, resulting in artificially low pricing. Both these malaises must be eliminated to make the pay television industry healthy.
We hope the Government will work with the DTH industry to digitalise Pay TV in the country and will give it some sort of economic viability.
Will there be a shakeout going ahead?
This is inevitable in the longer term as nobody can sustain an unviable business for too long. There are too many DTH players right now, and unless the market expands fast to accommodate everyone some shakeout is likely in future.
Have you heard from the Government on reducing licence fees?
At 10% licence fee, the DTH industry is paying the highest tax. We learnt about some Government proposal to reduce the same. But, unfortunately the I&B Ministry and the Finance Ministry have not been able to achieve any consensus. This is a cause for concern.
Secondly, we are looking forward to the introduction of the GST. It has been delayed by a year. The Entertainment Tax, which is now becoming a burden in every state, will be subsumed under GST. This hopefully will help us.
What is the broad outlook for the DTH industry?
The outlook is good. About 8-10mn new DTH connections will be added every year. By 2015, there might be anywhere between 45-50mn DTH connections. This will be a substantive number, considering that total cable connections in the country are about 90mn today.
The issue is with regard to the financial and economic viability of the DTH business.
Is Star group hiking its stake in Tata Sky?
An application was made by the Star group to the FIPB for increasing its stake in the JV. Now, they have gone in for a modification of that application and filed a fresh application with the FIPB.