Direct-to-home (DTH) players – Dish TV, Tata Sky, Airtel digital TV, Big TV, Sun Direct and state-owned DD Direct Plus – are building up their subscriber base by targeting viewers outside the big cities, which suggests that about 60 per cent of DTH subscribers reside in rural areas and towns with a population under a million.

Within the rural markets, it is Dish TV and DD Direct Plus DTH services that have the most penetration; while again Dish TV and Tata Sky are preferred brands in top 100 metros. The southern market is dominated by Sun Direct; while in high-income households, Tata Sky is the dominant DTH brand.

Market leader Dish TV, set up by Zee Entertainment Enterprises Ltd (ZEEL), has the first movers advantage and was the first private company to start DTH operations in India in 2005. At the time of its inception, Dish TV had avoided the big cities because it did not have all the popular and quality channels on its platform.

Speaking to Televisionpoint.com, Salil Kapoor, chief operating officer (COO), Dish TV India, says, “We had no option but to launch in the semi-urban and rural areas in 2005. We did not have Star and Sony content so it did not make sense for us to launch in urban areas. As of today, we get 50 per cent of our customers from the top 100 cities and towns.”

Dish TV migrated to urban areas, once it got the bouquet of channels right, using Bollywood actor Shah Rukh Khan in its marketing campaigns to sell connections. Khan still features heavily in the Dish TV ads.

Dish is currently expected to hold the dominant position in the DTH market with an overall base of 5.3 million net subscribers by December 2009, to take the overall subscriber base to about 17 million, a 57 per cent growth over December 2008.

Tata Sky, the second largest DTH operator with 4.2 million subscribers, is confident about its strategy of targeting big cities. Tata Sky, which features Bollywood star Aamir Khan in its commercials, says the actor has helped expand outside the main urban areas.

Vikram Mehra, chief marketing officer, Tata Sky, says, “Large markets are sound ground for us and therefore, our focus lies in these markets. Half of our revenues come from the top 50 towns and cities alone.”

Airtel digital TV, which began offering services in October last year, has about 1.1 million of the total 16.9 million net installed DTH subscribers as of August 2009. The company is likely to add a net 1.6 million new DTH subscribers by March 2010.

Ajay Puri, director and chief executive officer, DTH, Bharti Airtel, says, “Most of our business has come from rural and semi-urban areas. The top 100 cities contribute to about 35 per cent of our revenues, which ascertains that the DTH market is far beyond cable.”

Farokh Balsara, partner, advisory services, Ernst and Young India, says that Airtel and Big TV aim to take advantage of the reach of their mobile services. Bharti Airtel is India’s biggest telecom company, with about 109 million users as of August 31, according to the Cellular Operators’ Association of India (COAI).

Balsara adds, “It makes sense for these mobile dominant companies to start from the rural India given their reach in these places through their telecom business. Since there is no cost of laying cables or other capital-intensive infrastructure, they have an edge over traditional cable networks.”

The Reliance Anil Dhirubhai Ambani Group’s Big TV, which started services in August last year, has a similar strategy. It gets nearly half of its 1.7 million subscribers from the top 100 cities.

Umesh Rao, chief marketing officer, Big TV, says, “Big TV has recently step up a new campaign to wean away cable customers with a new marketing drive in the country’s top 50 cities, which contributes 35 per cent of our subscribers.”

For Big TV, in each of these cities, the largest share will come from the cable homes. The biggest challenge for the company is to communicate with these consumers and Rao claims that “the bottom line is that we cannot offer consumers the same price that a cable operator does, so we are targeting housing societies.”

Sun Direct, present mostly in the southern states, has 4 million users (as on August 31) having launched in December 2007. The company did not reveal how much revenue it gets from the top 100 cities. For Sun Direct, the four states of Tamil Nadu, Kerala, Karnataka and Andhra Pradesh account for 70 per cent of its subscribers.

Tony D’Silva, COO, Sun Direct, says, “From the beginning we had clear plans on the value we will offer to our customers; our think regional and go national strategy helped shape our approach in different markets.”

DTH is a fast growing market, estimated to touch Rs 3,000 crore in the current financial year based on sales turnover, with the bulk still expected to come from rural India and semi-urban towns. In 2008-09, the size of the DTH market was Rs 1,428 crore.

In terms of geographical location, North India and Western India together contribute over 8 million DTH subscribers, while the southern market contributes 3 million. The states of Maharashtra, Goa, Punjab, Uttar Pradesh, and Rajasthan are the leaders in DTH subscription, contributing over 6.5 million DTH connections to the overall base.