Market Insight

Tata Sky to launch Ultra HD in 2015

July 10, 2014


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India’s second largest satellite pay TV provider Tata Sky will launch ultra-high definition (UHD) services in early 2015. French STB vendor Technicolor will supply Tata Sky with UHD set-top boxes to support the launch. Videocon which owns the d2h+ satellite pay TV platform and is India’s largest TV set manufacturer, has announced similar plans for a UHD launch in early 2015. Both launches will coincide with the 2015 ICC Cricket World Cup, although plans to broadcast the event in UHD have not been announced.

Our analysis

India is an emerging and highly competitive pay TV market, where economic conditions and rampant price competition, make it challenging for pay TV providers to generate high average revenues per user (ARPU). Under these conditions, using advanced services to attract the high-paying subscribers is a critical factor for success. Tata Sky’s UHD launch plans reaffirm its long term strategy of using technology-based service differentiation to win market share and grow ARPU. It was the first pay TV operator in India to launch DVR and one of the first to launch HD channels.  Being first to market with UHD should help Tata Sky win high-value early adopter subscribers.

Although the majority of Indian consumers will be unlikely to purchase a UHD TV during the 2015 launch period, there is most certainly a high end segment of market that will be able to do so. These high end consumers are already buying UHD TV sets. In 5 years from now (by 2018), 3.5% or 6.1 million TV households in India will have a UHD TV set – which is half the time it took HD sets to reach this level of household penetration since first launch in the country. This makes India the 6th largest addressable market for UHD and presents a significant opportunity for Videocon’s TV business, which will be further bolstered by it providing UHD content as part of its d2h+ satellite pay TV operation.

India is also a significant market for STB manufacturers. Due to rapid satellite pay TV growth and national cable digitisation legislation, the Indian pay TV STB market has boomed since 2008. 142.5 million STBs will be purchased by Indian pay TV operators between 2014 and 2018. This represents 13% of global pay TV STB demand over the period. Only China and the US offer larger volume opportunities than India to 2018.  Indian Pay TV operators have so far relied mostly on low cost, and low margin, STBs to keep up with the rapid pace of the low ARPU market. As a result, Western STB brands have struggled to succeed in India. The market is beginning to mature, which is creating a need for product differentiation through more advanced STBs. As the market moves toward the higher end, Western vendors could find greater success in India, since margins will be higher and low value STB vendors struggle to supply higher end boxes.

UHD is a growth opportunity for the STB market. During 2014 – 2018, 25.6 million UHD STBs will be shipped globally to pay TV providers. These shipments will be worth $6.2 billion or 8% of the global pay TV STB revenue over the same period.

Geography
India USA
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