Both Direct to Home (DTH) and Internet Protocol Television (IPTV), which is sometimes also referred to as Interactive Personalized TeleViewing in India, offers integrated service providers the opportunity to further grow their revenue while meeting a latent demand of customers—providing video entertainment to subscribers at home with differing levels of willingness to pay for interactivity. To ensure the best economic gains, integrated service providers should holistically look at the customer base, segment it and then address the needs of this segmented customer base in the most optimal way based on the available options for service delivery. From the analysis presented, it appears that DTH addressable market complements IPTV’s customer segments and that IPTV has a higher potential to grow average revenue per user (ARPU).

Exhibit A: Video Entertainment Value Chain Exhibit A provides a pictorial view of the video entertainment value chain. Content producers such as Adlabs, Disney and ESPN produce the actual content while content providers such as Shemaroo, STAR, and ZEE acquire content from the producers and aggregate them for the service providers. The service providers, as content aggregators and distributors of the content, then create and offer bundled packages that will appease the end users and support typical content consumption on their TV screens. In India, this value chain is still evolving and one can see that the content creator could also become the content provider and may choose to distribute the content using other channels of distribution.

The professionally developed contents from the likes of Adlabs, STAR, and ZEE can be delivered through any of the country’s service providers to the home TV. This is as described by the black arrows in the exhibit. However, only IPTV providers can offer interactive content like games, video on demand (VOD), music on demand (MOD), e-learning, polling, televoting, and karaoke the delivery of user generated content from the likes of YouTube, Facebook, Myspace and Yahoo video that users can potentially consume not only on the home TV but also on the mobile devices and personal computers. This is depicted by the red arrows in the exhibit. A work around would only provide limited interactivity on cable and DTH networks.

Identifying Target Markets
DTH service makes business sense when
* There is non-availability of both broadband and physical back-bone network and the video signals are received by each individual home through a mini satellite dish that acts as a receiver of signals.
* Economies of subscriber scale exist. DTH service can scale-up gracefully as the fixed cost is the satellite link, and this cost reduces per subscriber as the number of subscribers increases—the higher the adoption of DTH, the lower is the fixed cost per subscriber.