Tata Sky 

is a DTH satellite television provider in India, using MPEG-2 digital compression

technology, transmitting using INSAT 4A at 83.0

It is a joint venture between the Tata Group, that owns 80% and STAR Group that owns a 20%
stake. Tata Sky was incorporated in 2004 but was launched only in 2006. It currently offers close
to 200 channels (As of August 2010) and some interactive ones; this count includes some
numbers off HD channels offered by Tata Sky (as Tata Sky - HD) and interactive services also.

The company uses the Sky brand owned by British Sky Broadcasting.

In October 2008, Tata Sky announced launching of DVR service Tata Sky+ which allowed 90
hours of recording in a MPEG-4 compatible Set Top Box. The remote is provided with playback
control keys and is being sold with special offers for existing suscribers.

In 2008, Singapore-based Temasek Holdings picked up 10% stake in Tata Sky from the Tata
Group. This has diluted Tata's stake in the venture to 75%.

STAR’s parent company, News Corporation, owns an International group of DTH businesses
that include Sky Italia in Italy and Foxtel in Australia.
Tata Sky+

Tata Sky+ is a premium set-top box-cum-Personal Video Recorder or even known as DVR
Digital Video Recorder that allows recording up to 130 hours of live TV, recording one
programme while watching another, pause, fast-forward and rewind a live telecast and review a
TV programme. Also Tata Sky+ provides service using MPEG-4 digital compression
technology.
Tata Sky HD

Tata Sky HD was launched on June 14, 2010, and has channels in their native resolution of 1080i
or 720p. The STB is compatible with 5.1 CH surround sound as well. The service currently
offers four HD channels - National Geographic Channel HD, Discovery HD, Showcase HD (Pay
Per View) & Star Plus HD. More channels such as Star Movies HD and other popular sports
channels in HD format are expected to be added soon.
Certifications and Honours

ISO 27001:2005 accreditation

In March 2009, Tata Sky, became the first Indian direct-to-home (DTH) service provider to be
awarded the ISO 27001:2005 accreditation, the benchmark for information security ISO
27001:2005 is an international standard that provides specifications and guidance for the
establishment and proper maintenance of an Information Security Management System (ISMS).
The assessment for the certification was conducted by Intertek Systems Certification, the
management systems business unit of Intertek Group. This certification confirms that every
transaction carried out through Tata Sky’s IT systems are highly secure.
SUPERBRAND 2009 – 2010
Tata Sky was selected as a SUPER BRAND for the year 2009-2010 by an independent and
voluntary council of experts known as Superbrands Council. It is the only Indian DTH to have
won this distinction.

DTH INDUSTRY – An Overview:

DTH services were first proposed in India in 1996. But they did not pass approval because there
were concerns over national security and a cultural invasion. In 1997, the government even
imposed a ban when the Rupert Murdoch-owned Indian Sky Broadcasting (ISkyB) was about to
launch its DTH services in India.

Finally in 2000, DTH was allowed. The new policy required all operators to set up earth stations
in India within 12 months of getting a license. DTH licenses in India cost $2.14 million and will
be valid for 10 years. The companies offering DTH service will have to have an Indian chief and
foreign equity has been capped at 49 per cent.

Today, broadcasters believe that the market is ripe for DTH. The prices of the dish and the settop
box have come down significantly. Overall investments required in putting up a DTH
infrastructure has dropped and customers are also reaping the benefits of more attractive tariffs.
The major thing that DTH operators are betting on is that the service is coming at a time when
the government is pushing for CAS (conditional access system), which will make cable
television more expensive, narrowing the tariff gap between DTH and cable.

Country’s first private DTH license was awarded to Dish TV in 2003 which started operations in
2004.Prasar Bharti also started its product DD-Direct+.

Industry competitors: Segment rivalry

 Presently as on 2010, these are the main DTH service providers in India:
 DD Direct – state owned free service provider
 Dish TV - owned by Essel Group, was the first commercial DTH service
provider.
 TATA Sky – owned by TATA group, largest DTH service provider
presently in India.
 Sun Direct – owned by Sun group, primary focus is on low income groups
and regional viewers.
 Reliance Big TV - Owned by Reliance group, new entrant into the market.
Oct’09 PT-PGPM Page 7
 Airtel Digital TV – Owned by Bharti group, new entrant with aggressive
marketing strategies.
 Videocon D2H – Videocon group, new entrant into the market

Market Share
Others
AirtelDigitel 5%
7%

Big TV Dish Tv Dish Tv

12% 32% Tata Sky
Sun Direct
Big TV
AirtelDigitel
Sun Direct Others
20%

Tata Sky
25%

Market Share
With 7 operational players, the segment rivalry is quite high. The competition
from state owned DD-Direct to private players is negligible from the content
point of view as the number of channels offered by DD-Direct is very limited.
However, DD-Direct does not charge any monthly subscription fee which poses
a threat to the private players. Between Dish TV and Tata Sky there is an intense
rivalry exhibited by price wars and discount schemes offered to new connections.
Being the first mover, Dish TV has price advantage in both the STB as well as
procuring the transponders. On the other hand, Tata Sky claims its STB having
superior DVD quality video. There is also a competition at acquiring the content.

The Story of TATA SKY.

In 2004 TATA group(India most largest and most respectable business conglomerate) and
STAR( leading media and entertainment company in Asia ) form a joint venture to establish Tata
Sky.In Jan 2006 Tata Sky selects NDS end to end system for its DTH(satellite) digital pay-TV
platform.In Aug 2006 Tata Sky launches satellite DTH service across the India.In July 2007
Connection reach 1 millon within the 11 month of launch.In Apr 2008 surpasses 2 millon
connection within the 21 months.In Aug 2008 Launches India’s first Hindi-language Electronoic
programme guide(EPG)in partnership with NDS.In Oct 2008 Tata Sky launches India’s first
DTH DVR based on NDS XTV DVR technology. In March 2010 Tata Sky reaches 5 million
subscribers making it India’s second largest DTH playerIn June 2010 Tata Sky launches HD
channels and an HD zapper set-top box.
KEY FACTORS OF GROWTH FOR TATA SKY:
The 3 major reasons for growth of Tata Sky that can be explored are:

1. SUPERIOR PICTURE QUALITY

Unlike analog cable, Tata Sky subscribers can view TV through superior digital DVD quality
picture and CD quality sound

2. WIDE ARRAY OF INTERACTIVE APPLICATIONS

In order to empower the Indian viewer with choice, control and convenience Tata Sky has a
widearray of programming choices and interactive services like Active Cooking, Active Wizkids
etc.that can be ordered with any of the basic packages. This service is being provided in
association
with 24 X7 guru.com. The customer is not going to stay forever with the package he subscribed
to initially, he should be encouraged to subscribe to other packages and value added services
quickly to increase revenues. These applications are expected to do well given that in India TV
viewing in India is done as a family.

3. UNPARALLELED CUSTOMER SERVICE

Tata Sky has established an extensive customer service network across the country. It has
engaged a field force of approximately 3000 service engineers who are complemented by high-
end 24x7 call centre’s, manned by multi-lingual customer service associates, trained to solve all
customer problems.

Tata Sky takes direct responsibility for installing and servicing the hardware for periodic
problems that exist at every subscriber's home, thereby ensuring the highest levels of customer
service. Tata Sky retails its hardware and prepaid recharge vouchers through popular consumer
electronic stores to enhance customer convenience.

TATA SKY FINANCIAL ANALYSIS:

Assumptions:
• ARPU increases from Rs 190 to Rs 470 in 2010-11
• Revenues increases @ CAGR of 112% till 2010-11
• Expenditure reduces from 180% to 75% till 2010-11
• Debt : Equity reduces from 2:1 to 1:2 till 2010-11
From the above table the following interpretations can be made:
The total revenues of Tata Sky have been continuously increasing from 0.19 million in FY
2007
to .845 million in FY 2009.
The company is expected to generate revenues of 3.838 million in FY 2011.

SWOT ANALYSIS FOR TATA SKY:

STRENGTHS

1. Leveraging on brand TATA and High brand recall

2. Technological expertise with Newscorp’s DTH arm Sky
3. Superior Picture quality
4. Leads in introducing new packages & Services
5. Customer service
6. Rural penetration through ITC E-Choupal and Godrej Aadhar
7. Interactive channels and program guides
8. Innovative Product offering Tata Sky Plus
WEAKNESSES

1. Second Mover after Dish TV who captured Market Share

2. Cannot match free service like DD
3. Currently Does not offer free Set Top Box like Dish TV
4. Litigation due to issues related to sports channels which it lost
5. Dependency on broadcaster and had issues with Sun TV

OPPORTUNITIES

1. Larger disposable incomes with India

2. Tapping niche markets with Better service and Product offering
3. Expansion of distribution network through exclusive stores
4. Interactive advertising – Tie up of with Samsung
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5. Increase in number of TVs sold
6. Increase in the geographical boundaries with Rural Market untapped
7. Growing demand for quality of service in the form of DTH over Cable
8. CAS being made Compulsory would encourage switch.
9. Value Added Services are gaining steam.

THREATS

1. IPTV provides superior technology if implemented

2. Cable Set top Boxes provide easy switching due to negligible switching costs
3. Increasing Competition internally
4. Dependency on CPE suppliers to some extent
5. High dependence for transponders on ISRO
6. Dependency on broadcasters for their channel content and thus increase in cost
7. No Exclusivity in Content and Rule of ‘Must Carry’
8. Cap on Investment (20%)
9. Interoperability Regulations
10. Cap on foreign Investment (49%)

RECOMMEDATIONS:
The following price related strategies could be adopted, which may lead to a short term loss but a
medium term break even and profit.
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· Free Set Top: Set top Boxes can be given free while ensuring lock in by providing base
pack free for limited time duration, thus inducing update to next level.
· Multiple Connections: Provide discounts for consumers buying second Tata Sky
Connection (up to 50% off)
· Encourage References: Provide discounts on Monthly charges if a reference from
existing consumer becomes a new customer.
· Payment Options: Allow multiple points of payment, ensuring timely payment and
convenience to the customer – Credit Card through Website, Pre Paid cards from Retail
shops to be activated using Telephone and Drop Boxes at Societies.
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