'DTH is a common man's product': Tony D'silva

Tony D'Silva, chief operating officer, Sun Direct, is a few minutes from lunch, as he goes into this interview. “Bring me your Mumbaiyya vada pav,” he asks a colleague. He's told that vada pav's not really lunch material. But D'Silva's insistent. “No, bring me that only. I like the vada pav here.”

Can DTH services be affordably consumed by the common man—vada pav loyalist?
That's a question Sun Direct is attempting to answer with low subscription packages. The company's DTH battle with incumbent players—Tata Sky, Dish TV, Big TV and Airtel Digital TV—is focused on pricing differentiators and regional channels. Already a market leader in the South with 2.6 million subscribers, Sun Direct launched in Mumbai in December. D’Silva spoke to DNA  in this interview. Excerpts:

What has the response been to the launch of Sun Direct in Mumbai?
Extremely positive. But we can do much better. We’ve had a problem with supplies. I wouldn’t say we’ve been able to deliver to our full potential or cater to the demand completely. I think the demand is much more than we’ve been able to supply.

Any figures on how many users you’d have gained by now? And by the end of this fiscal?
The states in which our supply position is better, we’re far ahead of competition. In the western regions (Maharashtra, Gujarat, MP, Chhattisgarh), we’re adding 2,000 subscribers everyday. Overall, we have 2.6 million subscribers. The objective is to reach 3 million before March 31. That’ll make us the number two DTH player in the country.

Are you replicating the same strategy that made you successful in the South?
Very much. Only difference is in the packaging. Since Marathi is the main driver of viewership, we have more Marathi channels here unlike in the South, where you have more South Indian channels. And the pricing therefore becomes cheaper because the Hindi-speaking content is much more expensive than the South Indian content. The added advantage is that we’re providing the customer subscriber the set-top box free of cost.

What’s different about your distribution strategy compared to other DTH players?
The others have confined themselves mainly to white goods stores and telecom distributors. At Sun Direct, we’ve spread ourselves much thinner than that. Essentially, we’ll be present wherever consumers congregate. So in a village, it could be a cycle shop, a grocery shop or an electrician’s shop.

Internationally, there’s been a fall in set-top box prices. Have you benefitted from that?
Not really, since the fall in box prices has been offset by the fact that the value of the dollar has gone up. If the dollar remained at Rs 42-43 level, then it would have given us some benefit. Including all the taxes, we buy the box at about $50, and prices have come down by $5-6. Actually the chip prices—which account for 30-35% of the cost—have come down, along with steel prices.

What kind of losses are you staring at, this fiscal…
About Rs 600-700 crore. But that’s budgeted. Break-even will happen only after 5-6 years.

What next? Are you looking at new revenue streams such as video-on-demand?
There are phases in the plan. At present, we want to concentrate on mopping up as many subscribers as possible. Next, we’ll look at on-demand channels. We already have four comedy channels in the South and there are video-on-demand channels for south Indian movies in the pipeline. We have a library of about 3,500 to 4,000 movies. We plan to launch hi-definition (HD) channels very soon and we’re gearing ourselves to launch it in a big way. National Geographic and Discovery Channel have already applied for up-linking of their HD channels. As soon as they’re approved, we should be ready to roll. Also, all of Sun Network’s content is now being shot in HD, including their film productions. We’ve already begun importing boxes. Normal box cost about $50, but these boxes cost about $90. So we won’t be giving them away for free.

Are there any plans to set up special Sun Direct retail stores?
We are formulating plans to set up Sun Direct Experience Zones. Hopefully, by the end of this fiscal we’ll announce those.

Dish TV, Tata Sky have supposedly benefitted from big-ticket brand ambassadors. Are you thinking on similar lines?
I feel we need to get a much larger consumer acceptance of our product, before we look at a brand ambassador. The way I look at it is, what contribution does a brand ambassador make? More of an image.

Better convincing power?
I’m not sure. There are two brand ambassadors, I know, in the DTH space, but I wonder if they’re using the same services themselves. Brand ambassadors are basically a credibility thing. But then think about it—very successful companies don’t have brand ambassadors.

Sun Direct is essentially fighting the DTH war on pricing. How long do you think will this continue?
DTH’s growth potential is very similar to telecom, wherein one player suddenly came and changed the complete model of pricing. And the whole market exploded. What we’re witnessing today in DTH is something similar and we’ve been instrumental in effecting that, since the product is now available to the consumer at a very low price point. At Rs 90 and Rs 100 per month, he wants to try it out because he sees value in it. But at Rs 300-400, he starts comparing it to cable.  At the end of the day, the important thing to remember is that DTH is not a rich man’s product, as it was made out to be, by the people who launched it first. In the initial phases, it was considered that the top end of the market would consume DTH. But that doesn’t hold true anymore. It is a common man’s product.

And that is my market. Sure, the market also has people with cable connections. But it also has people who have TVs but no cable. About 100+ channels for Rs 99 a month is very competitive and I don’t see a dramatic change in the pricing of the packages.