The Hindu Business Line : Lower sourcing costs help Tata Sky halve price

The company had decided to give customers the benefit of one big price cut rather than a series of small cuts. — Mr Vikram Mehra, Chief Marketing Officer

Tunia Cherian
Vinay Kamath

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Chennai, Feb. 15 Many recent customers of Tata Sky subscriptions would have been surprised by the company’s sudden decision to halve the price of its hardware to Rs 1,499 as against Rs 2,999 earlier.

However, Mr Vikram Mehra, Chief Marketing Officer, is quick to point out that the company was simply passing on the benefit of a cheaper procurement price. Having achieved economies of scale with 1.5 million subscribers in 16 months, the company had decided to give customers the benefit of one big price cut rather than a series of small cuts.

Mr Mehra told Business Line that the decision was also made keeping in mind the fact that the company was competing for viewers with cable TV. One of the barriers to switching from cable to DTH was the initial expense incurred on the hardware (the dish and set-top box) and installation, which was Rs 2,999, plus an installation cost of Rs 1,000, earlier.

With the current price reduction, the company had been able to bring down the initial expense to Rs 2,499, inclusive of an installation cost of Rs 1,000, thus bringing the service within the reach of many more people, Mr Mehra said. Tata Sky sources from three STB manufacturers that have set up base in India for Tata Sky — Kaon Media, a Korean company, whose unit is based in Uttaranchal; France’s Thomson Electronics with a unit in Pune and Korean company Humax based in Noida.

Schemes

Replying to a query whether the company would continue to offer schemes along with TV manufacturers, he said it was entirely possible. In fact, the service may soon be bundled with 21-inch TVs and not with plasma screens as was the case earlier. Thus, the Tata Sky package would be available to customers just like any other durable in the market.

The company has targeted 8 million subscriptions by 2012 at which point the industry is projected to have between 25-25 million subscriptions.

According to Mr Mehra, conversion from cable to DTH was happening very fast. This could be attributed to the fact that the average middle-class family came together to watch TV. They appreciated quality and were dissatisfied with the service provided by their local cable operator. On the other hand, Tata Sky, he said, had delivered on all its promises in respect to quality of content, transmission and customer service. According to him, the company had established a presence throughout the country; the package was available with dealers in 5,000 towns currently.

Regional content

Having rolled out several channels for its urban consumers, the company was now focussing on regional content. This niche focus had paid rich dividends in Tamil Nadu, where subscriptions had surged once the Sun TV bouquet of channels was added, he said.

According to Mr Mehra, the company’s offerings for kids had been well received since it combined education with entertainment. The company had developed content in-house for Active Wizkids and Active Stories, both of which was meant for children in the age group of 2-4 years. Content for Active Learning, a channel targeted at children in middle-school, was provided by 24X7 Guru.

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