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Tata Sky’s Rs 8 ‘daily recharge’ voucher and its impact on the industry
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Tata Sky’s Rs 8 ‘daily recharge’ voucher and its impact on the industry
MUMBAI: A telecom operator in India once came up with recharge denominations of smaller amounts (as low as Rs 10), which it called ‘chhota recharge’, with the whole industry soon following suit. Now Tata Sky, India’s premium DTH brand, is taking the same mini way. Shocking everybody in the industry, Tata Sky has introduced a ‘daily recharge’ voucher at a price of just Rs 8. In a first-of-its-kind move, the DTH operator will allow its subscribers to pay only for the days they watch TV. With the base pack at Rs 240, any subscriber can recharge his connection for just one day for Rs 8. This, incidentally, is also the smallest denomination of recharge voucher in the broadcast sector globally. So, what is Tata Sky trying to achieve and how does this impact the industry? Will this lead to a dilution of ARPU (average revenue per user)? Will the fight for Phase III and IV DAS (digital addressable system) markets turn ugly? Is this just a marketing ploy? Target audience Tata Sky is primarily targeting the small towns and villages falling under the third and fourth phases of digitisation. Explaining the target audience, Tata Sky MD & CEO Harit Nagpal told, “This is for those customers who don’t want to or can’t pay for a month but are happy to pay for a day. Think about those who don’t have electricity. Their biggest concern is why he should pay for a month when he doesn’t have electricity for 20 days. So he can get the service recharged on the days when there is electricity.” “We are thinking of the person who looks at the cash flow first and convenience later. Who earns every day and spends every day. We want to open up television for those people,” he explained. Tata Sky daily recharge TG Aggressive push in Phases III and IV Tata Sky said that this offer is on the understanding that there is a demand in smaller towns and villages for bite-size consumption like shampoo sachets and small mobile recharges. Also, with digitisation in Phase III to be completed by 31 December 2015, this plan should help accelerate acceptance of the DTH sector in India, it said. It certainly spears that the company is sniffing the opportunity to add more subscribers in the Phase III and IV towns. Tata Sky daily rechargeWhile the ‘Rs 8’ recharge option will make the consumer in the smaller towns relate more easily with the DTH brand, the indication is that this will have to be backed up by a bigger subsidy in set-top boxes (STBs). Many towns have low disposable income pockets along with other infrastructural issues. So there could be a price war of some sorts, with DTH operators sensing that they have a big opportunity to seize the market. So far, DTH operators have stayed sane in the first two phases of digitisation. Nagpal clarified that the prices of the packs will not be reduced. “I am not reducing the price of the pack. So if a subscriber has subscribed to a pack worth Rs 240 per month, he can recharge for a day for Rs 8, if he has a Rs 300 pack, he can recharge by Rs 10 and so on.” Impact on ARPU One major concern about this step could be a dilution in ARPU. On the surface, it seems this scheme may impact ARPU negatively. Not just small cities, even people in urban areas and subscribers with multiple TV homes may use the service. For the last few quarters, DTH has been able to increase ARPU. With the HD population growing and the cable TV prices at the consumer level also increasing, the recent move may not turn out to be a big influencer. This will, however, depend on the popularity of the scheme. At this stage, it is looked at more as a ‘convenience’ product and a marketing ploy more than anything else. Nagpal did not comment much on the impact, saying that it has only just launched. An executive from a rival DTH firm, however, said that it is not a good thing to talk about when a premium brand offers something of such low pricing denomination. While a few other DTH operators also provide recharge of smaller denominations, the main difference is the smaller denominations are only for active subscribers, more like top-ups in telecom terms without validity. But, in case of Tata Sky, these recharges bring validity into play. According to industry data, around 20 per cent of DTH ARPU is lost because of late recharge. How the daily recharge option impacts this aspect of the business remains to be seen. Incidentally, Tata Sky has launched a marketing campaign that has over 10 different TVCs narrating a love story set in a small town in Jammu & Kashmir. The TVCs are conceptualised by Tata Sky’s creative agency Ogilvy.

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[-] The following 1 user says Thank You to Maharana for this post:

Nothing we will get with Rs.10 recharge on Tatasky Tongue
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May be one day extention for deactivation. Big Grin
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