Tata Sky Ltd - Consumer Electronics -
India
Tata Sky Ltd
Strategic Direction
·
Tata Sky is aiming for eight
million subscribers by 2012, a significant increase from two million
subscribers it had in 2008. Tata is also
looking to offer different levels of service, with personal video recording at
the premium end and budget service packs at the economy end.
·
The company intends to be the
leading satellite service provider in the country. It is also staying at the
forefront of innovative technology driving services and diversifying into
internet and related services using its Sky experience and technology.
·
The company faces increased
competition with the launch of BIG TV by the Reliance Group and Airtel DTH by
the mobile phone services Bharti Group.
These launches are likely to result in price wars, as the new players
need to penetrate into the market and maintain market share.
·
As of 2008, Tata Sky was not
yet generating any profit, with launch and marketing costs far outweighing
sales.
Key Facts
|
Full name
of company:
|
Tata Sky
Ltd
|
|
Address:
|
Bombay
Dyeing AO building, Pandurang Budhkar Marg Worli Mumbai 400 025, India
|
|
Tel:
|
(+91) 22
6613 3000
|
|
Fax:
|
(+91) 22
6613 3030
|
|
www:
|
www.tatasky.com
|
|
Activities:
|
Direct-to-home
satellite television service provider
|
Source: Euromonitor International from
company reports, Trade press,
|
|
2005
|
2006
|
2007
|
|
Net sales
(Rs million)
|
0
|
3,221
|
5,412.1
|
|
Net profit
(Rs million)
|
-530
|
-8,150
|
-8640
|
Source: Trade press, Company research
Company Background
·
Tata Sky is an 80/20 joint
venture owned by Tata Sons and the Star Group.
The company was incorporated in 2004 and it entered the market in
2006. Currently, the company is not listed
on the stock exchange, and it is not required to submit an annual report.
·
Tata Sky competes in the
television and projectors sector in India, via its set-top box (STB)
service. Tata Sky’s STBs are sourced
from Humax and Thomson, but they carry the Tata Sky brand. Consumers buy STBs and cards to gain access
to the services while Tata Sky installs and activates the services.
·
Within two years of operation,
Tata Sky has penetrated more than 5,000 Indian towns and cities with its STBs.
It intends to increase its penetration while at the same time offering a wider
variety of service packages at different prices.
·
In 2008, Tata Sky launched the
Tata Sky Plus service which allows subscribing viewers to record and watch
their programmes at later times. This
premium service includes an upgraded set top box.
Production
·
Tata Sky began importing its
set top boxes from Humax and Thomson, but now these STB manufacturers have
established themselves in India for Tata Sky, and their domestic production has
helped Tata Sky offer STBs at a much lower rate to its customers.
·
Manufacturers supplying Tata
Sky include Kaon Media, a South Korean company whose unit is based in
Uttaranchal; France’s Thomson Electronics which has a unit in Pune; and South
Korean company Humax, which is based in Noida.
·
As Tata Sky is a DTH service
provider, manufacturing is not the company’s principal activity. The company
does not manufacture any products for third parties.
Competitive Positioning
·
Tata Sky is a single business
company focused on delivering DTH television to its subscribers. The company markets a narrow product
portfolio, retailing only digital set-top boxes under the Tata Sky and Tata Sky
Plus brands.
·
DTH services are positioned
above free-to-air and cable-based television services, and thus they occupy the
premium position in India. However,
among the DTH service providers themselves, market positioning has not yet
settled, as new players Airtel and BIG entered the market 2008. However, between traditional competitors
DishTV, Doordarshan and Tata Sky, the latter is seen as the more premium
service, with higher prices and limited freebies.
·
Tata Sky ranks twelfth overall
in terms of volume share in the consumer electronics market in India. It has climbed rapidly up the rankings since
2007, its first full year of operation, and it has grown its subscriber base to
two million in a period of 20 months.
·
As one of the early entrants
into DTH, Tata Sky has an “early mover” advantage, already having established
its dealer and service networks across the country. This has given the company and brand
leadership positions, and it has been a pioneer in offering technology-driven
value-added services to consumers, such as active/interactive viewing and
personal video recorder set-top boxes.
·
Tata Sky intends to maintain
its leadership position in the DTH market.
However, the company faces challenges from new entrants BIG and Airtel,
who bring with them established distribution networks that have been successful
in the other sectors in which these companies compete. As well, these companies
have the ability to support promotions with marketing muscle. For example, BIG
could easily piggy-back on Reliance Communications’ strong and deep networks in
the mobile phone service sector. Cross-promotions and bundled packages
targeting existing customers of sister companies/services would no doubt help
the new entrants quickly gain market share.
·
Tata Sky is operating in a
high-growth market. However, as the
marketplace becomes more crowded over the forecast period the company will no
doubt lose share. It could hold on to its leadership position if remains
proactive and is perceived as a customer-friendly brand.
|
Product
type
|
Volume
share
|
Rank
|
|
Consumer
Electronics
|
0.5%
|
12
|
|
Televisions
and Projectors
|
5%
|
5
|
Source: Euromonitor International
