With 5X surge in profit, Tata Sky opens up for the likes of Netflix and Amazon Prime

With the penetration of smartphones and Internet, the consumption pattern for video content is changing in India. It's gradually shifting from DTH and cable supply to digital (over the top or OTT). The change has also caused protest by some DTH and cable operators but smarter ones have adopted the shift.

Direct-to-home television company Tata Sky is ready to open its system for both the satellite TV and OTT platforms like Netflix, Hotstar, Amazon Prime, Youtube, and others.

In an interview to Mint, Tata Sky CEO and MD Harit Nagpal said that he will change the box which can receive both the signals—from the satellite and from the broadband. The change in hardware will enable to switch from live TV via satellite to OTT via broadband.

He, however, said that the company continues to add about 15-20 per cent subscribers every year with a similar growth towards revenue and profit.

The company’s net profit has jumped to Rs 408 crore in the fiscal ended March 2018 compared to Rs 80 crore in the previous year. It’s profit margin also saw an improvement at 7.1 per cent compared to 0.1 per cent in the year-ago period.

Importantly, the company's 60 per cent fresh subscriber base is hailing from villages and semi-urban pockets.

Nagpal also explained that the OTT platforms are much more expensive in India and can’t replace cable tv. Unlike America, cable connections are overwhelmingly cheap in India. While a cable or DTH connection cost $100 in the US, it merely costs $5 in India.

Meanwhile, Netflix subscription alone costs at least Rs 500 and requires data worth Rs 300 to Rs 500 to run it. On contrary, cable connection with hundreds of channels is available in only Rs 300 in India.

Despite the strong projection of cable and DTH by Nagpal, the growth of OTT players have caused some jittery in the past.

In February this year, Direct-to-home (DTH) platforms and cable operators expressed concern that certain broadcasters are airing same content through internet channels as through direct-to-home (DTH) platforms and cable operators.

In a letter to the Telecom Regulatory Authority of India (Trai), they demanded to develop a (pricing and economic) framework for the video streaming platforms.