The Digital Cable TV Industry: Paving the Road to Success

Indian cable TV industry has witnessed many ups and downs since its inception but has managed to maintain a firm foothold in the country's TV viewing homes. Screen Digest currently estimates that out of 111 mn cable and satellite TV households in India, almost 86 mn, or over 77 per cent, have cable TV.

 

As the competition intensifies with the growth of direct to home (DTH) and IPTV in key markets, cable operators in India and other parts of Asia Pacific are responding with the introduction of set top boxes with digital output, interactive services and next generation ramp-up like Digital Video Recorders (DVRs), Video on Demand (VoD) and Pay per View (PPV) services.

Digital cable TV is also gaining popularity amongst TV viewers in Asia Pacific as over 35 mn homes migrated from analog to digital TV in 2009. With the growing conversion to digital from analog cable TV, digital cable deployment is also expected to pick up in India in the coming years as financing grows and technology costs fall.

Analysts' Standpoint

A new report on India's pay-TV market released by Media Partners Asia (MPA), states that cable will dominate the Indian pay-TV market with a 70 per cent market share through 2014 despite a brisk growth in the DTH space. Digital cable will also see steady gains, increasing to 17 mn by 2014 and 29 mn by 2020. Cable Broadband, a key driver of future profits, will grow from 850,000 homes in 2009 to 3 mn by 2014.

 

What do all these forecasts mean? Industry analysts seem to agree that while cable MSOs face many challenges, future funding and large scale deployment will nevertheless enable MSOs to obtain more digital subscribers.

Need for Digitization

The entertainment industry is dynamic with new technologies emerging and new business opportunities waiting to be explored. To stay ahead of the competition, MSOs must innovate- they need to offer the latest bouquet of services and provide the flexibility and content that consumers want. This is also pertinent to the growing cable industry and technological advancement on the whole, as in many cases, the existing infrastructure is not able to provide secure programing, VOD, interactive applications, and other innovations.

An advance digital technology is capable of competing with high quality DTH with equivalent competent compression technology and local area services. Advances in digital technology mean that new, sophisticated devices for accessing and viewing content are continually being introduced to the market. This creates new roles for content and the cable operators who bring that content into viewers' homes. Simple pay TV models with one or more TV sets connected to one or more set-top boxes no longer suffice. They don't meet consumers' growing appetite for personalized on-demand content, flexible viewing rights, portability, video-on-demand, interactivity and high-speed broadband access. Now home networks are bringing content to a new range of devices, including mobile devices and digital video recorders (DVRs), as well as to multiple TV sets.

Basic Digital Cable TV Model

An ideal digital connection allows content to flow easily between locations and to reside virtually anywhere from the time it is distributed until the time it is ready to be viewed by subscribers. Content owners and network operators are looking for new ways to market their content while preventing unauthorized access, recording and redistribution.

Among the key requirements are:

- A conditional access system (CAS) like NDS VideoGuard that enables and secures the enhanced TV experience. For more than 20 years the world's leading pay-TV operators have chosen NDS VideoGuard due to NDS' zero-tolerance for piracy and effective operational security. VideoGuard can be implemented in set-top boxes (STBs) with smart cards.

- A digital headend that processes and secures an enormous quantity of information along with a set-top box that can be tuned to the digital services it sends out.

- Set-top box software like MediaHighwayfrom NDS supports applications like the electronic programme guide (EPG), user interface and interactive applications. The middleware and conditional access are inextricably linked, since these elements must be integrated and work closely together. The middleware and conditional access also impact on the type and complexity of EPGs which can be implemented.

Higher Revenue Generation

Personalization of services is the key to enhancing the viewing experience, which in turn, increases per subscriber revenues and customer loyalty. Today's 'must-have' applications like video on demand (VOD), digital video recorders (DVRs) and pay-per-view (PPV) enable MSOs to sharpen their competitive edge vis-à-vis satellite providers.

MSOs that have invested in the new digital infrastructure can lever their digital cable platform to provide better technology and more services than an analog cable TV operator. For example, a server based VOD solution can provide a range of movies and personalized content. The digital cable infrastructure offers efficient delivery options which take advantage of distributed head-end architectures. Interactive services are another differentiator in a competitive market in drawing more subscribers, increasing ARPU and reducing churn. Interactive applications include an enormous range of customized services, each bringing unique demands on resources and response time. Some applications, such as a banking application or stock market information, are only accessed by a few users at any time and require timely two-way information exchange, while other popular games and services may be accessed by hundreds or thousands of users, who all need essentially the same information. Thus the MSO has the flexibility to allocate bandwidth per application according to demand, thereby charging channels for access to the interactive infrastructure.

DVRs: Seemingly Endless Possibilities

DVRs can play an instrumental role in completely changing the way subscribers watch TV. DVRs such as those based on XTVfrom NDS give viewers the freedom to use functions such as simultaneous recording and recording multiple episodes. In fact, the possibilities are huge:

- Subscribers can book pay-per-view (PPV) events from broadcasters' promotions-and only pay when they watch.

- To stay ahead of the competition, MSOs can add advanced features and applications to their current DVR. They can also introduce features like multi-room DVRs that allow subscribers to watch content stored on their DVR in any room in the home, or transfer content to a PC or to another device using secure removable media.

- DVR Lite is a revolutionary technology that converts set-top boxes (STB) into DVRs with the addition of an approved external hard drive. This solution reduces the hardware cost for the consumer and enables them to benefit from the ability to record, playback, fast-forward and rewind programs.

Advanced User Interface and Advertising Solutions

There is a host of other applications which can help MSOs stay ahead of the competition and reduce subscriber churn. For example, advanced advertising possibilities such as those offered by NDS Dynamicintroduce a new world of advertising that is measurable, addressable and interactive. NDS Dynamic includes the most deployed set-top-box (STB) audience measurement solution globally with leading operators in North America, Europe and Asia Pacific already using it to measure STBs daily.

Visually rich electronic programme guides from NDS are much more than their name suggests. They have developed into multilingual portals to broadcast, on-demand, Internet, interactive and over the top OTT content. They encourage viewers to book, view and buy more content while reducing churn and increasing ARPU. NDS EPGs have a fast response time and support sophisticated navigation tools, social networking and various other interactive applications.

Hitting the Bull's Eye

In the Indian market, the shift from analogue to digital cable will drive a large number of cable TV operators either to digitalise their networks or to join MSOs such as Hathway and DEN. This will give them the opportunity to offer new technologies and value added services. The recent recommendations made by the Telecom Regulatory Authority of India (Trai) to increase the FDI (foreign direct investment) limit will provide incentives for MSOs that plan to go digital. This, together with other tax relief plans, will help boost digitization in the cable TV sector.

The overall objective is straightforward. The goal is to expose consumers to a television experience that is imaginative. NDS is therefore dedicated to delivering the most that digital TV can offer in changing the way people are entertained.

(The author is country head and general manager, NDS India. This article was first published in Voice & Data)