BCG Matrix for DTH services and suitable

strategy for the Leader

What is DTH?

DTH stands for Direct-To-Home television services. DTH is defined as the reception of
satellite programmes with a personal dish in an individual home.

DTH does away with the need for the local cable operator and puts the broadcaster
directly in touch with the consumer. Only cable operators can receive satellite
programmes and they then distribute them to individual homes.

BCG Matrix: - The BCG Growth-Share Matrix is a portfolio planning model

developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It is
based on the observation that a company's business units can be classified into four
categories based on combinations of market growth and market share relative to the
largest competitor, hence the name "growth-share". Market growth serves as a proxy for
industry attractiveness, and relative market share serves as a proxy for competitive
advantage. The growth-share matrix thus maps the business unit positions within these
two important determinants of profitability.
The four categories are:

• Dogs - Dogs have low market share and a low growth rate and thus neither
generate nor consume a large amount of cash. However, dogs are cash traps
because of the money tied up in a business that has little potential. Such
businesses are candidates for divestiture.
• Question marks - Question marks are growing rapidly and thus consume
large amounts of cash, but because they have low market shares they do not
generate much cash. The result is a large net cash comsumption. A question mark
(also known as a "problem child") has the potential to gain market share and
become a star, and eventually a cash cow when the market growth slows. If the
question mark does not succeed in becoming the market leader, then after perhaps
years of cash consumption it will degenerate into a dog when the market growth
declines. Question marks must be analyzed carefully in order to determine
whether they are worth the investment required to grow market share.
• Stars - Stars generate large amounts of cash because of their strong relative
market share, but also consume large amounts of cash because of their high
growth rate; therefore the cash in each direction approximately nets out. If a star
 can maintain its large market share, it will become a cash cow when the market
growth rate declines. The portfolio of a diversified company always should have
stars that will become the next cash cows and ensure future cash generation.
• Cash cows - As leaders in a mature market, cash cows exhibit a return on assets
that is greater than the market growth rate, and thus generate more cash than they
consume. Such business units should be "milked", extracting the profits and
investing as little cash as possible. Cash cows provide the cash required to turn
question marks into market leaders, to cover the administrative costs of the
company, to fund research and development, to service the corporate debt, and to
pay dividends to shareholders. Because the cash cow generates a relatively stable
cash flow, its value can be determined with reasonable accuracy by calculating
the present value of its cash stream using a discounted cash flow analysis.

 BCG Matrix for DTH Services

 Permitted in 2000, Started in 2001.
 Private Players entered in 2003 (Dish TV).
 Current 7 players (1 Govt. + 6 Private).
Prominent players in market are: -
Company's Subscribers Market Relative Market
Name (In Million) Share Share
Dish TV 5.92 31.62% 1.32
Tata Sky 4.50 24.04% 0.76
Sun Direct 4.30 22.97% 0.73
Airtel Digital
TV 2.00 10.68% 0.34
Reliance Big
TV 2.00 10.68% 0.34
Videocon d2h NA NA -
Total 18.72 100.00%
  Suitable strategies for Market Leader in DTH
Industry i.e.; Dish TV

Following can be the strategies opted by Dish TV:

1. Revenue Enhancement: Creation and on-going management of multiple
price points, greater emphasis on up selling and cross selling of new packages
through trade incentivisation and consumer promotional schemes, revenue build
up using al-a-carte packs, wider offerings on Movie on Demand increased
emphasis on bandwidth revenues, adoption and usage of pay gaming and inter-
active services, would be some of the key revenue drivers. Tapping of high end
customers for higher ARPU in the longer run, will be initiated through our tie-ups
with key chain stores, direct corporate sales, better farming of MDU (multi
dwelling unit) buildings etc.
2. Cost Containment: Cost Rationalization will continue to be one of the main
focus areas to derive better efficiency from the available resources and optimize
productivity and output to derive better value for money. Various initiatives have
already resulted in huge savings on account of sales& distribution cost, collection
cost, various administrative cost, marketing cost etc. An optimal utilization of
below the line budgets along with efficient planning of above the line budgets, has
given great returns, with dish TV enjoying the best advertising to sales ratio in the
category. Employee cost is contained through better manpower planning and a
robust appraisal system for reward and retention Evolution of better understanding
and long term relationship with the Pay channel Broadcasters will lead to lower
content cost and enrich their content offering across various schemes.

3. Brand Building: Dish TV is already considered a pioneer and leader in the

DTH segment. Efforts will be on, to make the brand a force to reckon with, that
carves a niche for itself in the consumers' mind-space and life. Further, it will be
the task of marketing to educate consumers, about the relevance of this technology
to their entertainment needs, which will drive faster adoption. Value added
services, will become more aspirational and find higher usage, as the product
penetration expands. These services will drive not just brand stature but add to the
revenue prospects as well.

4. Corporate Governance and Value Creation: it is strongly believed that

group corporate governance and management best practices are critical for long-
term sustainable growth and for building resilience to competition. It will drive
and ensure accountability, transparency, professionalism and risk containment.
The recent restructure exercise will create more value and build a focused business
approach that will go a long way in creating value for the stakeholders.

5. Subscriber and Revenue Growth: The Company has created a Zonal

structure comprising of seven zones to create a wide spread distribution muscle
across the length and breadth of the country. Apart from traditional retail outlets in
the durable and telecom categories, the product will also find presence in multi
brand national and regional modern trade chain stores. These stores that attract
large volume traffic will add to more sales numbers in the year, apart from giving
them a commanding brand presence in the market. Moreover, large Corporates are
being approached for bulk sales for their employees, vendor gifts, trade schemes
and the like. Whilst acquiring new subscribers would remain one of the primary
drivers for growth, retention of existing customers.