With phases one (top-four cities in the country) and two (the next 38 cities) nearly complete, the government is on course to complete phase three (all remaining urban areas) by the end of the year.
The opportunity, which has revolutionized the way people consume content on television, presents a lucrative opportunity of greater monetization for cable and direct-to-home operators.
Also read: Cable TV digitisation deadline for 38 cities ends
Sameer Manchanda, CMD, DEN Networks , one of the four large multiple-system operators (MSOs) in India, does the number crunching. "There are 130 million televised homes in India. A total of 90 million of these have cable. Of this, only 20 million has been digitalized," he says.
The shift from analogue to digital has ramifications for players such as DEN that extends beyond television. "The digital landscape of India is changing. The nature of how we consume content, how we access the internet will all change," says Manish Chokhani, Director of Enam Holdings.
Chokhani says even as headlines are dominated by a lack of investment in brick-and-mortar sectors, sectors such as the media will provide a great opportunity for investors.
"We are a USD 1.8 trillion economy. [With rising affluence] you are not going to consume more toothpaste or soap, but you will consume more content," he says.
The move towards digital has already started showing up in the players' financials. In the second quarter of this fiscal year, DEN's total income increased to Rs 272 crore from Rs 211 crore, year-on-year. The operator's operating income surged 98 percent from Rs 43 crore to Rs 85 crore.
The boost to DEN's income was helped in part by a strong growth in subscription revenue, increase in carriage and placement revenue and sales of set top boxes.
Internet key focus
DEN is mulling going the way of Comcast in the US, a triple-play operator that has a presence in cable, Internet and telecom services.
"For fixed bandwidth, private players are hardly present in India. It's largely MTNL and BSNL," he says, adding that the company's broadband launch, scheduled in March-April will usher in "a complete revolution".
"For a country used to 512 kbps or 2 Mbps broadband speed, we see the opportunity of bringing in speeds up to 100 Mpbs," says Manchanda.
Broadcasters better poised
Chokhani believes that more than content producers, the broadcasters are in a better position to currently profit from the digitalization wave.
"The entire value chain starts collecting money. But the bigger money of course is with the broadcasters, because they do not incrementally have to spend money [after initial investments]," he says.
And the initial capital expenditure for broadcasters, too, will be passed on to consumers who have shown the propensity to bear it. "We are seeing blockbusters go from Rs 100 crore [in collections] to Rs 300 crore. Movie ticket prices have gone from Rs 20 to Rs 500 in a couple of decades," Chokhani adds. "You cannot continue to pay Rs 200/month for television and Rs 300-400 for unlimited bandwidth [in the future]."
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