Will the Airtel-Tata Play merger breathe new life into DTH?

By Jaideep Ghosh

Amid a digital revolution rapidly reshaping how audiences consume media, the traditional DTH satellite model faces unprecedented disruption from mobile-first viewing and streaming innovations.

In a bid to strengthen their grip on India’s fast-shifting telecom and entertainment landscape, India’s top two Direct-to-Home (DTH) operators, Airtel Digital TV and Tata Play, have unveiled plans to merge, pending regulatory nods. Structured as a share swap deal, this partnership aims to forge a newer model, blending telecom, broadband, and entertainment services. Together, they hold a commanding 60% of the subscriber base (35 million users) and 72% of the revenue pie (Rs 7,000 crore). Yet, both companies are grappling with losses.

This merger marks a strategic shift, transferring the reins of a standalone DTH business to a telecom giant to tap into the rising demand for bundled offerings as the DTH market slides downhill.

Satellite DTH: A Fading Force

Amid a rapidly evolving media landscape, the traditional DTH satellite model is losing relevance, facing intense disruption from streaming platforms and mobile-first consumption. The rise of OTT services like Netflix, Amazon Prime, and Disney+ has fundamentally altered viewing habits, drawing audiences away from linear television.

The affordability of 4G and 5G data plans has further accelerated this shift, making smartphones the primary screen for content consumption. Additionally, the growing popularity of short-form content—such as reels and quick video clips—has fragmented audience attention, reducing engagement with traditional television formats. While hybrid DTH-internet models have emerged in response to these trends, they continue to struggle against the dominance of streaming and on-demand content.

The decline is particularly evident in India, where TRAI data indicates that DTH subscribers have fallen from 70 million in FY21 to under 60 million by Q2 FY25. Meanwhile, OTT penetration is projected to rise from 35.8% in 2025 to 42% by 2029, signalling a decisive shift in consumer preferences.

Global DTH vs. OTT: A Tale of Two Trajectories

Globally, the DTH services market is limping along. Valued at USD 127 billion in 2024, it is projected to inch up to USD 149 billion by 2029, growing at a modest 3.2% CAGR, according to a January 2025 report of the Business Research Company. The growth hinges on tech upgrades like 4K content, OTT integration, and niche channels. Yet, these features are effortlessly mirrored by OTT platforms.

By contrast, the global OTT market, valued at USD 235 billion in 2024, is racing toward USD 595 billion by 2030, boasting a 16.7% CAGR, according to MarkNTel Advisors, January 2025. Fuelled by changing viewer preferences, higher disposable earnings, and widespread internet access, OTT offers vast, personalised content across devices—a trend sweeping India and beyond.

Against this backdrop, the Airtel-Tata Play merger hints at a future where telecom players, not standalone DTH firms, can lead the way by weaving content into broader service bundles.

Merger Synergies: A Shot at Revival?

The deal augments Airtel's access to Tata Play’s 19 million homes and 500,000 broadband users, creating a powerhouse serving 40 million paid subscribers with over Rs 7,000 crore in yearly revenue. Here is how it could pay off.

• Market power: With a 70% revenue share, the merged entity gains pricing power over rivals like Dish TV and Sun TV. However, taking on Jio’s streaming juggernaut, backed by a sprawling telecom and entertainment empire, will be tougher. The merger’s bundled strength may help mitigate any future aggressive pricing battles.
• Regulatory ease: Airtel’s deep telecom regulatory experience could smooth out compliance hurdles.
• Content cost cuts: A bigger subscriber pool strengthens negotiations with broadcasters, slashing licensing fees and savings in cost per subscriber. The AT&T-DirecTV merger, targeting USD 1.6 billion in content savings, offers a playbook.
• Tech and infra gains: Merging satellite transponders, set-top box sourcing, and backend operations reduce costs. For example, Tata Play’s fibre network (Tata Play Fibre) could integrate with Airtel’s broadband infrastructure (Xstream Fiber).
• Distribution edge: Combining Airtel’s retail network with Tata’s channels boosts reach and cuts overlap. This aligns with operational efficiencies seen in the DirecTV-Dish merger, where infrastructure sharing was a focus, though limited by different technologies.
• Operational efficiency: Unified billing, customer service, corporate services, and marketing streamline overheads, a tactic proven in most mergers.
• Bundled boost: Fusing Airtel’s Xstream and Tata Play’s Binge could birth a hybrid DTH-OTT service. Cross-selling telecom, broadband, and DTH via plans like Airtel Black may lift ARPU, though overlapping customer bases (e.g., Tata Play homes with Airtel mobile users) could cap gains.
• Churn control: Bundled services might lock in subscribers, softening DTH’s decline.
• New offerings: Hybrid set-top boxes or broadband-DTH combos could target rural markets where DTH still thrives.

Standalone DTH: Navigating the Crossroads of Evolution

Despite OTT’s dominance, satellite TV holds ground in rural and low-income urban pockets where cable and fibre lag. Its affordability and reach remain strengths. Yet, standalone DTH is unmistakably in its twilight, losing relevance fast.

The Airtel-Tata Play merger seeks to counter this slide through smart synergies. By pooling resources and bundling services, the new entity might weather the storm better than standalone. Success hinges on flawless execution, blending operations and cultures while leveraging Airtel’s telecom muscle and Tata Play’s premium base.

The road ahead is steep. Will this be satellite TV’s transformation or its final bow?

The author is a member of the Harvard Business Review Advisory Council.
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