The Indian pay-TV industry is projected to witness a revenue contraction of 1-3% in FY2026, driven by a steady decline in its subscriber base, according to a report by credit rating agency ICRA. Consumers are increasingly shifting towards over-the-top (OTT) platforms or DD Free Dish services provided by state-sponsored DTH operator Prasar Bharti.
ICRA estimates that aggregate operating margins and coverage indicators for the pay-TV industry will moderate further by 175-225 basis points year-on-year (YoY) to 23-25% in FY2026, down from the estimated levels for FY2025. The margins for DTH operators are expected to be in the range of 33-35%, while multi-system operators (MSOs) are likely to see a lower margin of 6-8%. However, the presence of strong parent companies will ensure liquidity and capital access for necessary investments.
ARPU Growth and Industry Consolidation to Partially Offset Decline
While the subscriber base is declining, ICRA expects this to be partly offset by a rise in the average revenue per user (ARPU), projected to grow by 1-3% YoY. This growth is attributed to the bundling of traditional TV content with OTT platforms and broadband services, as well as premium content offerings such as high-definition (HD), 4K, and live events. However, increasing content acquisition costs, including expensive sports rights and premium international programming, along with sustained capital and operational expenditures for network expansion and maintenance, are expected to put pressure on margins.
Changing Consumer Preferences and Digital Shift
Ritu Goswami, Sector Head of Corporate Ratings at ICRA, highlighted that several factors have made OTT platforms the preferred choice for consumers. “On-demand and personalized content, ad-free viewing options, access to regional programming, and flexible subscription models are driving the shift. Additionally, the proliferation of smartphones, affordable data plans, and connected TVs, along with regulatory changes in channel pricing and packaging rules, have accelerated the move away from traditional pay-TV,” she stated.
India’s television market remains the second-largest globally, next only to China, with an estimated 190 million TV households in 2024. While the overall number of TV households is expected to grow due to rising disposable incomes, the industry is undergoing a structural shift. High-ARPU subscribers are transitioning to smart/connected TV and digital alternatives, while lower-income households are gravitating towards free dish services.
Urban vs. Rural Pay-TV Dynamics
The shift away from pay-TV is more pronounced in urban areas, where higher disposable incomes and access to wired broadband infrastructure have encouraged digital streaming adoption. In contrast, rural and low-income households have shown a stronger preference for free dish services.
“Despite a large subscriber base, India’s TV distribution industry remains smaller than its Western counterparts due to lower ARPU levels. Unlike in the U.S. and Europe, where consumers are willing to pay for premium content, India and China have vast, price-sensitive audiences. As a result, the rate of cord-cutting in India will be relatively moderate. A strong tradition of TV viewing, the availability of affordable hybrid offerings, and infrastructure challenges in internet connectivity will also prevent a drastic fall in pay-TV subscriptions,” Goswami added.
As the industry continues to evolve, pay-TV operators are likely to focus on content bundling, premium offerings, and technological advancements to retain subscribers and sustain revenue growth.
