The Indian pay-TV industry is facing significant challenges due to the ongoing trend of cord-cutting, where subscribers are increasingly shifting from traditional pay-TV services to over-the-top (OTT) platforms and free dish services. This shift is expected to result in a revenue contraction of 1-3% in FY2026, according to forecasts by rating agency ICRA.

Subscriber Base Shift
Urban vs. Rural Dynamics: The shift away from pay-TV is more pronounced in urban areas, driven by higher disposable incomes and better access to wired broadband infrastructure. In contrast, rural households are more likely to opt for free dish services.
OTT and Free Dish Services: The rise of OTT platforms and free dish services, such as DD Free Dish, is attracting viewers away from traditional pay-TV. This trend is particularly strong among those seeking affordable entertainment options.

Operating Margins: The pay-TV industry’s operating margins are expected to contract by 175-225 basis points (bps) year-on-year, reaching 23-25% overall. The DTH segment is projected to maintain higher margins at 33-35%, while multi-system operators (MSOs) will face lower profitability at 6-8%.
ARPU Growth: Despite subscriber losses, the industry may partially offset these declines through an increase in average revenue per user (ARPU), driven by bundled services and premium content offerings.

Pay-TV operators are adapting by offering bundled services that combine traditional TV with OTT platforms and broadband. Additionally, they are focusing on premium content such as HD, 4K, and live events to attract and retain subscribers6.

Challenges Ahead
Content Acquisition Costs: Rising costs for acquiring premium content, such as sports rights and international programming, will continue to pressure profit margins.
Internet Infrastructure: Challenges related to internet infrastructure in rural areas will slow the pace of cord-cutting, ensuring some stability for pay-TV services.

The Indian pay-TV industry faces a challenging environment due to cord-cutting, with revenues expected to decline by up to 3% in FY2026. However, strong parentage of major players and strategic adjustments in service offerings may help mitigate these impacts.

Key Highlights:

• Revenue Contraction: The Indian pay-TV industry is expected to see a revenue decline of 1-3% in FY2026 due to cord-cutting.
• Subscriber Shift: Urban subscribers are moving to OTT platforms, while rural areas favor free dish services.
• Financial Impact: Operating margins will contract by 175-225 bps, with DTH maintaining higher margins than MSOs.
• ARPU Growth: Partial offsetting of losses through increased ARPU from bundled and premium services.