[10-23-07 – Satellite News] Dogan TV, a major media group in Turkey, is using satellite technology to extend its reach into the digital TV market.

Earlier this year, Dogan announced it had teamed up with conditional access and middleware provider NDS to launch a digital interactive television service, D-Smart, which will be available to more than 17 million households in Turkey. The collaboration between NDS and Dogan TV is bringing a new television service, broadcasting free-to-air and premium content to Turkish consumers on a pay-as-you-gonbasis, a new type of business model emerging in Europe.

Mustafa Gözalan, executive board member of Dogan Yayin Holding believes the slow take-up of pay-TV in Turkey has opened the door for D-Smart to make a strong impact "The potential of this business is huge, especially when you compare it to the plain pay-TV business model,” he said. "Although the existing pay-TV operator in Turkey has been in the market as a monopoly, the growth of the pay-TV business has remained slow. There are less than 1.4 million households currently using pay-TV services in Turkey. That represents only five percent of total market.”

Gözalan believes what Dogan TV is doing is genuinely unique, even in a global context. "Together with our technology partner NDS we have developed a very unique model, we believe a world first, a product which enables us to save significant costs as compared to other regular pay-TV operators,” he said. "Our fixed costs are significantly less than other regular comparable pay-TV platforms. The software used in our system is built over Java and can be transferable to different set-top box brands in the market. We do not subsidize the set-top boxes. The customers buy the set-top boxes as the set-top boxes can also be used as a normal FTA set-top box independent of D-Smart to access many other FTA channels available in the market. It is mind blowing but the truth is that our platform operation is breaking even from the first day.”

Despite the available content and new pricing model, Gözalan does not see D-Smart as a direct rival to Digiturk, which offers the more traditional pay-TV services via satellite. “Our model is significantly different than Digiturk,”he said. "We are interested in penetrating into mass retail markets. Digiturk was not interested in that market before. However, we can see that Digiturk is also changing their strategy in order to compete with D-Smart in the retail market. We are very surprised about their new strategy. I had not believed if one said they could give up their premium position for this market when we launched D-Smart, but they did.”

Dogan also believes it has an effective set-top box strategy in place, which means attracting new households should not be an issue. "D-Smart is embraced by almost 80 percent of the retail set-top boxes brands in Turkey,” Gözalan said. "There are more than 7,000 outlets where D-Smart enabled set-top boxes are sold. There are approximately 1.5 million DTH set-top boxes sold in Turkey annually. There are still more than 10 million homes to be yet digitalized. We are very excited to see how many of these homes will be D-Smart enabled in the coming years. I guess our market share may be even more than 50 percent of the retail set-top box market.”

Gözalan would not disclose the number of households accessing D-Smart, but "we already made agreements to procure more half a million units until the year-end in 2007 and our current activation speed is very promising," he said.

Gözalan expects 2008 to be a vibrant year for digital TV in Turkey. “I believe that there will several emerging and competing TV platforms in Turkey in 2008,” he said. “There will be D-Smart as a new innovative DTH platform, cable, DTT and most likely an IPTV platform launched by Turk Telecom. I see great opportunities for all of these operators as the digitalization journey of homes in Turkey is a long way and there are many years to reach maturity. The show is just starting.”