China Shows Mixed Progress Post-Olympics

With the Beijing Olympics serving as a landmark event for China and the global broadcasting industry, many hoped the event would be the catalyst for greater things in terms of digital and multimedia services in the world’s most populous country. But nearly a year after the Olympics closed, have things really changed or has the promise of better things to come faded now that the world’s spotlight is no longer focused on China?

Digital TV Market

Michael Liu a research analyst at IMS Research, says things are in place for satellite television services to develop quickly in China. "The analog to digital transition in China is still in progress. To the end of 2008, about one-third of the national transition had been completed. In the second half of 2008, a new satellite in China was launched, mainly for the satellite TV broadcasting in rural areas in China. Months later, a total of seven set-top box suppliers gained a deal with the government for 3.66 million satellite set-top box units. This was said to be just the beginning. In 2009 and 2010, satellite digital TV should develop quickly due to favorable government policies," he says.

Sue Taylor, senior vice president and general manager, NDS Asia Pacific, and chairman, NDS China, says China’s digital TV sector is developing rapidly. "According to the Guideline Research, China had 45 million digital cable connections in January 2009 and around 2 million IPTV subscriptions. The statistics from Research in China also shows China’s digital TV market value is expected to reach CNY 260 billion ($38 billion) by the year 2010. Service providers in China are increasingly focused on monetizing digital content following the introduction of the Ping-Yi process which will see the deployment of digital TV throughout China by 2015."

However, Taylor believes developments could have perhaps moved more quickly. "It has been disappointing in some respects despite the digital deployment facilitated by the Ping-Yi project. The investment in higher level services and the deployment of middleware to increase the range of services and improve the viewer experience has been somewhat limited."

One of the flagship digital TV projects is the CunCunTong project, which aims to bring digital satellite TV services to the smallest villages across China. "The development of the CunCunTong project has also seen good progress and today, is reported to cover almost 90 percent of the reported 400,000 villages," says Cynthia Dickins, senior vice president of market development, Asia, SES Americom-New Skies. "It is expected that by the end of 2010, all 20-household natural villages will have access to satellite TV." Graham Kill, CEO of Irdeto, adds, "The governmental support of the CunCunTong project has been important to continue the spread of digital TV to more remote areas. The launch of Chinasat 9 satellite last year and the rapid follow up with orders of 3.6 million set-top boxes via a CNY 130 million ($19 million) subsidy were important steps in making digital more accessible to the wider population."

Progress has not been as smooth in the mobile TV market. A year ago, Kill was optimistic that there would be a satellite-delivered mobile TV service in China by 2009, but the reality is somewhat different. "SARFT (China’s State Administration of Radio, Film and Television) originally planned to launch the S-band satellite for mobile TV coverage within that timeframe and my view was that we would have seen the start of that service within 12 months of the Olympics. However, to date the S-band satellite has not been launched, so that will not be likely within that timeframe," he says.

However, the mobile TV market via terrestrial has started to develop. In July 2008, China Multimedia Mobile Broadcasting launched with terrestrial delivery only and had about 1.2 million users – mostly in Shanghai – by the end 2008, says Taylor. It is now available in more than 160 cities on more than 200 mobile-TV compatible devices from more than 100 manufacturers. Initially launched as a free-to-air service, a pay tier of six to seven channels will be launched soon.

One of the big issues when talking about the digital and multimedia markets in China is regulation, and Kill believes there is still some way to go in reforming regulations to promote the growth of services. "Document No. 129 (the right to purchase, install and receive television services on a satellite dish) still has not been relaxed. We believe that the commercial DTH era will come sooner or later. Given the economic situation in the world and the developmental priorities of the Chinese government (together with most governments in the world) I suspect that developing such media areas might take a slightly lower priority," he says.

"Like many other countries, China has a national policy which protects its national interests. While the government is capable of and does produce a large amount of programming, opportunities for other content providers do exist in certain areas. As a national policy, China has made a great deal of progress in developing coverage of the viewer base which is fundamental to a successful rollout of commercial DTH service in the future. Prospects for DTH in China in the medium term are optimistic given the huge numbers of households, the highly diverse cultures and many dialects spoken," she says.

Telecoms operators also have looked to gain a slice of the television market. "The Chinese telecom industry has undergone a major transformation since last year with the formation of three full-service telcos: China Mobile, China Netcom and China Unicom," Dickens says. "The full-service offering will allow the telcos to provide seamless inter-connecting services which are viewed as essential for healthy development of the telecoms sector. A more equitable competition among the telcos will provide consumers more choices in certain regions across the country."

With the Olympics becoming just a memory, the path to digitization and a multimedia economy continues in China. "We share the view of many others that with its enormous population and ethnic diversity, ever increasing cell phone and pay-television penetration, together with proactive government efforts to bridge the digital divide in the country, China could offer the greatest potential for satellite service demand of all the countries in Asia," Kill says.

"Under national policy, the Chinese TV industry will complete TV coverage to the rural areas as well as continue to explore different delivery means," Dickens says. "In the near term, the existing domestic BSS satellite fleet will probably have a reasonable amount of available capacity for satisfying the growth of domestic TV channels. As to the conventional FSS satellite fleet: China is entering a replacement cycle during which we expect to see the direction the domestic operator will take in terms of developing its FSS businesses."