By Jason Bates
As technology makes the world smaller, expatriate populations are finding it easier to maintain links with their home countries. Large concentrations of immigrants and first- and second-generation citizens that have developed in countries around the world are driving a market for moving so-called ethnic content from one part of the globe to another. Business opportunities in these areas will continue to expand, driven by improvements in satellite and ground segment technology as much as the mass movement of people around the world.
Delivering content into the United States offers the largest business opportunity for companies that want to capitalize on the market for providing ethnic content. But moving programming into and out of Europe also is becoming a lucrative market, officials say. Large concentrations of Africans in France, as well as Indians in the United Kingdom are among the expatriate populations dotting Europe demanding access to programming from their home countries and are willing to pay for such access.
"We've seen at least three phases of this business," says Mike Antonovich, executive vice president of global sales and marketing for Panamsat. "When we started program distribution internationally, it was European distribution around the world. Then it became increasingly localized within those markets. Throughout the last few years, we have seen globalization of local content. All kinds of content can be found virtually everywhere now because of expatriate work forces. The notion of having this programming virtually everywhere is very important to national broadcasters."
Improvements in technology also have aided the growth of the ethnic broadcasting market, as companies can fit more channels onto a single transponder, lowering the content delivery cost, says Nigel Gibson, vice president of European sales for New Skies Satellite. The company's own research indicates that the number of ethnic channels moving around the globe has expanded from 378 at the end of 2000 to roughly 1,000 at the end of 2003, driven in large part by demand for European content, he says.
The explosion of ethnic content demand throughout the last five years has been driven largely by advances in technology, adds Jon Kirchner, vice president of global marketing for Loral Skynet. "We've seen a definite acceleration of ethnic channel distribution, in part because of multiplexing and compression that has been able to offer a lower-cost entry point for channels. Another factor is technologies such as Internet and [direct-to-home] platforms and channels. That infrastructure lends itself to linking communities of interest, and that demand for connection communities of interest leads to the demand for ethnic [programming] because people will know about it."
The growth in the market also is attracting new companies willing to provide the services, meaning greater transponder space to carry additional channels, Gibson says. "What we have is large number of national and commercial providers from different countries, some of them quite new," he says. "They very much want to reach communities that speak their own language all over the world. Many of them want to go to the United States, which is still the number one market, but they also want to go all over the world. We are looking at steady growth in the future. We are going to see a few spurts in that, prompted by the new connections coming on line. Beyond that, we see consistent steady growth."
One of the U.S. providers of ethnic content is Paris-based Globecast. The direct-to-home provider broadcasts nearly 140 channels from around the globe to viewers in the United States, such as an Eastern European bouquet that includes Polish and Serbian channels. "Ethnic broadcasting is our business," says Anna Porteus, marketing director for Globecast's WorldTV. Globecast launched its service, mainly free-to-air content, in 1998 using a C-band platform. Since then, the company migrated to Ku-band aboard the Intelsat Americas 5 spacecraft and added subscription services to its roster. Globecast launched its 10th transponder in June and the combined customer base for free-to-air and subscription services now stands at roughly 750,000 viewers, Porteus says. "We began with two channels and now have nearly 140. We believe we have plenty of room for growth. We are slated to launch another 15 channels within the next few months."
Globecast has been joined in the ethnic broadcast market in recent years by more broad-based consumer direct-to-home service providers such as Echostar Communications and DirecTV Inc., who have added ethnic content as a complement to their more mainstream offerings in the United States. Echostar offers more than 100 international channels from more than 25 countries on its Dish Network service, including European, South Asian and African programming. The marketing for the international channels varies, says Molly Noonan, an Echostar spokeswoman. Some channels are available on an a la carte basis, while others are bundled with other international channels to form a package. In addition, some of our channels are available by both subscription methods. For example, French channel 3A Telesuc is available for $14.99 a month a la carte, or customers can subscribe to both 3A Telesud and French channel TV5 as a package for $19.99 a month. Echostar does not breakdown how much revenue the international channels provide, she adds.
Newcomer Home2US Communications Inc. also jumped into the ethnic broadcasting pond, where the direct-to-home broadcaster sees an opening in the way DirecTV and Echostar collect and market their regional program offerings, Home2US CEO Emrah Ozkan says. "If you look at the entire landscape, you might see 100 channels in the United States trying to serve close to 35 million people. There are thousands of channels that would like to get into the United States, they just don't know how to get into this market," he says. Since its launch, Herndon, Va.-bsaed Home2US has attracted about 100,000 users to its mix of free-to-air and subscription-based programming. The company claims it is on track to exceed its goal of attracting between 600,000 and 700,000 users and delivering 60 to 70 channels of targeted programming in its first five years of existence.
Advances in technology, both in orbit and on the ground, are helping increase the market opportunities for ethnic programming, adds Patrick French, regional director, Europe for Northern Sky Research. "Satellite capacity is not necessarily getting cheaper, but it is taking less and less megabits per second to carry individual channels. As more and more channels are carried per transponder, this brings down cost of carriage for each channel. As that goes down one can target more and more niche markets. We are definitely seeing greater carriage of ethnic channels within the different business models, mainly because of improved compression and coding," French says. "It cost less and less to carry each channel, so ever smaller audience are sufficient to get your return on investment."
As technology continues to develop, the cost for providing ethnic channels should continue to drop, allowing for even more nationalities to tap into the market, Kirchner says. "At the end of the day, economics will drive this market. There has to be a certain set of numbers that will make this attractive. One of the areas we have focused on is distribution of video over Internet protocol (IP) over satellite. We are deploying worldwide IP infrastructure. IP tends to be traditional voice and data, but doing videoconferencing and doing video distribution, whether using IP or other, is where the market will go ultimately. We are taking lead in finding new ways to get niche programming to audiences. We are in the process of laying out what that looks like and how it gets done, and the beginning is getting IP infrastructure into place."
Moving regional content around the globe is a good business for the major satellite operators, officials say. Panamsat moves ethnic content around the globe for other companies and also has started its on DTH bouquet in Australia, "where there was a gap in the marketplace," Antonovich says. "Everybody is programming for all these pockets of people, because in the U.S. market 20,000 to 50,000 subscribers can be made or break even proposition for a lot of ethnic channels. For a lot of smaller ethnic groups or communities, the economics operating on tradition satellite play is more sensible."
"For these ethic platforms, certainly in the European area, they can't afford to pay the rates they need to pay for some of the orbital locations currently going on for distribution in Europe," says Jon Romm, president of Intelsat's media and entertainment business unit. "They command a higher rate per transponder to get the X number of millions of eyes that need to be there for BSkyB or other high-end direct-to-home platforms. So they create their own community using high-powered spot beams." The closed network for the ethnic market does not require the number of users that mainstream channels require, he adds. "Ethnic content providers don't care if they reach 7 or 8 million eyes, and they don't want to pay for that. They want something more appropriate for satellite capacity but not inflated. That creates a window of opportunity for those FSS providers that do not have those specific orbital roles."
While the U.S. market for European programming continues to grow, moving content between Africa and Europe could be the next hot opportunity for satellite operators and service providers, according to satellite industry officials. "I think East Africa will be the next popular destination for ethnic programming," says Gibson. "We're optimistic that we are providing the satellite connectivity that will open up a new route to market for a number of these channels. Africa been our most successful continent to take programming to. It's a very diverse market, with religious channels, political, entertainment, national language channels all trying to get coverage over Africa."
Intelsat also is looking at capitalizing more on the African market, in addition to the bump in ethnic programming the company received when it acquired the North American satellite fleet of Loral, Romm says. "When we took over these assets, we never realized how strong the community build is," he says. "What has happened in past 16 months is that we've been able to look at other areas around world where similar formula for this kind of bouquet of programming works. We are taking a look at a multiplex for broadcasting French-speaking programming into Africa for French-speaking locations. There is a high need for additional programming in that region because there is so much ethnic migration and behavior. There is significant programming from India in the United Kingdom and other European locations. I would say it is as large a growth opportunity we're seeing on the broadcast side as anything."
While satellite operators and broadcast providers are bullish on the market, Benoit Denis, a Paris-based research analysts for Frost & Sullivan, is more conservative when looking at regional broadcasting as a major revenue provider for satellite companies. "It's a bit early to talk about it in terms of quantity of programs. We know it's picking up, but it's hard to quantify which viewers will want to see programming from their own countries at the moment. ... Obviously there are many people from these regions in Europe that demand this type of programming. It's not surprising, when you talk about globalization, that these people want to be close to their culture."
Operators try to squeeze as many ethnic channels as possible, up to 14, on a single transponder to cut costs. This means many low-quality channels, and is not something that will drive major revenue growth in an age when high-definition TV (HDTV) is supposed to be the next big thing, Denis said. "For most players, this programming is not valuable. Ethnic channels usually are broadcast in limited quantity. We have seen them more as complimentary for content providers and DTH service providers. It's not the main business. It is used to attract customers for the whole business." But that does not mean that content providers and satellite operators will drop the service. "Satellite operators are very bullish about ethnic programming," he says. "It's about the only thing they can justify for growth at the moment until HDTV comes in."
While the regional broadcasting market may never provide gigantic revenue numbers, most of the signs today point to the business continuing to grow. Whether its Polish immigrants and Polish-American living around Chicago or large concentrations of Indian expatriates in England, the demand for maintaining contact with home is not going away.
Jason Bates is Assistant Editor of Via Satellite magazine.