The Asian Video Landscape: DTH Market Share Trending Up

With a range of television options that run the gamut from OTT to DTH, the main video markets are now offering a wealth of different dynamics and opportunities. As with natural geography, the Asian video landscape varies widely, depending on where you are.

Across the board, there seem to be a few hard and fast “truths” to what is happening in Asia’s video sector. Parts of the region are on the verge of explosive growth. Content consumption is on the rise and in demand from a strong demographic. Satellite will remain an important part of every facet of the video market because of its unmatched ability to distribute content to people located in remote or less populated areas.

Simon Twiston Davies, CEO of CASBAA, says that Asia has the advantage of continued economic growth. “With an average of about 8 percent across the region, with some fluctuation depending on the country, Asia has an increasingly informed media market with positive demographics coming through. People under the age of 30 are driving consumption for increased media services and options and satellite technology provides the ultimate backhaul for it. Video is gradually migrating from analog to digital format and migration from SD to HD content is becoming more standard, which is driving usage of satellite capacity and demand.”

Replacement rates for Asian satellites are high, according to Twiston Davies. “Orbital slots are more valuable, deregulation of turnaround services is increasing and there are more requests turning up. There is huge demand for content — from India, Indonesia and some other countries. Satellite will play an enormous role in exporting content out of Asia into other markets where consumers demand it.”

 

The Numbers

Many markets in the region are showing huge potential, and some of the numbers related to DTH growth are a match for those found anywhere in the world. Media Partners Asia is one of the leading consultancies in the region that produces DTH and pay-TV forecasts across the region. India continues to be one of the most dynamic DTH markets anywhere in the world, says Vivek Couto, executive director, Media Partners Asia. “The growth [in India] last year was lower than before. I think the active subscriber base is around 29 million. It is growing at around 6 million to 7 million a year. The reason it has slowed is because operators have started to increase package prices. As an industry, the operators have come together to do more rational pricing, as well as reduce trade margins across the industry. The industry has cleaned up. It has become more rational. Digitalization is a massive opportunity for them.”

There are also other markets, such as Indonesia and the Philippines, which are showing strong signs of DTH take-up. Couto adds, “In Indonesia, the market added about 600,000 new subscribers last year, and about half of that came from SkyVision. You have two other players in that market. Aora is another player in that market, there’s also some new entrants on DTT like NexMedia. In the Philippines, Cignal TV, the DTH service owned by PLDT, has grown the market substantially. Last year, the market added about 160,000 – 170,000 new subscribers. Most of that came through Cignal. The ARPUs are low but they are doing well. They will probably break even in the next couple of years.”

Vietnam, with a population of almost 90 million people, has yet to see explosive DTH growth as the country continues to deal with an economic recession, adds Couto. “The country’s GDP grew around 6 percent, which is not great for Vietnam. This is a bit of a tougher market for DTH. The Canal+ platform is doing okay, but not as great as expected.”

 

Interesting Stage

Dish TV was one of the first operators to launch pay-TV services in India and now has around 12 million subscribers. The operator has witnessed the explosive growth in the take-up of pay-TV first hand. Rajiv Khattir, president, special projects for Dish TV, says the Asian video market is at an “interesting stage.”

“Various markets are likely to go digital, so online content availability is easing for consumers and content consumption is on the rise,” says Khattir. “With government mandating the digital rollout on cable, there is a growth in revenues (from digital TV). DTH is continuing to grow and now represents one-third of the pay-TV market. Pay-TV operators will now depend on growth coming from this move to digital.”

Khattir believes that satellite will remain an important part of Asian pay-TV growth. “With the geography here being so diverse and Internet penetration being low, satellite offers an opportunity for fast, low-cost deployment of pay-TV distribution,” he says.

Even with this optimistic outlook, Khattir observes that ARPU remains suppressed and there are still taxation issues that need to be resolved. “I would rate the temperature of the market as cautiously warm,” he says.

In spite of the fact that Handhi Kentjono, vice president of SkyVision, one of Indonesia’s leading pay-TV operators, believes that too many licenses are being issued without proper due diligence on content and capital ability and that illegal distribution is impeding growth, he rates the temperature of the market as “very hot,” with many new entrants and a number of possibilities.

“We are exuberantly optimistic for the prospect of robust growth,” says Kentjono. “But this growth will be unevenly distributed across the region. This is also why satellite will continue to play such an important role. Without satellite there would be no pay-TV growth in Indonesia.”

Broadcasters view the overall landscape similarly, says Jonathan Spink, CEO of HBO Asia. “[The market is] vibrant yet challenging, dynamic and fast changing, across multiple screens, devices and delivery means — especially in markets such as India, Indonesia and Taiwan.”

 

Demanding Audience

The upsurge of DTH growth in markets such as India and Indonesia is not the only characteristic of the entire market. The region, by and large, is also very tech-savvy in the way it looks for other means to access content. Twiston Davies says, “There is a more demanding audience in Asia. Online is becoming more important, but it is not lessening the prevalence of more traditional means of watching TV or accessing content. They are experiencing parallel growth. Watching content on portable devices varies by market depending on the development of the broadband market. In built-up areas or cities, we see almost 100 percent penetration. Watching content on portable devices is another way to consume, but will not replace traditional means.”
 

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Cable

86%

83%

80%

78%

75%

73%

66%

62%

61%

59%

58%

DTH

10%

11%

13%

14%

16%

18%

25%

28%

30%

31%

32%

IPTV

4%

6%

7%

8%

9%

9%

9%

10%

10%

10%

10%

 

Spink agrees with the notion that the advent of technology affects traditional pay-TV business models of providing content. “But at this early stage, it’s too soon to cast the demise of traditional TV. In fact, its got lots of legs left,” he says. “There’s data in the United States and Europe to say that total TV viewing per person, per week exceeds 30 hours and more than 90 percent of that is live viewing, with the remaining balance using time-shifted viewing. Furthermore, online viewing constitutes less than 10 percent of total viewing. Therefore, while this trend is increasing year-on-year, it is a complementary service rather than a substitute.”
 

 

How to Read the Map

Traditional means of watching TV aside, growth for video services is largely attributed to an increasing number of DTH subscribers in untapped markets and the availability of HD content. With a multitude of delivery options and platforms from which to choose, and an increasingly knowledgeable, sophisticated and demanding consumer audience, players in the video arena are trying to come up with new ways to please consumers and tap new market share. These efforts include expanding product offerings and dabbling in non-traditional areas to capture viewers.

“There is a blurring of lines between what operators of a specific type would offer in the past and what they offer now,” says Twiston Davies. “There is a true convergence between traditional terrestrial TV, multichannel TV and content — any broadcaster that is not getting into multichannel is missing the boat…and vice versa. Every type of platform, provider or broadcaster needs to be dabbling in other areas — participating in the changing market — because the demand is there.”

Spink says that HBO Asia is innovating traditional business models to provide more value to the end consumer and to continuously provide choice. “There are non-linear opportunities on traditional TV in most markets in Asia as well as launching new media initiatives in-line with expectations of consumers, who have increasingly sophisticated viewing consumption behaviors,” he says. “In providing value, we have to tailor our strategies for each region and that includes investing in original productions for exploitation across platforms.”

Pay-TV operators like Dish TV are branching out as well. “Some of the satellite pay-TV distribution platforms are trying to remain competitive with other video offerings, such as IPTV, by expanding and providing services like near video on demand. A few have initiated progressive download of the content on storage devices,” says Khattir.

Even with new, innovative offerings, DTH distribution still claims the lion’s share of growth opportunity, largely because it can reach anyone, anywhere. “Today 40 percent of video distribution is held by satellite operators in India, with Dish TV leading with more than 12 million subscribers,” says Khattir. “Pay channel revenue has seen upward trends with 40 percent of their revenue coming in from DTH operators. This is growing continuously and will be contributing more and more.”

Kentjono highlights Indonesia’s unique geography — 13,700 islands spread in 9.8 million square kilometers — as a major challenge to any meaningful rollout of fiber. “DTH will remain dominant in a market where the largest and most demanded media consumption habit is still television,” he says. “With any exploitation of HD content, SVOD will be more conducive via DTH, while broadband distribution will adopt the most efficient hybrid solution.”

 

Taxation and HD

The DTH environment in Asia does come with certain challenges. Market taxation puts some operators at a disadvantage to regional competitors. In Khattir’s view, HD content may be able to serve as an impetus for growth.

“Heavy taxation is hampering the growth of DTH,” says Khattir. “The DTH sector is currently taxed to the tune of about 30 percent and cable will be taxed to the tune of 20 percent, putting a heavy burden on operators as the margins remain low. HD will play a role in increasing the ARPU on some level for pay-TV distribution platforms in the region, which will have majority of their consumers on SD. HD is growing in the region, and with flat panel sales picking up, HD is likely to see growth.”

Couto echoes these sentiments. “HD channels are doing okay in India,” he says. “There are only about 500,000 to 600,000 paid HD subscribers in India today. You have to be a little bit careful when analyzing the numbers. There are about 30 to 40 HD channels in India, and some of the platforms are carrying 15 to 20 HD channels. It is going to be big eventually.”

According to Spink at HBO, HD channels in Asia will catch up to North America and Europe when there is equilibrium between affordable pricing of HDTV sets and availability of content in HD.

“We’re in a region where markets are very different. Developing markets are faced with limitations of income disparity,” says Spink. “I came across a statistic that it was not until 1990 that over half of urban Chinese households possessed a color TV, and not until 2001 that rural areas caught up to this figure. Mature markets like Japan, Korea, Hong Kong and Singapore, on the other hand, are similar to the United States in terms of technology adoption and viewing habits.”

Spink notes that HD content is prevalent in Asia, led by sports, movies, gaming and factual content. “HD provides a more satisfying viewing experience for consumers and allows content owners to provide more value in their product offerings,” he says. “Certainly, it differs by region, but HBO Asia has had a presence through HBO HD since 2009 and we were the first regional movie network to do so. It’s encouraging to see that more channels are offering content in HD as it benefits the industry and consumer as a whole. Arguably, the catalyst for growth in HD content is TV manufacturers — given the significant reduction of retail prices of full HDTV sets in the last five years. “

Companies like SkyVison believe that platforms will influence the level of demand. Industry associations such as CASBAA feel that demand for localized content is driving consumption. Either way, both believe that demand for HD is on the rise.

“The growth of pay-TV will create demand for HD content in the future,” says Kentjono. “The majority of TV sets are still smaller than 32 inches. Right now in Indonesia, HD is nice to have but not currently a make or break factor. Variety and exclusivity are way more important to draw the premium distinction.”

 

OTT

Viewing habits and technology continue to evolve in parallel with options for distribution platforms. While the over-the-top (OTT) video distribution has recently become a buzzword in the video landscape, the general market perception is that OTT doesn’t pose much of a threat to existing, less expensive and more popular means.

“Asian viewing habits have changed and continue to evolve,” says Spink. “We are experiencing a demand for TV everywhere, for viewing over multiple devices and the need for control and time-shift television as opposed to appointment viewing. OTT is already in existence in China with Youku, Tudou and various other players there. Elsewhere, several legitimate OTT services have also cropped up in Southeast Asia as pure ad supported services. We should, however, tamper this excitement with the inherent issues of piracy, the lack of willingness to pay for content over the Internet and new media content rights. Until there is a solid and robust business model for OTT in Asia, we should tread this carefully.”

The one thing that Twiston Davies worries about most concerning OTT is that the regulators don’t really understand the platform and, therefore, don’t understand how to regulate it. “Regulators are standing back [from OTT] and not regulating it at all,” he says. “But they are continuing to heavily regulate the pay-TV market — which puts pay-TV operators at a serious disadvantage. Online (OTT) suppliers are not paying taxes while pay-TV and DTH operators are taxed sometimes upwards of 30 percent; these are not just revenue taxes either, they are taxes on equipment like set top boxes. In India and Indonesia there are import taxes on equipment, so this gives online suppliers a distinct advantage.”

OTT and IPTV have been gaining ground in markets where Internet penetration and speeds to the end consumer are developed, according to Khattir. “Southeast Asia is yet to come to that level of connectivity or speed, so the main distribution platforms for content will remain satellite and cable,” he says. “Currently, IPTV has high infrastructure costs and in this low ARPU market, it takes a long time to recover them. OTT operations have the cost of the Internet attached which makes the service costly for the consumer, thus satellite distribution and cable will remain the preferred mode of distribution.”

“The natural habitation for OTT will be small clustered sections in metropolitan areas,” says Kentjono. “The impact on pay-TV is marginal due to the nature of the geography of Indonesia. We are offering everything that OTT could offer, and we offer it in regions that OTT could not due to the terrain.”

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