DTH Flourishes Across Asia
When it comes to DTH in Asia, it is not hard to look past India, which at the end of April 2012 had close to 44 million DTH subscribers, making it arguably the most vibrant DTH market in the world. While operators such as DishTV, Tata Sky, and Airtel gain a lot of headlines for their subscriber growth in recent years, DTH is making an impact all across Asia.
With a population of just less than 250 million people, Indonesia is often referred to as Asia’s other big DTH market behind China and India. The country has seen an explosion of new DTH players all vying for a piece of the pie.
The DTH leader is MNC Sky Vision, which has around 1.72 million subscribers and is expecting to increase that number by another 700,000 this year after it added around 600,000 subscribers in 2012. Furthermore, the company believes there is still far more to come.
“In my opinion, DTH has the potential to reach 22 million subscribers in Indonesia,” Handhi Kentjono, vice president, MNC Sky Vision, says. “I am very optimistic about the prospects of reaching the entire addressable households in the country. We think 22 million of them will have the ability to have pay-TV services. So, the potential is quite big.”
Due to the subscriber growth Sky Vision has experienced, access to satellite capacity has become a key issue for the company. “We moved from MPEG2 to MPEG4 early enough. We reached about 800,000 subscribers when we switched over to MPEG4. Right now, with MPEG4, we have the capacity for 160 to 200 channels, while the channel count right now is less than 120. For the foreseeable future, we are OK with capacity. We are not looking for more capacity in the next year, unless we want to use it for competitive reasons,” Kentjono says.
However, one of Indonesia’s dynamics as a market is the lack of perceived enthusiasm toward HD services. Sky Vision, itself the market leader, only offers five HD channels, and Kentjono admits the operator is unlikely to increase this number in the near future. Currently, the company is more focused on adding subscriber numbers than on boosting its HD output.
Due to its geography, it could be argued that Indonesia has great potential for a satellite broadband offer, and Kentjono admits the operator has given this some thought. However, with pay-TV still on a huge upswing, he says Sky Vision will continue to focus aggressively on maintaining its number one position in the market.
“Right now, DTH is the dominant platform in Indonesia with 81 percent of the marketshare. DTH is the only platform that can go across all of Indonesia; cable and IPTV are hampered because of infrastructure,” Kentjono says. “Until 2015, we think DTH will grow to have 84 percent marketshare. Until 2015, I don’t expect the competitive environment will change. But, having said that, we are not standing still, we are preparing the platform so it will be ready for the deployment of digital, so it can be wireless/OTT/3G. We are not putting a lot of emphasis on this in the short term because our business is quite robust on the DTH side,” he adds.
With Indonesia’s market potential and licensing regime, new DTH players are constantly emerging, though it remains to be seen how many will stand the test of time. Aora TV is one of the new kids on the block, and has just fewer than 200,000 subscribers for its DTH offer. Alex Lambeek, CEO, Aora TV, says the operator hopes to double and triple that number over the next two to three years. He admits the company is still in start-up mode and that it has a slightly different focus than MNC Sky Vision.
“There are roughly 44 million TV households in Indonesia. Also, the country is quite layered socio-economically. We are focused more on the B and C class consumers, so not the top end or the mid end. We focus more on the low end and high low end, if you will. We think ultimately there could be 10 to15 million households that could be reached by pay-TV. We have one of the lowest cost entry-level packages in the market, so we are very price competitive for what you got,” Lambeek says.
Aora TV offers 70 SD channels and 10 HD channels. “In Jakarta, you do have some consumers that do appreciate HD, but if you look at the masses and ask them whether they are willing to pay anything extra, and whether they appreciate HD, the answer is typically no. So, the return on investment at this point in time pretty much is not there,” says Lambeek. “We are not planning to add any more HD channels this year.”
Ironically, being a new player itself, Lambeek believes the market could benefit from better regulations. “The number of licences that have been given out is just outrageous. Clearly, there is only room for several pay-TV players. You can argue whether that number is from two to five players. But, clearly, that is far less than the number of players currently in the market. So yes, I do believe there will be consolidation in the market,” he says.
IMTV is another DTH offer that is set to launch in the first part of this year. IMTV, owned by the Lippo Group, is focusing on the B and C segments of the demographic, like Aora TV. “We are mainly targeting communities among the many islands in Indonesia,” says Felix Ali Chendra, CEO, IMTV.
Chendra points to the economic situation in Indonesia, for its optimism on the future of pay-TV. “A couple years ago, we passed the $3000 GDP figure. This is a magic figure as economists have said that when you pass this figure people will want to start buying consumer goods such as pay-TV. We are already a member of the G-20 and fast approaching status as a G7 country,” he adds.
Japan is still one of Asia’s major markets, and Sky Perfect, the main DTH operator, in the country has just fewer than four million subscribers. The operator is likely to be one of the leaders in bring ultra-HD (UHD) broadcasts via satellite in Asia.
“We have a plan to do UHD-TV test experiments in 2013, similar to those being implemented around the world since last year,” says Yutaka Imai, who works on the service development team of the platform service division at SkyPerfect. Imai believes satellite will be vital for SkyPerfect’s plans to deliver an ultra-HD future in Japan. “Any other transmission lines except satellite will not be able to maintain the stability of cost and distribution to deliver large video data to homes across the country. Satellite will need a shorter period for preparation to implement than others. It would be possible on the Internet in the future, but takes a little more time to achieve it,” he says.
At the other end of the scale, you have a market like Nepal, which has a population of a little more than 30 million people and for which satellite capacity is a main concern, according to MyTV CEO, Ramesh Poudel.
“We may well need another satellite transponder. We have to increase the number of transponders in order to carry more digital channels,” he says. “We are planning that the total bouquet of channels will be around 400 in the next few months. The major challenge is getting a good cost for satellite bandwidth. There are high costs for this bandwidth. The market is tough and it is difficult for us to pay the current costs. The costs and satellite bandwidth are the two major things for us. If we can get more satellite bandwidth, we can increase our marketing activities.”
The company has around 150,000 subscribers and has now broken even, although Poudel admits the initial target was to have around 200,000 subscribers by this stage. In terms of expanding its offer, MyTV wants to be in a position to offer 20 HD channels across the major cities of Nepal.
Despite having a DTH offer, the operator also plans to deliver services via terrestrial networks, as more fiber is being laid in Nepal. MyTV, is working with the Nepalese government to accomplish this goal, and could deliver a 200-channel service via terrestrial, increasing its already strong position in the market.
“There is strong demand from subscribers for pay-TV. There is a drive toward more premium-level content. The pay-TV market is very good nowadays in Nepal,” says Poudel.
Another interesting DTH market in Asia is the Philippines. It has a handful of DTH players, such as Cignal Digital TV and Dream TV, monetizing the market.
Cignal Digital TV, which is owned by Mediascape, launched a nationwide DTH service back in 2009. It has now just more than 450,000 active subscribers, and aims to be profitable this year. The content has also increased steadily. When it launched in 2009, Cignal Digital TV had only four HD channels, and four upconverted HD channels; nowadays, it offers 19 HD channels. Back in 2009, the pay-TV operator only offered 30 channels, and now offers close to 80 channels.
While the company may be in its fifth year of operation, pay-TV has still only scratched the surface in terms of its potential in the market. “There are 17 million households in the Philippines and pay-TV penetration is only around 11 percent,” Robert Galang, vice president, sales, Cignal Digital TV says. “There is a very large untapped market for pay-TV services in the country because cable TV is able to serve only the key cities and towns. With Cignal TV, we can reach not only the key cities, but also the most remote areas in the Philippines. We are able to offer very compelling subscription packages and programming at various price points. In 2013, we expect to maintain or even surpass the level of growth we’ve seen in the previous years.”
With cable operators in the country still moving from analog to digital, the opportunity for DTH is a significant one. “Our main cable TV competitor is still in the process of converting their service to digital. There are two other DTH providers in the country, but their focus is mainly on offering pre-paid services in un-cabled, rural areas. I believe their subscriber bases are still quite low,” he says. “We have made the best quality pay-TV broadcast available on post-paid and pre-paid subscriptions, allowing us to cater to both urban and rural areas. While Cignal aggressively grows its post-paid base, which contributes higher ARPUs, a big portion of our subscriber numbers will still be on pre-paid.”
While Cignal has pushed its DTH service aggressively all over the country, Galang admits the operator could launch an OTT service in the Philippines later this year. “Cignal is in the best position to offer OTT services given our relationship with the biggest Telco players in the country, namely PLDT, Smart Communications, and Sun Cellular,” he says. “Cignal will soon be available on various platforms, on your smartphones and tablets. We will be launching an OTT service within year, probably within the third quarter. We are in the process of securing the license to offer Cignal over IP.”
The company is also investing to make its service more attractive in urban areas of the country. “We have just invested in our new digital headend facility. We are now in the process of migrating our channels from the old headend to our new headend. This is our biggest capital expense this year. We are also investing in provisioning for Cignal TV in Multi-Dwelling Units (MDU). There is a boom in the Philippine property development sector, particularly in the construction of high-rise condominiums in urban areas,” he says.