Combating Piracy Plague Creates Opportunities

 

Piracy is a plague that has an impact on pay-TV operators worldwide, and the problem has become even more acute in a distressed economic environment.
The Cable & Satellite Broadcasting Association of Asia (CASBAA) estimates that in 2008, piracy cost pay-TV operators in Asia nearly $2 billion in revenues and more than 34 million subscribers in 2008. Countries that have been hard hit include Thailand, the Philippines and Indonesia, “where there are substantial black market cable industries, featuring operators who take DTH signals from one source or another and distribute them to millions of homes across these three territories without any payment,” says John Medeiros, deputy CEO of CASBAA. While the piracy situation may have an impact on analog cable TV operators more, there are many cases of satellite pay-TV operators feeling the negative effects of piracy. “There are satellite systems in Asia which have been compromised. There have been massive numbers, hundreds of thousands, even millions, of cloned cards that have been distributed throughout Asia. The nature of the satellite business is that it doesn’t respect national borders, so one broken satellite system in one market can impact markets around it. It can indeed spill over. The technology situation is worse for cable than satellite in Asia. In general, the satellite systems are newer and have more effective conditional access controls. For cable systems — old analog systems — there are no effective conditional access mechanisms. Older cable systems are the weakest link in the piracy chain in Asia,” he adds.

Market Opportunity

With the problem is spread throughout multiple countries with large populations and many new pay-TV operators, Asia represents a potentially lucrative market for content security vendors. Verimatrix, best known in the IPTV world, recently signed its first pure satellite deal in Asia and sees strong opportunities as operators realize there are no short cuts to dealing with the piracy issue. “Operators that are transitioning from analog to digital are a very strong market in terms of growth,” says Bob Kulakowski, the company’s CTO. “What is interesting is that a few years ago when we were trying to enter into the market, price was really a driver. Now they want a partner with a long-term vision to protect their revenue, which is where we align with operators. The price points have improved from a few years ago. Operators understand the value of security. You have operators with cable, satellite and IP plans. They know how to monetize services. They do multiple network delivery and need to protect their investments,” he says.
Berit Svendsen, CEO of Conax, a Norwegian-based content security company, says, the company has established a foothold in India, where there is strong competition between five different satellite platforms. “There is a lot of price pressure in this market, and it is a very exciting TV market. They have a lot of content there for distribution. What we also think is exciting is that the cable TV operations there are starting to digitize. There will be an additional market for that when that starts to happen.”
NDS also has been successful in India, says CEO Abe Peled. “It is not a high-ARPU market. These operators have to be economical with their expenditure, but it has proved to be worthwhile. There is strong subscriber growth in these markets. In emerging markets, it goes just beyond security. We sell operator’s whole packages, so security, middleware, EPG, games, etc. For operators that really see a long-term business, we find solutions.”

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