The latest research from MPA shows that while the Asia Pacific pay-TV industry remains revenue generative and scalable, a broad recalibration has begun as industry stakeholders adjust to competitive realities and a more fragile growth outlook.
We here highlight six simple themes:
1. The bundle. Current strategies are anchored to the growth of broadband. Bundling is an important driver of net new pay-TV additions in markets such as Indonesia, Korea and Thailand, underpinned by the growth of fiber network deployment.
2. Technology. Pay-TV operators in markets such as Australia, Hong Kong, Japan, Malaysia, New Zealand and Singapore, are undertaking technology upgrades to sustain a flagging consumer proposition. This involves cloud delivery (through new DVRs) and android enabled STBs with strong internet functionality. This may help combat growing levels of piracy across key markets and limit cord cutting.
3. Low ARPUs and free TV. The growth of free satellite TV and digital terrestrial TV (DTT) is proving disruptive to pay-TV prospects in India and parts of Southeast Asia. DTH satellite operators in India and the Philippines will continue to experience robust customer growth but the pace of net additions will gradually decelerate and pricing power will remain under pressure, limiting ARPU growth. Increasingly, operators in these markets are investing in local and vernacular content and scalable technologies to address the needs of the mass market.
4. OTT. The proliferation of broadband is helping fuel the growth of legal online video consumption. A number of pay-TV operators in India, Japan, Korea and Southeast Asia are undertaking STB integration with various OTT platforms, thereby limiting churn for a premium customer base and driving adoption across new non-pay-TV customer segments.
5. Content. Operators are increasingly investing in local mass and premium content segments to differentiate and cater to the needs of important customer verticals. Demand for Asian premium content, led by Korean entertainment, is growing. Premium sports remains a vital lifeline for many pay-TV operators as they look to drive ARPUs and customer growth. However, sports rights costs have probably peaked in the linear window in most markets ex-India.
6. Consolidation. At the distribution level, consolidation continues to occur in large markets such as Australia, China, India, Japan and Korea. Ultimate consolidation is only a matter of time and dependent on regulatory approval. We note that two transformational M&A’s – SK Telecom’s acquisition of CJHV in Korea and Vodafone’s acquisition of Sky New Zealand – have been blocked by regulators. At the channel and content provider level, consolidation has begun at regional and global levels in the market for pay-TV channels. This is expected to increase.
Pay-TV Revenue Growth (US$ bil.)
MARKETS 2016 2017 Y/Y growth (%)
Australia 2.9 2.8 -2%
China 18.7 21.0 12%
Hong Kong 0.6 0.6 -3%
India 9.1 10.0 11%
Indonesia 0.4 0.5 5%
Japan 6.4 6.5 1%
Korea 5.2 5.5 6%
Malaysia 1.2 1.2 0%
New Zealand 0.6 0.6 -3%
Pakistan 0.7 0.7 4%
Philippines 0.4 0.4 1%
Singapore 0.5 0.4 -6%
Sri Lanka 0.1 0.1 0%
Taiwan 1.8 1.8 1%
Thailand 0.7 0.8 7%
Vietnam 0.7 0.8 19%
Regional Advertising 0.1 0.1 9%
Total A-P 50.0 53.8 8%
Note - Includes subscription fees and local/regional ad sales
Source - Media Partners Asia
For inquiries relating to this viewpoint, contact MPA analysts Vivek Couto (firstname.lastname@example.org) and Aravind Venugopal (email@example.com).