For the global media companies that own pay-TV channels in Asia, 2017 was a surprisingly good year. Regional channel revenues for the likes of 21st Century Fox, Sony Pictures Television and Viacom hit about $5 billion, according to a study by Media Partners Asia (MPA).
Those gains, however, came from highly local businesses in India, which contributed 65 percent of revenues for regional pay-TV channels in 2017. Southeast Asia contributed just 15 percent, Japan 7 percent and Australia 5 percent. In fact, excluding local channel businesses in India, revenues for pan-Asian broadcasters fell by 1 percent to $2.2 billion.
“Success in a large-scale market such as India shows that regional broadcasters that invest in IP and local businesses can create a lot of long-term value,” says Vivek Couto, executive director and co-founder of MPA. “These bets are starting to percolate across Southeast Asia, Korea and Japan. At the same time, businesses are starting to tap more growth from streaming platforms, including partnerships with online video and telco services.”
Channels are expanding their slates of partnerships because they have to. The industry, leading executives agree, is in a state of flux amid a shift to online and mobile video consumption.
“Household consumption is moving to individual users, there’s no doubt about that,” Couto says. “That is challenging for content providers. It’s exciting if you’re an AVOD model, but it’s not so exciting if you’re expecting subscription fees to be the majority of your revenue stream. What people spend on mobile is a fraction of what they spend as a household on broadband and the competition for that watch time is significant. When you’re competing with mobile you’re competing with a digital ecosystem.”
BACK TO BASICS
Add to that global consolidation moves happening, or pending, in the background, and the result is a state of uncertainty. But with that, channels are focusing on the basics: great programming delivered in every mode the consumer desires, local relevance, smart marketing campaigns and full-service offerings to advertisers.
“We put everything under two buckets—there’s business as usual and there’s innovation,” says Zubin Gandevia, the president of FOX Networks Group Asia (FNGA). “It’s difficult sometimes to tell what is business as usual and what is innovation because you tend to be innovating all the time. We are a subscription business, which, you could argue, would be business as usual. We’ve enhanced it by innovating and introducing [the OTT service] FOX+, which will help to [extend] the life of this traditional business, not just for us but for our platform partners. Now they have access to amazing content on demand. It also allows us to take a step into the digital future of understanding our consumers more directly and more intimately, and therefore creating a better product.”
Virginia Lim, senior VP and general manager at Sony Pictures Television Networks, Asia (SPTNA), says that embracing digital has helped her portfolio of channels remain relevant in an increasingly on-demand environment. “Nonlinear strategies have become an integral part of our overall programming strategy to increase the availability of our products to various audience segments,” Lim says. “So when we’re negotiating acquisitions, digital rights are now very much a [necessary] factor. We offer stacking catch-up VOD and prior full season catch-up wherever possible. We offer full-episode free views to affiliate partners to increase their reach and sampling in a very fragmented audience market. We work to ensure new shows premiering on our channels are available for catch-up as early as the next day on affiliate platforms. And increasingly, our original content is formatted to be snackable, digital extensions that are available on demand and via our branded social-media platforms.”
But as it turns out, there is still an opportunity to launch 24/7 linear channel brands. “The world around us is changing rapidly and it was changing even when we launched,” says Avi Himatsinghani, founder and CEO of Rewind Networks, which rolled out the HITS network in 2013. “There were already signs in the West in 2012/13 that OTT and other forms of content distribution were the new way. Fundamentally it comes down to the kind of service offered. Platforms know what works well with them. Unless there is a clear proposition offered, platforms aren’t willing to carry those services. The size of a [portfolio] no longer determines what channels get carried. This is a very good sign as it creates a more level playing field and helps platforms put out more compelling services.”
Indeed, Himatsinghani is so encouraged by opportunities in the market, with both traditional pay-TV operators and OTT platforms looking at bundled services of linear channels, he is planning a new network, HITS Movies. The service will launch first as a weekend block on HITS, delivering films from the ’60s through the ’90s. “People often ask, Why are you launching another linear channel with HITS Movies? Because [these movies] don’t get consumed through on-demand that easily. Deep library competes for a share of time with first-run and exclusive blockbusters like Game of Thrones or Narcos. When a consumer is in an on-demand environment, they tend not to choose to consume deep library, even if the movies are timeless hits.”
Alexandre Muller, managing director for Asia-Pacific at French-language broadcaster TV5MONDE, has also seen growth in his channels business over the last year. “TV5MONDE Asie and TV5MONDE Pacifique, our general-entertainment channels, have seen strong growth in markets such as India, Sri Lanka and Korea. And TV5MONDE Style HD, our thematic channel focusing on French [lifestyle], was launched with many partners in the Asia Pacific, including Thailand, South Korea, Taiwan, Singapore and Hong Kong.”
Rewind’s Himatsinghani points out that there are still territories to expand to. “Many of these emerging markets are highly populated, dense areas and are not necessarily evolved in terms of broadband or mobile. Pay TV is still the bread and butter, bundling strong local fare alongside select international content that people can afford on a mass-scale basis. From our perspective, there are new markets to launch in, including Vietnam, as well as Laos and Cambodia. Even in evolved markets there are new opportunities, including broadband providers looking at bundling their service with content. The ecosystem will evolve into a marketplace with several master aggregators, be it telcos, device players, traditional pay-TV operators going into the OTT space or SVOD services offering linear propositions. So the runway for us is to tap into all of these opportunities and continue to grow.”
TV5MONDE’s Muller observes, “We are lucky to be evolving in a market that still has a lot of growth [to come] for the next couple of years. There are still plenty of opportunities in the region for us and our priority for the coming 18 months will be to strengthen the distribution in mature markets through TV5MONDE Style HD while growing the availability of TV5MONDE Asie/Pacifique.”
For many channels, a primary growth area has been original content creation. “It’s about creating unique content that is only available on our services,” says SPTNA’s Lim. “We have grown in the original IP space with our own formats and our own characters that are available for merchandising and to be produced into animated series and vignettes.”
AXN has long been in the original-content space with shows like The Amazing Race Asia and Asia’s Got Talent. More recently, AXN launched The Elements: Cosentino, and sister network Sony Channel has also expanded into original IP with The Apartment, an interior design reality competition. ONE, meanwhile, features popular Korean shows like The King in Love. AXN also launched a show specifically for the key market of the Philippines, Adventure Your Way. “This is an interesting concept as it bridges the gap between the linear and social spheres,” Lim explains. “Essentially, the series is fully crowd-sourced—AXN viewers in the Philippines get to advise the show host on where he should travel to next and the adventures he should experience, via Facebook and Twitter.”
Lim adds that this social-media strategy is crucial. “We don’t see social as an after-thought and a marketing campaign; we treat it as part of the series experience, extending the show beyond TV to digital so that fans can consume more and engage more deeply with the untold stories.”
LET’S GET SOCIAL
Social media engagement has been helpful to Rewind. “We’re in the business of listening to our customers,” Himatsinghani says. “Consumers—because they know what the HITS proposition is—provide us with reams of recommendations. They trust our curation, but they also want to be involved in the process by being our programmers. Sandie Lee, Rewind’s VP and channel head, and our team feel like DJs listening to requests. Shows like MacGyver, Three’s Company, Airwolf, Baywatch and Knight Rider were all suggested to us on our Facebook page. That’s unique to us and something we have not seen happen anywhere else. We need to see ourselves as playlists. In the world of Spotify and Apple Music, there is a certain proposition you need to live up to. If your playlist is not strong enough, you’re not going to have followers.”
Advertisers also want to see channels embracing digital so they can get a 360-degree offering that reaches audiences wherever they are. “We’re seeing keen interest in digital extensions and brands wanting to leverage our social platforms to reach and influence new audiences,” says SPTNA’s Lim.
The general view among pay-TV channel operators is that as the business is changing, being agile and flexible is key.
“The overall theme is, continue business as usual and keep innovating because we have to move forward and march ahead,” FNGA’s Gandevia says. “The world is moving very quickly and we want to continue to be at the forefront of that progress.”