Crossing Borders

April 2007

Asia’s pan-regional cable and satellite networks are expanding their reach with original-content initiatives and alliances with new-media platforms.

By Mansha Daswani

There was a Wild West feel to the Asian cable and satellite industry in the mid-’90s, with the lack of protected, addressable systems and limited capacity forcing many international brands to pay platforms for carriage just to secure a foothold in the market. Fast-forward to today, and the region is home to one of the most sophisticated IPTV platforms in the world—PCCW’s Now Broadband TV in Hong Kong—as well as to TU Media’s satellite mobile broadcasting platform in Korea and StarHub’s commercial high-definition rollout in Singapore. Those platforms, and many others, are providing new opportunities for international brands to roll out additional services in the region.

And yet, the restructure that recently took place at MTV Networks Asia provides a cautionary tale to anyone operating in the region. At the end of last year, MTV Networks Asia slashed more than 80 positions at its Singapore-based headquarters, and independent observers say it was a case of too much growth too soon, with a slate of ultra-localized feeds for markets that were just not big enough to support them.

Indeed, the landscape’s major players today are taking a more reasoned approach to the market, tapping into new opportunities when it makes economic sense to do so. “Our growth goals are about building sustainable, profitable businesses and building brand value,” says Christine Fellowes, the managing director for the Asia Pacific at E! Networks. “We don’t have a big ego that requires us to have a list of 25 markets where we’ve launched.”

At present, E! operates an English-language feed that is available in most of the region, including Singapore, Hong Kong and the Philippines. Last year, E! created a dedicated feed for Australia and New Zealand. “Digital penetration is so strong, we had the numbers to support an ad-sales business there,” explains Fellowes. “That’s the model in this digital world,” she continues. “You put in the one feed that is a cost-effective way to be able to get onto lots of these smaller digital platforms. As penetration grows and you have enough eyeballs, then an ad-supported business becomes viable. Then you can start doing local productions, local scheduling.”

On the content front, “We’re going to start to cover some of the red-carpet events in Australia,” Fellowes says. “Events where there’s a good smattering of Hollywood as well as some of the big Australian celebrities.”

For the E! feed that services the rest of the region, original content creation is not a high priority, Fellowes notes. Partly it’s an issue of market penetration and economic rationale: “It doesn’t make sense to do local-language, local-production blocks on a Hong Kong IPTV � la carte service. Local [production also] tends to be country-specific. There aren’t a lot of movie stars that travel between countries in Asia, other than some of the big Chinese and Bollywood and Korean celebrities. The hottest star in Taiwan is not known in Japan or the Philippines.”

THE REAL ASIA

Original content, however, has already become a significant part of National Geographic Channels Asia’s business. NGC Asia has a four-year deal with Singapore’s Economic Development Board to finance quality productions out of that market. More recently, NGC entered into similar alliances in Korea and Malaysia. Many of those productions have aired as part of the channel’s ShowReal Asia strand in the region, as well as on sister channels around the world. “We’ve uncovered some terrific filmmakers and producers who are brilliant at doing a localized story, but now we’ve been able to turn those into international stories,” says David Gunson, the senior VP of broadcasting and programming at NGC Asia.

In addition to fostering local talent, NGC Asia is taking existing local productions and re-versioning them for the international market, as it did with Inside the Forbidden City, a two-hour special adapted from a 12-part series produced by the Chinese state broadcaster CCTV.

NGC Asia’s local production initiatives have focused on the flagship National Geographic Channel brand, but Gunson says that he hopes to begin doing some for A1, the action-adventure network, and the new offering, Nat Geo Wild, which began its regional rollout in Hong Kong and Singapore a few months ago. “Wildlife is still extremely popular in Asia,” Gunson says, noting that Malaysia, Thailand and the Philippines are the next markets he hopes to get on board for the new service.

NGC Asia has also begun rolling out its high-definition channel, which is currently available in Singapore on StarHub. “Hong Kong will be the next market,” Gunson says about the expansion of National Geographic HD. “We have trials in Hong Kong now. Malaysia will probably be the next.” The process, Gunson concedes, will not be easy: “Most people are in trial mode or considering trial mode. It’s so expensive—a lot of cable operators are asking, ‘If we have to spend $100 million dollars, is our country ready for it?’”

Another company rolling out new services is BBC Worldwide, which is re-branding BBC Prime as BBC Entertainment region-wide, delivering British drama and comedy programming, both from the BBC and from third-party providers. “BBC Prime did a very different job compared to what BBC Entertainment does,” explains Christine Leo-McKerrow, the VP of TV channels for Asia at BBC Worldwide. “BBC Entertainment is much more focused on delivering what’s on the tin—delivering entertainment.”

The company is also offering to platforms the channels BBC Knowledge, BBC Lifestyle and the preschool service CBeebies. The last will launch initially in India. Leo-McKerrow notes, “Parents love it—if you think about the brand values that BBC has—reliable, good quality, safe—you know that the BBC makes good television. The parents immediately know what to expect. I think it will be a strong offering throughout the region.”

As the newest international brand to be making a major play for Asia, the BBC will be looking to tap into emerging digital platforms, which Leo-McKerrow says are giving the company some flexibility when it comes to its expansion strategy. “You don’t just have to be a linear channel. We don’t have to play by anyone else’s model. Our intention is to take our brand and work across all media. There are some markets where hopefully we can roll out into different spaces next year.”

ALTERNATIVE ROUTES

E! Networks is also eyeing alternative entry routes, using its E! Everywhere strategy. Fellowes is doing deals for syndicated branded blocks as well as making the company’s content available on new-media platforms. “Linear TV isn’t going to be the entry strategy in a market like Korea,” says Fellowes. “We were able to enter that market with syndicated programming. Korea now represents our number-one revenue earner in the entire international marketplace in terms of program sales. Korea is a great example of how we were able to develop a number of other revenue streams using different platforms to distribute the content and the brand. On the back of which, we are now looking [to launch] a Korean version of E!” with a local partner.

Digital initiatives in particular have fared well for E! in Korea, with a satellite digital mobile broadcasting deal with TU Media and a video-on-demand alliance with the broadband platform Hanaromedia. Fellowes is doing similar mobile and broadband deals across the region.

Another company that has been leading the charge on the multiplatform front is SPE Networks Asia—owned by Sony Pictures Television International—which operates two services in the region: the action-adventure brand AXN and the anime channel Animax. Ricky Ow, the general manager of SPE Networks Asia, cites the success of the AXN Mobile initiative, particularly following the launch of AXN’s biggest original production to date, The Amazing Race Asia. The regional version of the hit CBS series generated record ratings for the channel, and casting is under way for a second season. Ow says that original production will eventually become the “fifth pillar” of AXN’s programming strategy, alongside blockbuster movies, top-rating U.S. series like CSI, reality shows and lifestyle titles. “Our original production [output] has grown by more than 100 percent in terms of the number of hours,” Ow says.

PASSAGE TO INDIA

Like SPE, Turner Broadcasting System Asia-Pacific is one of the elder statesmen of the Asian cable and satellite landscape. Building upon the success of CNN International, Cartoon Network and TCM, Turner launched the live-action children’s channel Pogo in India in 2004. “Extensive research, conducted before Pogo’s launch, indicated that the viewing habits of Indian kids had matured,” says Ian Diamond, the senior VP and general manager of Turner Entertainment Networks Asia. “Three years since launch, Pogo holds the number-two position in the kids’-entertainment-channel category, second only to Cartoon Network.”

Turner’s success in India has allowed it to invest in a number of original productions for both Cartoon Network and Pogo, including a co-production with Sesame Workshop, Galli Galli Sim Sim, the Indian version of Sesame Street. “Our long-term strategy has worked well for us in India and we will continue to follow the same to ensure we sustain and grow our lead in the country,” Diamond says. “New shows, new themes, unique and fun-filled on-ground experiences, and online interaction—the aim has been to provide a 360-degree experience that is safe, enjoyable, fun and memorable. Every year we organize innovative multi-city events such as Toon Cricket [and] Pogo Amazing Kids Awards, among others, which are a huge success. A deep understanding of Indian kids, great content and the right programming strategy are a must in order to stand out in the market, which is why our networks remain on top and maintain leadership positions.”

Disney Channel, meanwhile, is also looking to stake a claim in the Indian market with its original productions. Last October, the channel launched its first local series in India, the live-action comedy Vicky Aur Vetaal, which was followed up in January with Dhoom Machaao Dhoom, a tween property about a girls’ pop band. “The [Indian] market has tended to be very focused on animation,” says Nicky Parkinson, the senior VP and managing director for Walt Disney Television International, Asia Pacific. “The key thing that Disney Channel is bringing into this region is our live-action comedy. We are creating a new genre in this market; we’re trying to build a new and slightly older audience, the 10- to 14-year-old kids, who have traditionally been underserved here. They’ve graduated from animation, they want that world expressed in a slightly more three-dimensional way, and that is what we’re appealing to.”

Disney is also doing local productions elsewhere in the region, including the recently announced As the Bell Rings in Australia. “We are looking at local production in China,” Parkinson says. “We’ve got a number of projects that are being slated at the moment. It is our intention to try and work with some local animation houses to create local content and work creatively with the market. This is about developing Chinese stories with a Chinese creative group, and providing some of the experience and insight from our teams in the U.S. to help that market with things that we have become particularly proficient at. What we’re trying to do in places like India and China is blend those two experiences—the local culture with some of the narrative structure that has been the trademark of kids’ television in the U.S. and the U.K.”

NEW PLAYGROUNDS

In the fiercely competitive kids’ space, both Cartoon Network and Disney are ensuring that their content is reaching the maximum number of eyeballs possible across a variety of platforms. “We’re trying to think about how we can go beyond the linear channel experience, delivering compelling and entertaining content across all kids’ platforms,” says Parkinson. “That includes free TV and digital media, but also thinking about retail opportunities as well. We’re redefining what we mean by network. It’s much more about a 360-degree experience.”

Experimenting with high-definition technology, Disney recently launched the HD short-form series Guardians, about Asian festivals, on its Southeast Asian feed. And it has already seen the power of multiplatform strategies with the hit High School Musical, for which the company rolled out a localized, Bollywood-style soundtrack in India and recorded a Southeast Asian version of the song “Breaking Free.”

Cartoon Network, meanwhile, has made full episodes of some of its series available on the Cartoon Network Australia website, and, also in that market, is offering up games on the FOXTEL games channel. In India, meanwhile, subscribers of the Tata Indicom Broadband service can watch Cartoon Network series on their PCs.

As a Hollywood movie service, HBO Asia is not looking at original productions to strengthen its position in the market. Instead, the premium service is working on expanding its portfolio of channels. Initially just offering two brands in the region, HBO and Cinemax, HBO Asia is now distributing the multiplexes HBO Hits, HBO Family and HBO Signature. The next step for the company is on-demand services. Working with PCCW’s IPTV platform in Hong Kong, Now Broadband TV, the premium channel operator has launched its first subscription video-on-demand (SVOD) service in Asia. “It was the logical next step,” says Jonathan Spink, the CEO of HBO Asia. “They have the capabilities to do it.”

However, Spink is not sanguine about the prospects for on-demand services elsewhere in the region: “There aren’t many places you can offer it—there aren’t many markets that are geared up for it,” he says. “It’s going to be a while before most of them are in the position to offer that kind of service.”

Spink also concedes that HD rollouts across the region are still some time away. “I think it’s going to be fairly slow,” he says. “Nobody’s going to leap into it. It will become the regular standard in time—we’ll all get there in the end. It may just be a few years.”

BUYING TIME

MGM Networks will be watching the HD space, following the rollout of its own high-definition service in Europe, according to executive VP Bruce Tuchman. In Asia, MGM operates two services in Korea, on the Skylife DTH platform. In the remainder of the region, the flagship MGM Channel is available in all of the key markets outside of Japan and China. The channel has been expanding in Southeast Asia with CNBC Asia Pacific as part of a 2003 strategic alliance. Tuchman says that aligning with the business-news network has allowed the company to rapidly expand in a cost-efficient manner.

CNBC Asia, meanwhile, is itself well entrenched in the region as the only dedicated business-news network in Asia. “We’re in over 21 countries around the region,” says Jeremy Pink, the president and general manager of the NBC Universal-owned service. The company’s strategy has been a mix of delivering its wholly owned CNBC Asia service as well as partnering with local outfits for co-branded channels in India and Japan. In China, meanwhile, the channel syndicates its programming to about 100 million homes via Dragon TV. With distribution less of a concern, CNBC, like so many other brands, is exploring the mobile space. “We have a tremendous number of mobile product offerings around the region,” Pink says. “We’re constantly making sure we have compelling and important content to reach a really high-end audience, who can access it any way they want, on television, online or mobile phones.”

While international brands have certainly made their mark on the Asian landscape, there’s no shortage of local ventures looking to exert the same influence. And the giant of that sector is the News Corporation-owned STAR, which, since its 1991 launch, has built up a stable of entertainment, news, music and sports networks that collectively reach more than 300 million viewers in 53 countries across the region. Some of those, like the English-language entertainment offering STAR World, are available region-wide. Others, like STAR Chinese Channel in Taiwan and STAR Plus in India, are delivering strong ratings with originally developed content. Those niche networks are also offered on a premium basis to expat communities in various Asian markets. “We feed the Indian channels to the Indian expats in the Middle East and Hong Kong,” says Ross Crowley, the executive VP of content at STAR. “We feed the Chinese channels to Chinese expats outside of mainland China and Taiwan.”

Hong Kong-based Celestial Pictures, meanwhile, a division of the Malaysian DTH giant Astro, has two services on the air in the region: Celestial Movies and WaTV. The former is a Chinese-language movie service, culling titles predominantly from Celestial’s large film library, including the classic Shaw Brothers’ catalogue of martial-arts films. That service is now in 12 markets, following its launch in Vietnam in February. WaTV, Celestial’s more recent launch, is a Mandarin-language infotainment and lifestyle network that has rolled out in Malaysia, Indonesia and Brunei. According to Daniel Fung, Celestial’s VP for film and channel distribution, Hong Kong and Singapore are the next target markets for WaTV.

For Fung, WaTV is intended to fill a gap in the market for quality Chinese-language content. The company is also doing that with its own original productions, such as the Chinese drama series Empress Feng of the Northern Wei Dynasty.

Both STAR and Celestial Pictures are now extending their reach even further, launching services in Europe, North America and the Middle East, particularly with the assistance of new technologies. STAR has launched a downloadable video service for its content out of India, while Celestial is doing online and video-on-demand deals for its Chinese-language movies.

PIRATES’ BOOTY

As all of Asia’s channels look to expand their reach, signal piracy remains a pressing issue. According to a report from the Cable and Satellite Broadcasting Association of Asia (CASBAA) and Standard Chartered Bank, pay-TV piracy cost the Asia-Pacific region $1.13 billion in 2006.

According to Fellowes at E!, signal piracy has become a barrier to entry in certain markets. “In a market like the Philippines, where you put the signal up on a middle tier somewhere and you get pirated to the millions and you’re only getting paid for a tiny, tiny part of that—that’s not a smart proposition. Piracy has tended to restrict where we would readily take the channel. However, as the investment in digital is ramped up, some of those issues are being overcome.”

Channel operators agree that as more platforms transition to digital and implement secure conditional-access systems, signal theft and under-declaration by platforms will become less of a problem. But there are other challenges on the horizon, with broadband rollouts making it easier for people to illegally download content from the Internet.

“Nowadays, signal piracy is not only restricted to somebody stealing your signal and selling it away [on their cable platform]. Now they’re taking your signal and bumping it onto the Internet and making it free for everybody,” says SPE’s Ow. “It’s harder to control and manage. We are seeing some new challenges.”

And the two elusive pots of gold in the region, India and China, are still full of regulatory hurdles that operators will have to navigate with caution. AXN experienced that firsthand in India, where it was pulled from the airwaves for close to a month for airing what the Indian government deemed to be “lewd” content in the one-off special The World’s Sexiest Commercials. As for China, meanwhile, Ow is, like so many channel executives in the region, optimistic and realistic. “Your guess is as good as mine,” he says of the prospects for that market opening up. “When they’re ready, we’ll be ready.”