Lighting Up the Screen

February 11, 2011 World Screen

 

This interview originally appeared in the MIPCOM 2010 issue of TV Asia Pacific.
  
The numbers are staggering—446 million pay-TV homes by 2014, reports Media Partners Asia (MPA) in its latest study of the Asia-Pacific multichannel business. This is projected to rise to 513 million by 2020. Last year alone, the industry added 26.6 million new subscribers.
 
Digital is the story, with operators finally making the upgrades needed to expand capacity and offer advanced ser-vices like HD and on demand. “It’s taken a long time—we’ve been talking digital for ages,” says Simon Twiston Davies, the CEO of the Cable & Satellite Broadcasting Association of Asia (CASBAA). “Platforms are now beginning to see the benefits of digitization.”
 
Indeed, the digital pay-TV market reached critical mass last year, according to MPA, with the number of digital pay-TV subscribers rising to 116 million—16 percent of total TV homes and 34 percent of total pay-TV homes. Leading the charge are cable players in China and Japan, India’s numerous DTH operators, satellite services like Astro in Malaysia and IPTV platforms in markets such as Hong Kong and Korea.
The new capacity has given rise to a host of new entrants, while Asia’s big pan-regional players are launching new services, adding new feeds and investing in local programming.
 
Among the biggest operators—and most profitable, according to MPA estimates—is News Corporation’s FOX International Channels (FIC) Asia division, which has a portfolio of 17 channels, including the flagship FOX, National Geographic Channel and STAR World. The business is the result of last year’s merger between STAR’s pan-regional, English-language channels operation and the FIC/Nat Geo bouquet. (Following the restructure, STAR India and STAR Greater China were spun off into separate entities.)
 
“The results speak for themselves,” says Zubin Gandevia, the COO of FIC Asia, on the benefits of the reorganization. “The business units are all doing financially better on an individual and collective basis than they were before. Each unit has made their products far more relevant to their market.”
 
Over the last year, the division has focused on the expansion of the entertainment brand FOX, which, with a male skew, complements the increasingly female-friendly STAR World, and the continued rollout of Nat Geo Wild. Next up, Gandevia says, will be exploring the movie space, following the success of the pan-regional STAR Movies service. This initiative kicked off with the launch of Fox Family Movies in Singapore last month on StarHub.
 
“Asia is growing and growing,” Gandevia says. “We are lucky in that we were in early and we have great brands. In the long term, even though there may be a lot of clutter, platforms and customers will increasingly differentiate between must-have brands, tent-pole brands, and the also-haves. We want to be in the former. There are four or five of our channels which are already in that category. I want to make these channels even more indispensable than they already are to platforms.”
 
The need to have a clear proposition that stands out for platforms and advertisers, is also expressed by Raymund Miranda, the managing director for Asia at Universal Networks International (UNI), which has been operating in Asia since 2008 and recently underwent a rebrand. “Universal Channel is now in 13 countries, we have one country with 13th Street Universal, Syfy Universal is in ten countries, excluding our joint venture in Australia, and DIVA Universal is in 21 countries,” Miranda says. “I think this is one of the fastest rollouts [of a portfolio] across multiple countries.”
 
MAKING AN IMPACT
The key, he says, is having “clutter cutters” that make platforms, advertisers and viewers pay attention. “I see viewers being more discriminating when it comes to their expectations of the channels,” Miranda says. “And that makes it important to have strong channel brand propositions.”
 
For Mark Whitehead, the senior VP and general manager of BBC Worldwide Channels Asia, the recognition of the BBC brand was crucial to the rollout of the pubcaster’s international networks—a portfolio that includes BBC Entertainment, BBC Lifestyle, BBC Knowledge and CBeebies. “When we first launched our channels three years ago, it was undoubtedly the BBC brand that helped us stand out from other channels in the market,” he notes. “In that short time, our business has grown considerably.” Whitehead adds, “Last year, we launched 13 thematic channels across South Korea, Singapore and Hong Kong and our channels are now in over 10 million homes in Asia.”
 
A strong international brand name can certainly lend a hand to a company’s Asian aspirations, concurs Greg Moyer, the president of Scripps Networks International, one of the region’s newest players. In the last few months, the company has announced two carriage deals for Food Network—StarHub in Singapore and DishHD in Taiwan.
 
“We feel there’s a fair amount of momentum in the market right now and it’s a good time to be entering the Asian marketplace,” Moyer says. “I have been taken aback at how much respect there already is for Scripps’s U.S. success. I was afraid that the fact we had only been doing program syndication for all these years, we’d have a lot of education to do to get people to understand that we operate very successful channels in the U.S. Our success thankfully has spread quickly and people in the industry know the power of Scripps’ lifestyle brands even though they don’t get to consume them themselves on a daily basis.”
 
Similarly, at Discovery Networks Asia-Pacific (DNAP), the buzz generated by TLC’s hit shows in the U.S. has translated into a positive response from local operators for the lifestyle channel, which made its debut in place of Discovery Travel & Living in September. Tom Keaveny, executive VP and managing director of DNAP—which operates seven channels across Asia Pacific—sees potential to bring in other U.S. Discovery brands, “where we think there’s demand in the market.”
 
Whether it’s a new brand or a familiar one, “It starts with clear positioning,” notes Todd Miller, executive VP of international networks for the Asia Pacific at Sony Pictures Television (SPT). “We build our channels as ‘destinations’ for viewers with specific preferences. This is part of our brand-building exercise—laying the foundation for viewer loyalty is very important, and we spend a lot of effort on strong execution to fulfill the brand promise.”
 
It’s a strategy that has worked for SPT—its AXN channel, which was an early entrant in Asia, is the leading pan-regional English-language entertainment network. With AXN firmly entrenched across Asia, SPT has expanded its portfolio with the additions of AXN Beyond and the female-targeted SET Asia. “Last year, we closed 29 new carriage deals for AXN Beyond and SET Asia, and expanded these services into 11 new markets,” Miller says.
 
Another company that is building out its portfolio is Turner Broadcasting Systems Asia Pacific, which for years has dominated the kids’ space with Cartoon Network. Last year, the company announced plans to bring the U.S. brand truTV to the region. “A year on and truTV is carving out a niche in entertainment programming in Singapore, the Philippines, Vietnam and Indonesia,” says Sunny Saha, senior VP and general manager at Turner Entertainment Networks Asia. “We believe that truTV’s unique programming cuts through the clutter as there is nothing like it in the region. Given its niche positioning, it fills the gap for audiences who we identified as ‘real engagers’—those who love programming with real people, real-life situations and true stories.”
 
A young channel in Asia, truTV is currently being programmed entirely from the library of its U.S. counterpart. “We’re concentrating on establishing truTV’s profile with the very best of our existing series,” Saha says.“In the long term, we’d like to explore potential content synergies between truTV and Turner’s other entertainment channels, such as QTV (Korea), Mondo TV (Japan), Imagine TV (India) and Infinito (Latin America),” he adds.
 
LOCAL STORIES
For channels that have been around in Asia for some time, local programming has become a must-have, especially in the documentary space.
 
“When you talk about the DNA, the fabric of what we do, our genres, biography and history, are so personal and local and demand so much local relevance by their very nature,” explains Sean Cohan, the senior VP at AETN International, which has secured carriage for the HISTORY, Bio and Crime & Investigation brands across Asia. “Our viewers demand that of us, our platforms demand that of us. From early in the game we made a meaningful effort across Southeast Asia—a significant piece of each of the channels is locally produced and acquired.”
 
Discovery, similarly, is producing and acquiring content across Asia, and has a number of initiatives in place to develop local documentary talent. Its competitor National Geographic is being equally aggressive in the local production space. “We will make 40 to 50 hours in Asia alone next year,” says FIC’s Gandevia.
 
For the big pan-regional entertainment brands, however, local programming has been more of a challenge, primarily because they’ve built their businesses on offering the best of American or British content. Nonetheless, it’s an area that is being eyed by a number of channel operators. UNI, for example, is currently on its second season of a regional version of The Biggest Loser on Diva Universal. “We’re looking at another possible format, because those seem to work very well for the regional feeds,” Miranda explains. “We’re always keeping an eye out for possible local acquisitions. That’s also becoming pretty expensive, because everyone is looking at local acquisitions now. I think we’ll get to a point where the local content costs even more than Western content—that would not be far-fetched.”
 
At SPT, meanwhile, AXN is now on the fourth season of The Amazing Race Asia, based on the CBS reality series distributed by Disney Media Distribution. “It differentiates AXN and offers a programming lineup that is unique, while creating opportunities for advertisers to be integrated seamlessly and be more relevant to our audiences,” says Miller on the importance of local content.
 
Having a hook for advertisers was also a key part of Comcast International Media Group’s (CIMG) decision to introduce local productions on E! Entertainment Television. CIMG recently tapped Sony Pictures Entertainment Networks Asia to handle E!’s pan-regional ad sales. With that business starting to gain traction and the channel well penetrated across Asia, the timing was right to invest in original production, says Christine Fellowes, CIMG’s managing director in the region. The result is E! News Asia, which features local entertainment news, and covers Hollywood from an Asian perspective, Fellowes notes.
 
“We see this as an opportunity for people to buy into our environment,” she continues. “We can offer on-the-ground [events] and some tie-ins.”
 
Finding ways to appeal to advertisers is at the top of all channel operators’ to-do lists—total pay-TV advertising revenues in Asia are expected to reach $11 billion by 2014 and $15 billion by 2015, according to MPA research. The question is how this pie is being carved up. Indeed, many operators point to a softness in pan-regional ad-buys at the moment. Where channels are seeing the most gains is in advertising on localized feeds tailored to a single market.
 
CIMG’s Fellowes, for example, points to the performance of E!’s Australian ad business. “We have this amazing branded presence that is kicking it out of the park in terms of ad sales. We’ve had really significant year-on-year growth.”
 
Launching additional local feeds is a key part of DNAP’s strategy for boosting its already strong ad-sales business. “So far this year, our ad-sales growth in the first half is 40 percent.”
 
DNAP’s strength, Keaveny notes, is its ability to offer ad partners a local spot, a pan-regional one and even a global one. “We’re a triple threat,” he quips. “As we’re seeing the upsurge in marketing activity, we’re able to take account of it in three ways. We’re optimistic and we’re seeing that optimism turn into cash.”
 
At FIC, Gandevia notes that it’s the documentary channels—notably Discovery and Nat Geo—and the international news networks that appear to be taking the lion’s share of an estimated $200 million pan-regional ad pie. “Something that has not been explored in this market is the opportunity to create an entertainment destination for pan-regional advertisers,” he says. And that is exactly what he is looking to do with the FOX brand.
 
HIGH ON HD
Another area of growth identified by several channel operators is HD. Adoption of high-definition pay-TV is forecast to reach 37 million homes by 2014, rising to 75 million in 2020, MPA reports. This is up from just 7 million in 2009.
 
Early movers Nat Geo and Discovery have secured carriage in every market in the region that has a platform capable of delivering HD services. And other channels across a variety of genres are anxious to reach the same penetration levels. AETN has fared well with its HISTORY HD channel, available in Japan and Korea, among other markets. BBC Worldwide Channels is eyeing opportunities for BBC HD in Asia, and AXN has landed slots for its HD feed in Korea, Singapore and Malaysia.
 
Scripps’s Moyer has found that offering Food Network Asia in both HD and SD is proving to be crucial to the channel’s regional aspirations. “I think if you come with a beautifully built channel that’s there in high definition, you may have an opportunity that somebody who just brings an SD product doesn’t have. That’s been a clarifying issue for a couple of distributors.”
 
UNI is also making forays into HD, with one channel already available in Japan. But, Miranda notes, “the jury is still out as to what the possible economic model is—some platforms are happy to pay extra, some aren’t.”
 
There’s also the issue of the wildly disparate HD penetration levels in Asia. Citing Nielsen data, Discovery’s Keaveny notes, “The [markets with the] highest index of HD ownership [worldwide] are Australia and Hong Kong. But Asia Pacific only indexes at 90. There are significant markets like Indonesia, Pakistan, Thailand, that aren’t at the same level. But Indonesia and Thailand are massive countries—that means there’s massive potential going forward.”
 
PASSAGE TO INDIA
In expanding Discovery’s business, Keaveny also sees potential for boosting the company’s presence in certain key territories—notably India. Discovery has applied to launch new networks in a country that appears to be on everyone’s priority list these days.
 
“The absolute focus will need to be India,” says Alan Hodges, managing director for the Asia Pacific at AETN International, on priorities for the next year. The company recently set up a joint venture with Network18 to launch HISTORY, Bio and other AETN channel brands in India.
 
Scripps is currently seeking out a new partner in India after calling off its joint-venture partnership with NDTV earlier this year. “We continue to remain extremely interested in being in business in India and are fairly confident that we’ll find a way to enter and do it with a partner that helps us increase the odds of success,” says Moyer.
 
India is also a key focus for CIMG’s Fellowes, who notes that the territory’s huge domestic entertainment scene would require some kind of local partnership for E!
 
The dynamic South Asian market is also home to numerous pay-TV platforms. “Oftentimes people equate growth in the business with new launches into new countries,” UNI’s Miranda explains. “But there is a lot more to do. Asia is an overbuilt business, so in a market with 800 or 1,000 operators, there’s still a long ways to go.”
 
While the growth prospects are tremendous, Miranda notes that new entrants should be realistic about their Asian rollout plans. “There are more U.S. or European studios that are looking at Asia as the real opportunity for growth, and they’re correct for looking at it that way because Asia is still so under-penetrated. It really is about tempering those expectations and making sure that you’re prepared for getting into the market and giving it your all.”
 
For those that do, the rewards look promising. “The market is healthy,” notes CASBAA’s Twiston Davies. “We’re still seeing sub numbers going up. Advertising revenues in some markets have gone up almost 50 percent since last year. Recovery is in full swing—[there are] new channels, investments in HD, investments that are coming for 3D. Broadcasters are very bullish about the future.”