MPA Charts Gains in Asia-Pac Pay TV

HONG KONG: By 2014, 446 million homes in the Asia Pacific will be receiving pay TV, according to the Asia Pacific Pay-TV & Broadband Markets 2010 report from Media Partners Asia, which forecasts rising penetration rates, digitization, increased value-added services and consumer spend and a widening ad market across the region.

Pay-TV profits will grow significantly over the long-term, the report reveals, driven by India and China. Unveiling the new study, Vivek Couto, MPA’s executive director, notes: “There is scope for cash generation amongst leading pay-TV operators in India, China and Indonesia as consolidation grows and capitalization improves. Consolidation and M&A will also help boost profits in Japan, Korea and Taiwan. Profits will remain sizable in Australia and Malaysia but earnings are likely to be volatile in Singapore and Thailand. Amongst broadcasters, media groups with strong brands continue to make money. Exposure to large advertising and subscription markets is vital along with investment in local markets.”

In 2009, Asia’s pay-TV sector added 26.6 million new subscribers, with the total pie rising to 340 million, a 9-percent year-on-year growth and representing a penetration rate of 46 percent. India and China added 75 percent of Asia Pacific’s net new pay-TV subscribers in 2009. Pay-TV industry sales increased by 8.6 percent to $32 billion, as compared with 15 percent growth in 2008. In the year, sub revenues were up by 10 percent but advertising rose just 3 percent.

The digital pay-TV market reached critical mass last year, the report adds, thanks to falling technology costs and large-scale deployments. The number of digital pay-TV subscribers increased to 116 million—16 percent of total TV homes and 34 percent of total pay-TV homes. Leading the growth in the digital space were cable ops in China and Japan, DTH in India and Southeast Asia, and IPTV in North Asia. HDTV is also gaining ground, reaching 7 million pay-TV homes in 2009. The PVR base remains small at just 2.4 million pay-TV homes.

With an improved economic climate, consumer demand is up and investor sentiment as improved, MPA reports, helping operators and channels raise capital to fund expanding. Digitization, HD, PVRs and eventually 3D will be key drivers in the years to come. By 2014, 446 million homes in Asia Pacific will be receiving pay-TV, according to MPA, rising to 513 million by 2020, with penetration rates rising to 55 percent and 58 percent, respectively. More than 70 percent of Asia Pacific pay-TV subscribers will have at least one digital set-top box in the home by 2014—this is forecast to increase to 82 percent by 2020. HD pay-TV adoption will grow to 37 million homes by 2014 and 75 million by 2020, and PVR users will reach 10 million and 19 million over the same period. On the broadband front, the number of users will hit 395 million by 2014 and 506 million by 2020, with per capita penetration rising to 11 percent by 2014 and 14 percent by 2020.

MPA estimates that total pay-TV revenues will reach $54 billion by 2014 and $75 billion by 2020, led by digital services. Digital pay-TV subscription revenues will grow to $35 billion by 2014 and $53 billion by 2020. HDTV and PVR will remain the most profitable services for pay-TV operators. Total pay-TV advertising revenues are expected to reach $11 billion in net terms by 2014 and $15 billion by 2015.

Looking at the top 60 pay-TV and broadband operators in the region, MPA estimates that delivered $19 billion in revenues last year with EBITDA close to $6 billion. Platforms in Australasia, Japan, Korea, Taiwan and Malaysia lead in revenues, profits and margins. However, growth prospects are strong for operators in India, China and Indonesia over the long term. Cable will continue to dominate, but DTH and IPTV services are gaining ground.

The MPA report also analyzes the top 20 pay-TV broadcasters, which boosted revenues by 7 percent last year to $5.3 billion, delivering EBITDA profits of $108 million. Sun TV, Discovery Networks Asia, TVB and Fox International Channels lead the way in terms of profit margins. News Corporation—including Star India and Fox International Channels—leads in profit volume, followed by Sun and Zee in India, pan-regionals Disney and Discovery; Australia’s Fox Sports and Korea’s On*Media. The pay-TV channel market grew revenues by 7 percent to $12.7 billion in 2009 with subscription fees expanding by 12 percent to $6.1 billion, while advertising rose just 3 percent to $6.6 billion.