MPA Forecasts Robust Growth for Asia-Pac Pay TV

HONG KONG: Pay-TV broadcasters in the Asia Pacific will achieve revenues of $20 billion by 2013, according to a new report from Media Partners Asia, which also notes that the region will see between 20 million and 25 million net new pay-TV subscribers per year in the medium term.

"Consumer demand for pay-TV and broadband remains robust in spite of various shifts in media consumption and the severity of the current economic cycle," said Vivek Couto, the executive director of MPA. "Audience fragmentation and disintermediation will be a key trend to watch, especially at its anchor point (i.e. online media). Over the medium term, originators of localized pay TV and unique English-language content will continue to grow while a number of distribution platforms should remain or emerge at the forefront of industry growth if they maintain/step up investment in next-generation digital infrastructure."

The report, Asia Pacific Pay-TV and Broadband Markets 2009, forecasts that the Asia Pacific pay-TV and broadband market will deliver growth of 12 percent this year, down from the 19-percent compound annual growth rate (CAGR) recorded from 2003 to 2008. This will slow to a CAGR of 10 percent in the next five years, falling to 7 percent from now until 2018. The study also cites near-term limits on new subs to pay-TV and broadband services as a result of rising unemployment, falling consumption and softer demand in some markets. Net new subscribers in the region reached 26.6 million last year, led by China and India. This is expected to fall to below 24 million in 2010, with an average of 15 million to 20 million a year thereafter. MPA also expects an acceleration in the migration to digital, with 30 million to 40 million new digital set-top boxes installed in homes per year.

Revenues from pay-TV and broadband will rise from $64 billion last year to $102 billion by 2013 and $130 billion by 2018. India will be the biggest pay-TV market from a revenue perspective, with $18 billion by 2018, followed by Japan with $10 billion, Korea and Australia with $4 billion each and Taiwan with $2 billion.

Looking at the issues for pay-TV broadcasters and content providers in this market, MPA cites the downturn’s impact on ad and subscription revenues and the growing importance of online platforms. Originators of local content, the MPA says, particularly programming for Chinese and Indian audiences, "will continue to remain relevant and profitable," the report notes.

For English-language broadcasters, the outlook is not as optimistic, as platforms invest more in local and nonlinear programming while curbing investments in regional and international TV channels. "In a number of genres, such as English entertainment and even movies, channels are proliferating at an alarming rate," the report says. "But the growth of broadband media and on-demand platforms, especially in developed Asian markets, means that consumers can watch the same content (and sometimes benefit from better windows) on the Internet or through related online services. This fragmentation will become more pervasive, underscoring strategies being undertaken by platforms to invest in broadband digital infrastructure, local content, proven global brands and effective niche digital channels."

Nonetheless, MPA points to significant growth prospects for pay-TV channels and content providers, thanks to advances in digital pay-TV distribution, an increase in pay-TV penetration and healthy ad forecasts. Revenues for pay-TV broadcasters in the region were up by 16 percent last year, but this is expected to slow to 8 percent in 2009, with a 12-percent rise in affiliate fees offset by just 4-percent ad sales growth. Revenues for pay-TV broadcasters in Asia Pac will reach $20 billion by 2013, MPA says, and $26 billion by 2018. Of this, 54 percent will come from advertising and 46 percent from subscription fees. The biggest revenue opportunities will come from China, India, Japan, Korea, Australasia, Malaysia and Indonesia.

MPA lists STAR as the leading pay-TV broadcaster in the region by revenues, followed by Japan’s WOWOW, India’s Zee, Turner Broadcasting and HBO and the Disney channels.

Pay-TV penetration in the Asia Pacific is forecast to hit 52 percent by 2013, up from 43 percent last year, rising to 54 percent in 2018. Regional analogue pay-TV penetration will fall from 31 percent last year to 16 percent by 2013 and 11 percent by 2018. Digital pay-TV penetration, meanwhile, will rise from 12 percent in 2008 to 35 percent in 2013 and 43 percent in 2018. By 2013, some 70 percent of pay-TV homes in the region will have at least one set-top box, up from under 30 percent last year, creating new opportunities for HD, VOD and other advanced services.

Cable is expected to remain the dominant force in the pay-TV market, as a result of large, well-established networks in China, India, Japan, Korea and Taiwan. DTH will see a boost in share as a result of "explosive" growth in India, MPA says, as well as gains in Australasia, China, Indonesia and Vietnam. IPTV deployment will also increase, notably in Greater China, Japan and Korea, but its market share will be limited. By revenues, Japan’s Jupiter Telecommunications is the region’s leading pay-TV platform, with a 2008 turnover of $2.8 billion. In second place is Australia’s FOXTEL, followed by SKY PerfecTV! in Japan, Malaysia’s Astro All Asia Networks and Australia’s Austar.

China and India will remain drivers of the region’s growth. In China, the digitization of cable networks is being helped along by a government initiative, which is also creating a foundation for DTH and IPTV services. MPA expects the Chinese government to achieve a 100-percent digital TV conversion by 2015. By 2018, MPA forecasts that digitization will also be completed in Australia, Hong Kong, Japan, Malaysia, New Zealand and Singapore, while Korea, Indonesia, Thailand and Vietnam will be close to full migration. India, Taiwan and the Philippines will average 40 percent to 60 percent digitization.

India will be among the markets where subscriber growth will be a key trend, with double-digit growth rates forecast for the long term. 

Discussing the HDTV market, MPA notes that adoption has been limited mostly to North Asia. HDTV on pay-TV networks is expected to increase from 3.5 million in 2008 to 23.3 million by 2013 and about 47 million by 2018. As such, almost 15 percent of digital pay-TV homes will have HD by 2018. PVR adoption, meanwhile, MPA says, has been "disappointing" in Malaysia and Korea but has been successful in Australia and Japan. Going forward, Singapore, Taiwan and India are all expected to be strong markets for PVR rollouts. The number of subscribers with PVRs is forecast to increase from 1.3 million last year to about 8 million in 2013 and 16 million in 2018.