Striking Gold

October 31, 2011 World Screen

 

This article originally appeared in the MIPCOM 2011 issue of TV Asia Pacific.
 
Asia’s biggest channel brands are luring viewers and advertisers with new original programming and digital initiatives.
 
The Asia-Pacific pay-TV market has reached a milestone, with 50 percent of the region’s TV homes now paying to receive services from cable, satellite and IPTV operators. The result is that the transition to digital is finally in full swing in most of the region.
 
“Consumers are demanding video content on multiple devices, and service providers are stepping up to address that demand,” says Simon Twiston Davies, the CEO of the Cable & Satellite Broadcasting Association of Asia (CASBAA). “The technology for delivering and monetizing TV everywhere continues to grow. While the concept of TV Everywhere is starting to pick up in Asia Pacific, it is not anywhere near as developed as in the United States, as its adoption is largely determined by the regulatory environments concerning digital rights and further complicated by viable business models and commercial considerations.”
 
Indeed, digital pay-TV penetration stood at just 20 percent on a regional basis last year, according to Media Partners Asia, meaning that critical mass for these advanced services is still far off. While multiscreen services are few and far between in Asia’s pay-TV space, HD rollouts have progressed rapidly, and all the major incumbent channel brands, as well as the region’s new entrants, have rushed into this space.
 
“We definitely see a growing appetite for HD in markets in Southeast Asia—including Hong Kong, Singapore and Malaysia,” says Sunny Saha, the senior VP and general manager for entertainment networks at Turner Broadcasting System Asia Pacific. “We are working on some HD rollouts over the next 12 to 18 months.”
 
Discovery Networks Asia Pacific (DNAP) was the first channel operator to go HD in Asia, launching a feed in Japan in 2005. Since then, it has rolled Discovery HD World out to Hong Kong, Singapore, India, Australia, Thailand, Malaysia and the Philippines, among other markets. “It’s taken off everywhere,” says Tom Keaveny, DNAP’s president and managing director, on the HD rollouts that have picked up speed this year. “A lot of other channels have come into the fray.”
 
HD is, in fact, no longer just the domain of the factual channels. Sony Pictures Entertainment Networks Asia (SPENA) has taken an HD feed of AXN into Korea, Singapore, Malaysia, Vietnam and Thailand. “We are certainly looking to make our HD channels available in more markets as well as offering HD feeds for our other brands as the opportunity arises,” says Ricky Ow, the senior VP and general manager for SPENA.
 
“HD rollout is a priority for Universal Networks International (UNI) as part of its growth plan,” notes Christine Fellowes, the managing director for the Asia Pacific. “Further HD launches in Asia are expected in 2011 and 2012, including for E!, Style and Golf.” This will add to a bouquet that includes Universal Channel in HD in Japan, Taiwan, Singapore and Malaysia and Syfy HD in Taiwan, Singapore and Malaysia.
 
“The potential for HDTV is sizable given the growth of LCD sets in emerging and developed markets, and we recognize that the key to going forward is more HD channels and HD DVR services at competitive costs to the consumers,” says Mark Whitehead, the senior VP and general manager for BBC Worldwide Channels in Asia. “We are currently in talks with partners about HD propositions.”
 
Making channels available in HD is important to strengthening relationships with platform operators, says Zubin Gandevia, the COO of FOX International Channels (FIC) Asia. “We’re allowing the affiliates to grow their ARPU and supporting them to drive HD, which is an important strategic and financial consideration. Ultimately HD is good for our brands, too.”
 
Nonlinear services are next on the horizon. A number of channel operators have made on-demand deals in more technologically advanced markets like Singapore and Hong Kong. UNI, meanwhile, has begun experimenting with airing shows on its channels’ websites. “Wherever possible we prioritize securing 360-degree content rights,” says Fellowes. “For example, in Asia Pacific, we launched the drama Fairly Legal first online a week before its on-air premiere in May 2011. We will continue to evolve our offering moving forward.”
 
ONLINE PLAYS
FIC is also positioning itself as an early mover in this space. Gandevia says that the company has begun conversations with its affiliates about offering an authenticated online content service. “Obviously we have to be careful about the piracy angle,” says Gandevia. “But it is an authenticated player. I have demonstrated it to operators in Hong Kong, Singapore, Malaysia, Indonesia, Thailand, Taiwan and Vietnam. It’s what they have been looking for to make the consumer experience better and at the same time help stem piracy. If you have access to this you have much less of a motivation to go to a pirated website. If you can give consumers a legal way to consume our product [on other platforms], that would appear to be a great value proposition. We have to support our affiliate partners who have helped us build the business that we have today, which is a linear business. We recognize that people have changed their consuming habits to some degree in terms of wanting to watch beyond TV.”
 
FIC is not just focusing on digital extensions of existing brands; it’s rolling out new ones as well. Over the last two years, its collection of channels delivering U.S. series has grown dramatically, with Star World and FOX now accompanied by more niche services such as FX and Fox Crime. “It’s not enough to have just one channel, because one channel doesn’t allow you to get enough good quality content—you don’t have the scale to buy aggressively,” Gandevia says. Prior to having this portfolio, he explains, “we were getting the rights [to shows after they had already been seen on] free to air. Now we’ve been able to go out to content suppliers and do big volume deals where we can offer a lot more money because we’re now buying across four channels. And then we also get significantly better rights. These new products first come to our channels and then go to terrestrial. It’s a complete turnaround.”
 
Gandevia says that a similar strategy is being employed in the movie category. Building upon the well-distributed Star Movies, FIC has launched Fox Family Movies, and there are more services to come. “We will probably have three to four movie channels, [each] with a very clear brand proposition.”
 
STRENGTH IN NUMBERS
UNI, too, touts the benefits of having a portfolio, particularly now that the division has assumed responsibility for the former Comcast brands E!, Style and Golf. “We leverage the strengths of our channels to create a more dynamic environment for our viewers,” Fellowes explains. “For example, by leveraging E! News Asia, we started cross-channel promotions on E! and DIVA for DIVA’s key programs, Fairly Legal and The Good Wife. E!’s tentpole series, Keeping Up With The Kardashians, was also heavily promoted on DIVA for its launch phase. Cross-channel promotions are an effective marketing tool for us and provide advertisers with a powerful solution to reach the female audience.”
 
SPENA has also amassed a portfolio over the last few years, with AXN Beyond, SET and ONE joining the already well-distributed AXN and Animax. Turner, meanwhile, has spent the last 18 months taking truTV to a number of markets, joining its Cartoon Network, CNN and TCM pan-regional brands.
 
At A+E Networks, which has rolled HISTORY out across the region, there are early discussions about importing other brands, including Lifetime, to Asian audiences. “We’re a young business—it’s critical that we build out our fleet of brands and own that full spectrum of audiences,” says A+E Networks’ managing director for the Asia Pacific, Alan Hodges.
 
Taking on the well-established tenants of Asia’s pay-TV real estate are several other more recent entrants to the market. Scripps Networks International, for example, launched its first service in the region, Food Network Asia, just a year ago. “It’s been a good first year,” says Hud Woodle, the channel’s acting general manager. “We’re really happy with the launch in four territories: Taiwan, Singapore, Malaysia and the Philippines. We’ve got more to come in the near future.”
 
Woodle says that Food Network Asia is using a variety of methods to build the brand, including working with StarHub in Singapore on its FooD.I.Y. app and its Hubalicious live event. This year, Food Network Asia also rolled out its first regional commission, A Culinary Coup: The Launch of Ku De Ta, going behind the scenes of the opening of the restaurant atop Singapore’s Marina Bay Sands hotel.
 
BRAND AWARENESS
It has been two years since AMC/Sundance Channel Global began its conversations with operators about taking its portfolio to Asia. For Ed Palluth, the senior VP of global distribution, Sundance Channel and WE tv were ripe for global expansion. “When you mentioned Sundance Channel, everyone knew what it was or was very close to knowing what it was without a long sales pitch. The brand is trusted and there’s nothing else quite like it in the industry. On the WE tv side, we realized that women’s programming is a very underserved market. We do a terrific job of programming the channel [in the U.S.] and it was very easy to take that programming and bring it out globally.”
 
BBC Worldwide Channels also used its brand recognition as a selling point when it landed in Asia in 2007. The past year, in particular, has been a positive one for the BBC portfolio, notes Whitehead, who cites “robust growth” in a number of segments. BBC Lifestyle and BBC Knowledge now have companion catch-up VOD services in Singapore. CBeebies added the Philippines to its distribution base of Singapore, Hong Kong, South Korea, Malaysia, Indonesia and India. And a BBC Entertainment feed has launched specifically for the Indian market.
 
PASSAGE TO INDIA
Channel operators across the board agree that India is one of the markets in Asia that does require a particularly focused approach. A+E Networks, for example, has a joint-venture partnership with Network18 Group to launch HISTORY and other brands into the territory. “We expect to launch HISTORY to north of 40 million subscribers,” says Sean Cohan, A+E’s senior VP of international. “That story is not just about numbers, it’s about a level of ambition that we have for that channel. We aim to be the leading factual channel and help our peers grow factual viewing in India. We’ve been hard at work over the last six months on the distribution front, the sales front and the programming and marketing front to develop a proposition that we feel very good about.”
 
HISTORY is certainly keen on a high-profile launch in India; it has lined up the Bolly­wood icon Salman Khan to host a show on the channel. HISTORY’s factual-programming rival Discovery, meanwhile, has its own big plans for India. In addition to operating a fleet that includes Discovery Channel, Animal Planet, TLC, Discovery Science, Discovery Turbo and Discovery HD World, DNAP has applied for five additional broadcast licenses in the country. The key to Discovery’s success in India has been its local-language strategy, delivering its flagship service in English, Hindi, Tamil, Telegu and Bangla. “It’s an enormous market that is growing at a tremendous rate,” says Keaveny.
 
Turner has also been stepping up its efforts in India, last year acquiring the general-entertainment channel Imagine. That joined the kids’ services Cartoon Network, Pogo and Boomerang, and the movie channels WB, Lumiére and TCM. And it’s not just in India that Turner has single-market brands—the company owns the female lifestyle network QTV in Korea and the Japanese channels MondoTV and Tabi.
 
Many executives see country-specific feeds and dedicated channels as “the next big development in our business,” as A+E Networks’ Hodges puts it. And that’s not surprising, given the huge potential to tap into the strong local ad-sales growth rates in several markets. “Everybody is having a really strong year on the regional ad market,” says Hodges. “It’s very robust. But the big story still remains the growth in individual markets in local ad sales.”
 
Keaveny says that Discovery has had a “fantastic” year in terms of ad sales, thanks in large part to its strategy of rolling out local feeds. “For seven or eight years, our advertising was 80 or 90 percent pan-regional and 10 to 20 percent local. That’s completely inverse now. The pan-regional is still growing. And we’ve seen strong growth in the key markets: India, Australia, Taiwan, Japan. It’s an exponential factor of more feeds, more networks, more languages, larger audience; it creates this circle of growth for us.”
 
FEEDING THE AUDIENCE
At FIC, too, Gandevia has seen gains in both pan-regional and local ad sales thanks to a local-feed approach. “We launched 11 feeds in the last year. Those are now paying off for us because as a result we can customize offerings to the consumer by getting better rights for programs, localizing the channel, and ultimately that drives better brand resonance and better ratings.”
 
Regardless of local feeds, though, channel operators stress that access to top-quality, brand-defining content has to be at the heart of any strategy to boost ratings, revenues and reach.
 
Whitehead at BBC Worldwide Channels points to BBC Knowledge’s coverage of the royal wedding as a particular highlight this year. “In Singapore, BBC Knowledge climbed to become the number one English-language pay-TV channel in Singapore during the coverage. The channel registered an eight fold increase in average viewing figures for the time slot.
 
William and Kate: A Royal Love Story, which premiered first and exclusively on the channel immediately following the live coverage, was the channel’s highest-rated program this year.”
 
Sundance Channel is bringing the acclaimed AMC U.S. hit Mad Men to the region this year and is delivering exclusive coverage of the 68th Venice Film Festival. WE tv, meanwhile, is faring well with its U.S. originals like Bridezillas and Joan & Melissa: Joan Knows Best?
 
Woodle at Food Network Asia notes that American personalities like Ina Garten, host of The Barefoot Contessa, and Guy Fieri of Diners, Drive-ins and Dives, have been connecting with local viewers. “I think the personalities just click—it’s engaging television.” On the horizon are more originals following the success of A Culinary Coup: The Launch of Ku De Ta. “We are making plans for 2012,” Woodle says.
 
ORIGINAL FOCUS
Well advanced on the original-programming front is SPENA, which was one of the first pan-regionals to get into the format game when it rolled out an Asian version of The Amazing Race. Noting that AXN has kept its position atop the general-entertainment heap with imported tent poles like the CSI franchise, Hawaii Five-0 and the recently acquired The Voice, Ow says, “The next steps for AXN are ensuring that we continue to secure great content and localizing already popular content to grow viewership. Increased viewership will translate to greater revenue, and that will in turn enable us to invest further in AXN.”
 
A new development at AXN has been signing on as a co-producer on international projects, notably the Entertainment One and Paramount Pictures co-venture The Firm. AXN has also announced a pan-regional version of Cash Cab, which will premiere in the fourth quarter. For India, meanwhile, AXN adapted the international format Minute to Win It, with season two in the works, and it is launching a lifestyle magazine series called Men 2.0.
 
The other side of SPENA’s localization strategy is seen in ONE, a 24-hour channel delivering Korean content. “The response to ONE has been overwhelmingly positive,” says Ow. “Korean pop and entertainment are very popular in Asia at the moment, and the ‘K-wave’ is showing no signs of abating. In fact, the phenomenon is not only delivering strong ratings on local terrestrial channels but also seems to be making inroads in Europe and even the U.S., with Korean superstar Rain having broken into Hollywood. We saw this as an opportunity to offer a 24-hour Korean entertainment channel that is localized for individual markets and designed to appeal to local viewers.”
 
FIC also has a Korean entertainment channel that it is rolling out, called tvN. At its primary networks, meanwhile, while U.S. series acquisitions remain the core proposition, there are several original programming initiatives in the works. Together with its sister operations in Europe and Latin America, FIC is a partner on the The Walking Dead, which is heading into its second season. “We’re also looking at productions locally, because we do believe that even on a channel like Star World, which is predominantly Hollywood product, it is good to have some local content because it helps to bring the channel closer [to viewers],” says Gandevia.
 
FIC is working with Astro in Malaysia on its local version of the Shine format MasterChef. The adaptation will air first on Astro Ria, while Star World regionally will broadcast a recap of the week’s episodes. Star World will also get the first window on MasterClass, a sister show in which the MasterChef contestants receive tips from celebrity chefs. “That’s a great example of us getting into local production but also working closely with a key partner and helping drive each other’s business and ultimately bringing value to the consumer,” Gandevia says.
 
FIC has also worked on a magazine series in the Philippines called Behind the Bylines and has invested heavily in local content for its National Geographic brands.
 
Indeed, the factual channels were the first pan-regionals to make a real commitment to working with Asian production companies. Both Nat Geo and Discovery have developed various initiatives across Asia to support emerging documentary filmmakers. HISTORY, meanwhile, has rolled out several locally produced titles for its Asian channels, including Hidden Cities, which has been renewed for a second season. The success of the show, says Hodges, “speaks to the value of creating programming that people in each of our key cities can identify with.”
 
In the kids’ content space, Cartoon Network has made a significant commitment to the regional animation sector. Turner’s SNAPTOONS initiative has supported budding Asian animators since 2006. Held in Australia, India, Malaysia and Singapore, SNAPTOONS has generated several ideas that were eventually developed into full series for Cartoon Network. The broadcaster also works with established animation houses across the region to generate animated series with Asian story lines.
 
TOONING IN
“We have much more kids’ content in production than any of the other regional broadcasters,” says Saha. “We are truly committed to supporting the local animation industry in this region. We are now seeing the traditional model of importing content to Asia being flipped. Increasingly original content conceived in Asia is being exported. Arjun and the Adventures of the Ice Lotus was developed and premiered in India but it was also broadcast across markets like Taiwan. The biggest project we have, the Ben 10: Destroy All Aliens 3D CG animated TV movie, is going to be a global premiere. We are working on it with Tiny Island in Singapore. It will premiere in March globally.”
 
While the growth prospects are tremendous, channel operators caution that there are hurdles to overcome. For new and established brands, one challenge, and opportunity, remains getting a bigger slice of the ad pie in markets where terrestrial still dominates. “Multichannel television is growing at a tremendous rate,” says DNAP’s Keaveny. The industry as a whole, he says, “needs to be better at telling our stories to media agencies and advertisers about the value of our audiences and the unique content we have.”
 
SPENA’s Ow identifies three key concerns: signal theft, a slower-than-expected growth in digital pay TV, and the emergence of new-media distribution platforms. “Rights owners [need] to work closer with networks like ourselves to ensure that [new distribution models] do not create an adverse impact on the existing ecosystem and still deliver a win-win scenario, for viewers, networks and the program distributors.”
 
Those issues, and more, will be on the agenda at this year’s CASBAA Convention, which is also celebrating the 20th anniversary of the industry body. “When a half dozen young executives from Asia’s nascent pay-TV business gathered in a Hong Kong bar in the spring of 1991, there was only a vague idea of what a regional industry association dedicated to pay-TV might achieve,” says Twiston Davies. “Nobody guessed that two decades later Asia’s pay-TV industry would encompass some 10,000 TV channels, 25,000 cable and DTH operators, $45 billion in annual revenues and 365 million pay-TV homes reaching over a billion consumers.”
 
So where will we be a decade from now? According to Media Partners Asia, by 2020 the industry will generate $78 billion in revenues derived from services reaching a whopping 570 million customers.