Asia Pay-TV Growth Tied to India, Southeast Asia

HONG KONG: Asia’s pay-TV market is expected to top 600 million subs by 2016, reaching almost 700 million subscribers by 2020, according to a new report from Media Partners Asia (MPA), with India and Southeast Asia among the key growth markets.

The report, which officially launches tomorrow as the MPA’s Asia Pacific Operators Summit (APOS) kicks off in Bali, looks at 16 pay-TV markets across the Asia Pacific. It found that of the 35 million new subs added across the region last year, 15 million were in markets outside of China. Of that 15 million, more than 60 percent, were added in India, followed by 15 percent from Southeast Asia, notably Indonesia with 5 percent. North Asia contributed 17 percent, led by Korea at 11 percent.

Vivek Couto, executive director of the MPA, noted, "Pay TV in India and Indonesia are growing at a rapid pace, with competition intensifying and structural dynamics changing, while direct-to-home (DTH) satellite platforms are emerging as key gatekeepers to future distribution value. Similar trends are occurring, though with less intensity, in markets such as Malaysia, Philippines, Thailand and Vietnam. The key to drive future growth in these markets will depend on ground execution and access to capital, with investors chasing higher returns due to the increasing cost of capital and volatility in risk / reward ratios."

The Asia Pacific Pay-TV & Broadband Markets 2012 report also found that operators upgrading their networks and rolling out new services will help boost sub rates and ARPUs in the key markets of India, Japan, Korea, Malaysia, the Philippines, Thailand, Vietnam and Taiwan. Another major trend is the increase in disposable incomes region-wide, which, combined with increased competition, among other factors, should make pay TV a more affordable proposition for Asia-Pacific subscribers.

MPA’s forecasts are healthy: the pay-TV subscriber base across Asia Pac will rise from 411 million last year to 602 million in 2016 and 695 million by 2020. Particular growth will be seen in digital pay-TV subs, rising from 203 million in 2011 to more than 623 million by 2020. Penetration rates could rise to 62 percent by 2016 and 67 percent by 2020, up from 50 percent last year. Digital-TV penetration is expected to soar from 23 percent last year to 60 percent in 2020.

Revenue forecasts, meanwhile, are "robust though not optimal," MPA notes, pointing to structural, competitive and regulatory dynamics that will limit consumer spend on pay TV. Local pay-TV ad revenues are expected to be buoyant, especially in China, India, Japan, Korea and Taiwan. Overall, MPA forecasts pay-TV revenues to rise at a 9 percent compound annual growth rate (CAGR) from 2011 to 2016, and at 11 percent CAGR from 2011 to 2022. By 2016, Asia Pac pay-TV revenues will exceed $65 billion, rising to $81 billion by 2020. The three largest markets will be China, India and Japan, contributing 36 percent, 19 percent and 17 percent, respectively, to overall revenues by 2020.

The MPA lists packaging and product innovation as central to future growth. The report notes that in maturing markets like Hong Kong, Singapore and Japan, "packaging is over-complicated, often unable to serve both the premium market and capture new mass market growth."