Like legacy pay-TV platforms the world over, Astro knows it can’t afford to stand still in the new media ecosystem. Malaysia’s leading content and distribution company—reaching 23 million individuals in 5.5 million homes with its portfolio—has expanded beyond the traditional pay segment with NJOI, which delivers a portfolio of channels for free, and has dramatically ramped up its investments in original content. New CEO Henry Tan—who has been with the group for more than a decade—is working hard to redefine the company’s value proposition to consumers.
TV ASIA: What strategy have you put into place as the new CEO of Astro?
TAN: Astro as a group is more than television: we have TV, digital, radio and we do events, movies and ground activations, etc. Within the television business, we have two offerings, the pay and free services. Pay is under the Astro brand name and free is under the NJOI brand. At a broad level, our goal is to really protect the premium pay and at the same time grow and monetize the free service. Like everywhere else in the world, there are challenges in pay. There are opportunities for us to grow and monetize the free service. Today we’re in 76 percent of Malaysian homes, with higher penetration on pay versus free. I believe NJOI will continue to grow because it’s a very simple and compelling proposition. You pay for the box and install it and then can enjoy close to 40 different channel offerings. The opportunity for us is not just to focus on growing the base, which I think will increase naturally, but to see how we can monetize that better. Currently, our NJOI average ARPU is about MYR2 ($0.5), which is very low. I see a huge opportunity for us to focus on selling skinny bundles. This group [of consumers] is enjoying the free service, so if you try and push them a heavy bundle, I don’t think they’ll go for it. But there’s definitely an opportunity for us to push skinny bundles or sachets. We’re selling events, weekend passes, three-day access. There’s an area where we can reorganize and make the offering simpler, clearer and monetize it better. That’s a natural opportunity and upside.
TV ASIA: How are you addressing the challenges in your pay-TV business?
TAN: Our business strength is our customer base. We are in 76 percent of Malaysian homes on television alone; you combine that with radio and we’re in more than 80 percent. The question is, how can we use these various assets within the group in a better way to help us move forward? If you look at the base as the opportunity, we have a lot of room to do better, especially in commerce. Why just sell content? There’s an opportunity to sell many other things beyond content.
The other opportunity besides commerce is broadband. We are exploring and examining how we can bundle broadband together with our content. The combination of content and connectivity will be quite a strong value-added proposition for our customer base. The more commerce we do, the more broadband we do, we’re redefining the value proposition for our premium pay customers.
There is a third opportunity: rewards. What I mean by rewards is, if you look back, our strength is our customer base, and in addition to our customer base, we have the ability to reach, persuade and promote. Say a car manufacturer has a brand-new model. I can say, “Those people who would want to buy your cars are already my customers. Why don’t you give me a sweet deal for my customers? I have the base and I can reach out to them quite effectively.” Then it becomes a wonderful reward mechanism because I can tell my customers, you’ll be among the first to have this new model at a special price or with additional freebies. The customers will hopefully feel quite privileged. And for the manufacturer, I help you make a lot of sales. Rewards is a concept that we would like to explore. Right now, we are still at the beginning stage, but we think this will be quite a strong proposition for our premium pay customer base. It becomes a win-win. We can take an intermediary role and convert that into a benefit for our customers. That’s quite exciting for us. We are working on finding what the winning model for this is. There are many reward programs and we don’t want to be just another one. We want a reward program designed for our business and our customer base. It’s not about giving these rewards to as many people as possible. It’s a privilege for the top 50 percent of Malaysian homes and Malaysian consumers.
The rewards tie back in with our commerce, which also links back in with our advertising proposition. Our advertising business is growing steadily, and we’ve been gaining quite a lot of share in that space. We are seen as the new force in advertising and marketing. We are spending a lot of time thinking about how we can redefine advertising. There is no denying that television is still the most powerful means to persuade. However, the way it is researched, measured and reported is really [inadequate]. Our goal is to look at how can we reinvent TV’s measurement and reporting to provide the intelligence and analytics that are demanded of this new world. If we can combine that intelligence with television’s persuasion power, I think we have a real opportunity to reinvent this whole advertising business and bring it to a new level. At the same time, we’re looking at one measurement across all platforms. Today, it’s all quite siloed. We think we have the opportunity to do one measurement that cuts across all platforms, from TV to digital to radio. We want to make TV really sexy when you combine it with the analytics. That combination, hopefully, will usher in a new era of advertising and marketing. We think we’re in a good position to do that.
TV ASIA: How are you investing in the consumer experience?
TAN: We are embarking on a review of our entire definition of the customer and the customer experience. We’re mapping out their whole end-to-end journey and reassessing how we can redefine the customer experience. How can we make it simpler and better? Doing this is in recognition that some of [our services] were designed at a different time with a different market environment. We all know the world has changed. We are asking ourselves what is still relevant. That exercise is ongoing. In the new environment, service can be a competitive edge.
TV ASIA: I watched a presentation you gave where you talked about “liberated” content. Can you explain that thinking, and how it plays into your strategy for Astro?
TAN: In the so-called technology revolution, content has been liberated. If you think about it, content in the past was restricted and confined. It was forced to conform to certain broadcast schedule requirements; for example, everybody begging and jostling to be in prime time because prime time is when you get the most eyeballs and the most advertising and the best ROI. What’s prime time in the new world? Prime time is less critical compared to the moment of truth of when you want to watch something. So now, you should use the new opportunities to see what is best for your content. If we plan a cooking program, that’s different compared to a factual show, a newscast, a sports program or a drama series. We all don’t have to conform to a standard order of what is considered a good time slot anymore. We say, let’s find the best way to offer and deliver this kind of content. We’re no longer shackled by fixed ways of what the industry and the broadcasters term as prime time, fringe time.
TV ASIA: You’ve stepped up your content-creation initiatives. Why has this been a necessary move?
TAN: Thankfully we did that! In a world where there is lots of disruption, the one area that has helped us keep flying the flag high is our own content. When it’s your own content, you’re free to decide how you want to use it, treat it, make it available. Truth be told—and this may seem harsh—in a world where consumers have changed, we are sometimes stuck in an ecosystem with partners who can be very slow or resistant to change. Old habits do die hard sometimes! Sometimes the bigger you are, the more you’re trying to defend the status quo. With our own content, we make all the decisions on how we want to treat it. We’re also seeing, particularly in our markets, a growing interest in local and Asian content. People ask me, where’s your empirical evidence? I say, take a long-haul flight and walk up and down the aisle and observe what people are watching! In the past it was Hollywood. If you take a flight with a lot more Asians on board, you see that Asians are consuming a lot more Asian content than ever before. That bodes well for us. In 2017, local movies accounted for 4 percent of the box office collections; last year it was 15 percent. That’s really exciting news. The theatrical distributors hope to see the local contribution hit 30 percent. Those are all encouraging numbers.
We see the same happening with our TV drama series. There is no doubt that our homegrown local IPs are the drivers in terms of viewership. That has helped us a lot, especially with customers and ROI.
The other area we’ve done really well in is kids’ animation. Didi & Friends crossed 1.2 billion views on YouTube last year, with 1.7 million subscribers. And there was the progressive Islamic kids’ animation Omar & Hana. In 2018, it was rated among the top-ten videos viewed in Indonesia on YouTube. We’re encouraged by those numbers and we hope to do more.
TV ASIA: How are you collaborating with other companies in the region to scale up your content ambitions?
TAN: We believe collaboration is a good way to move forward. We’re seeking like-minded partners who work towards a win-win. We’re open to anybody willing to work with us on that basis. For The Garden of Evening Mists, we worked with HBO Asia. It helps having them co-funding and doing the marketing and distribution in a certain way. We also partnered with CJ ENM for Garden—they look after the international rights and distribution. We hope to be able to do more projects with partners who share the same views and vision. Everybody wants content. We need it for our own customers and our own base anyway. Someone like Telkomsel in Indonesia is focusing more on content, so we’ve partnered with them on Nawangsih, a miniseries. They take care of the distribution and marketing on their own platform. We focus on the content side. We are hoping that will lead to more projects in the coming months.