Reflecting Change

This article originally appeared in the MIPCOM 2013 issue of TV Asia Pacific.

Asia’s biggest pay-TV brands are coming to grips with new technologies, investing more in content and doing all they can to attract ad dollars.

As Asia’s multichannel business convened in Hong Kong for the annual CASBAA Convention in October, the event’s theme could not have been more apt. The conference was tagged “Change Is On the Air,” but the shifts in the industry are being felt well beyond what’s on screen. There are new players in the market—a joint venture of RTL Group and CBS Studios International being the most high-profile new entrant to the pan-regional business—new owners of existing channels (notably Scripps Networks’ takeover of Asian Food Channel) and a host of new services from well-established players. On top of that, 2013 saw an unprecedented level of shakeups at the top management levels of the pan-regional groups.

“It’s a dynamic time,” observes Christopher Slaughter, who has been in the CEO role at CASBAA since the start of last year. “Whether we’re talking about technology or devices and delivery methods [or] the landscape of senior executives. The way people are strategizing about content [is changing]. New channels are coming into the market. The convention theme is intended to acknowledge that this is a time of change, of disruption.”

Disruption aside, Asia’s pay-TV business convened on an upbeat note in October, given the bullish forecasts for growth yet to come. Media Partners Asia estimates that there were 444 million pay-TV subscribers in the Asia Pacific in 2012. By 2020 there will be 696 million, reflecting a 68-percent penetration rate.

Setting up a structure to tap into Asia’s emerging opportunities was the announced rationale for Turner International Asia Pacific’s realignment this summer—a move that resulted in a 30-percent reduction in staff positions across the region.

“While there were many difficult decisions, the restructure was absolutely necessary to support the next phase of Turner’s business in Asia,” says Sunny Saha, the company’s senior VP and managing director for Southeast Asia Pacific and general manager for kids’ networks in the region. The next stage of evolution for the company, which has been operating in Asia since the ’90s, will be “driven by an aggressive, long-term growth plan to double our annual revenues by 2020 and build our core business while adding new business initiatives around them,” Saha says.

For example, in Thailand, Turner is expanding into free TV with Boomerang, which is set to reach 11 million homes in partnership with local outfit Major Kantana Broadcasting. Saha says that the deal marks the start of the “Turner 3.0 era, and is indicative of our philosophy of gaining deeper penetration in local markets.”

There have also been changes at BBC Worldwide (including a global restructure of the company), which made the decision at the end of 2012 to shutter its CBeebies and BBC Entertainment brands in India, citing the “challenging” economics of running pay-TV channels there. CBeebies is still present in the market, though, in the form of a branded block on ZeeQ, and BBC Worldwide continues to roll out its suite of channels across the region.

RESTRUCTURING MODE
A+E Networks, meanwhile, exited its joint venture with Malaysia’s Astro, taking 100-percent ownership of its channels in Southeast Asia.“I can’t overstate the importance” of the deal, says Sean Cohan, the executive VP of international at A+E Networks. “It’s our first major owned and operated channel [business] outside of the U.S. [The acquisition] reflects A+E’s belief in the region and in the business that we built with Astro.”

“We’ve launched two channel brands in the market since [the takeover], which speaks to our ambitions,” adds Alan Hodges, the managing director for the Asia Pacific at A+E, referring to the female-skewing Lifetime and the factual channel H2.

Another new service on Asia’s pay-TV operators is FOX Sports, run by FOX International Channels (FIC), following the completion of the company’s acquisition of ESPN’s interest in the former ESPN STAR Sports venture. Also in acquisition mode was Scripps Networks International, which added to its regional business—encompassing Food Network and Travel Channel International—with the takeover of Singapore-based Asian Food Channel (AFC).

“The next stage of growth for Scripps in Asia is to create synergy between all three channels by leveraging all of our resources to increase distribution and brand awareness,” says Derek Chang, Scripps’ managing director for the Asia Pacific. “As Food Network Asia and Travel Channel are not fully distributed in Asia as compared to AFC, we are looking to bundle channels and replicate AFC’s distribution to increase [their] footprint.”

Having a portfolio of diverse offerings is certainly key to the strategies of a number of Asia’s pan-regional players. Discovery Networks Asia-Pacific (DNAP), for example, has been expanding the reach of Discovery Kids, adding to its bouquet of documentary and lifestyle offerings. The channel is now in more than 40 million homes across seven markets.

KIDDING AROUND
“The kids’ market is a high-potential sector, with over 50 percent of the world’s under-14s located in the Asia Pacific and India having the largest kids’ population in the world, at over 420 million,” says Kevin Dickie, the senior VP of the content group at DNAP. “In the TV landscape, there is a gap in the market for edutainment programming targeting older school-going kids between the ages of 6 and 12.” Discovery Kids, Dickie says, fills that need.

Turner, too, sees further potential in the kids’ market, having added Cartoonito and Toonami to the existing slate of Cartoon Network and Boomerang. “In the few months since we launched Cartoonito and Toonami, take-up of both brands has been really promising,” Saha says. “We knew that kids wanted more content choice and dedicated channels for the genres of shows they liked—and so it has [been] proven. Subscriptions continue to increase across Southeast Asia, and every few months we’ve been signing new carriage agreements as the momentum grows.”

Sony Pictures Television Networks, Asia, home to AXN and Sony Entertainment Television, has also been expanding its portfolio, picking up a stake in Televiva, Dori Media’s telenovela channel in Indonesia. “We are constantly working to increase our content offerings, especially in a market like Indonesia where there is enormous potential for pay-TV penetration and viewership growth,” says Hui Keng Ang, the senior VP of business operations. “Televiva offers a genre that has broad appeal and complements [our] bouquet of entertainment networks. It is a popular choice among women ages 15 and over.”

Arguably the leading channel operator for female audiences is Universal Networks International (UNI), whose bouquet of networks includes E!, The Style Network and DIVA Universal. “We are the only network to comprehensively reach a wide spectrum of women,” says Christine Fellowes, UNI’s managing director for the Asia Pacific. “Women are a huge commercial opportunity, as they make or influence 80 percent of purchasing decisions (including cable subscriptions), and one in three [female pay-TV subscribers] in Southeast Asia say they are the chief income earners in the household. Our research also shows that as many as 84 percent of women counted on pay TV as their number-one source of television viewing.”

Fellowes notes that UNI’s strength among female audiences has helped endear its channels to advertisers. “Most recently, P&G signed on as a presenter of the High Heeled Warrior Awards, a platform created to recognize Asian women and their contribution to society and their industries,” Fellowes notes.

FOLLOWING THE MONEY
Channels report seeing gains in both pan-regional and local ad sales, but the executives surveyed here all agree that local will be the driving force in the years to come. “Local ad sales is becoming a bigger priority for us,” says Zubin Gandevia, the president of the Asia Pacific and Middle East at FIC. “While the pan-regional pie is growing, it’s not growing as fast as local, and we have a healthy chunk of [the pan-regional] pie anyway. Taiwan had a slightly challenging year [in 2012], which was in line with the market, but it’s starting to see improvement. Japan had a decent year—we outstripped the market. In other markets, like the Philippines, Singapore, Vietnam, etc., we had healthy growth. There’s a lot more to be done on that front. We’ve been investing really aggressively in local feeds, people on the ground, ad-sales teams. Even though we’re growing fast, the payoff is still to come in a big way, but we’re very confident that it will happen.”

At A+E Networks, Hodges notes that with the company now operating a broad portfolio that targets multiple demos, the response from the ad community “has been very positive.” He says, “The regional ad pie is not growing anywhere near the rate that the local pie is. That informed how we set up [our] ad sales. We’re continuing to go after the regional buys but, at the same time, all of our thinking is really informed by making sure that we’re aligning sales efforts and our resources to deliver to local clients.”

Conceding that the migration of ad dollars from free to pay has been slower than most people in the industry would have liked, Gandevia observes that things are moving in the right direction. “There are markets where media buyers have come to us and said, We have an agenda to move money from free into pay, but it’s a question of, how much can we move, at what point, and what needs to happen on pay TV to make that happen? Sometimes it’s the availability of research that’s needed, sometimes it’s the availability of critical distribution. The good news is, when you look at it every six months, there is a development that is positive, and it’s never [going] backwards.”

AMC Networks, which has only been in Asia for the last couple of years with Sundance Channel and WE tv, has not yet shifted to the dual revenue stream of advertising and affiliate fees. “The distribution footprint for both these channels has grown large enough that we have that critical mass where we can begin to really examine [ad sales],” says Bruce Tuchman, the president of AMC/Sundance Channel Global. “But there’s no rush. We want to focus on satisfying and identifying all pockets of demand and really getting the distribution down. It continues to be a very thrilling and exhausting task. There are a lot of deals in the pipeline that I want to make sure get done.”

The last 12-plus months have seen a number of gains for AMC/ Sundance, Tuchman says, most notably with Sundance rolling out on Indovision in Indonesia and WE tv clinching carriage with Astro in Malaysia. Key to the group’s success, he says, have been its distinctive program offerings, including shows like Rectify.

CONTENT CURATION
Investing in content has also been a primary focus for BBC Worldwide, “fortifying our promise of delivering more global events, as well as increasing the number of global launches of key programs and series,” says Mark Whitehead, senior VP and general manager for Southeast Asia and channels lead for the region. Whitehead cites 2012’s London Calling programming stunt on BBC Knowledge as among the group’s ratings successes, as well as the Glastonbury event. “We are also airing key programs closer to the U.K. air dates. The Graham Norton Show and the latest series of Top Gear go on air in Asia less than two weeks after the U.K. telecasts.”

At present, Lifetime is reliant on its brands from the U.S., but plans are underway to develop Asian series for the channel. “We’re looking for big characters we can develop shows around,” Hodges says.

UNI has placed an emphasis on top-notch international content as well as on refreshing the on-air looks for many of its brands, moves that have resulted in significant ratings gains, according to Fellowes.

Bolstering local content is one of Fellowes’s priorities for further boosting ratings and strengthening ties with advertisers. E! has been rolling out specials on celebrities from Singapore, Malaysia and the Philippines, as well as E! News Asia. DIVA Universal, meanwhile, is gearing up for the launch of the Asian competition series Supermodelme.

AFC has been producing lifestyle content for a number of years, with upcoming highlights that include Back to the Streets 2 and A Party Affair. “We expect to build on these local programming initiatives across all of our networks,” says Scripps’ Chang.

Local production has also been a mandate for SPT’s AXN network, which last year aired The Apprentice Asia. “We believe original content will continue to draw advertising dollars,” says Ang.

As the region’s largest pay-TV group, FIC is, not surprisingly, also the biggest content commissioner, with local productions rolling out on STAR World, National Geographic and STAR Chinese Movies, among other brands.

“[We’ve done] 100-plus hours on factual alone,” says Gandevia, listing the pan-regional series I Wouldn’t Go In There, the Taiwanese show Frogmen and India’s Emergency Room, all for National Geographic Channel feeds, as examples. “We are investing in hubs for [FOX Sports] in Japan, Hong Kong, the Philippines, Taiwan and Singapore. On the entertainment side, in Taiwan we make 2,000-plus hours. We’re going to introduce a few high-end drama shows in Taiwan. And we’re investing in Chinese movies. That’s all done with our unique abilities to manage costs and deliver more value to consumers and platforms.”

Gandevia notes that FIC is “obsessed” with helping its affiliate partners drive subscriptions and ARPU, a sentiment expressed by a number of the region’s top channel executives. That drive to help expand the pay-TV universe has included making sure that platforms can offer subscribers content on the platform of their choosing.

TV EVERYWHERE
“We’ve been trying to be very aggressive in embracing the functionality that the pay platforms are looking at,” says AMC’s Tuchman. “I think we’ve been at the forefront of making sure we have a nice package of those rights. That’s clearly where so much of the business is going and, being a new brand on the block, it gives us the opportunity to look back and say, what do consumers really want and what will they want a few years from now?”

“We work very closely with our channel partners to make the TV experience even richer for our consumers,” says BBC Worldwide’s Whitehead. “In July, we launched BBC Knowledge, BBC Lifestyle, BBC Entertainment, CBeebies and BBC World News on StarHub’s TV Everywhere service in Singapore. This is an addition to the catch-up service for BBC Knowledge and BBC Lifestyle with StarHub we launched three years ago. In Malaysia, we worked with TM Net to launch their TV Everywhere service in May [which offers] BBC Knowledge, BBC Lifestyle, BBC Entertainment and CBeebies. These are just some of the recent developments.”

While Singapore, Malaysia and Korea, among others, are well developed on the TV Everywhere front, the consensus is that there is still much work to be done on a regional level.

“[Indonesia] is a classic example of the challenge for us in the industry,” says A+E’s Hodges. “The traditional linear [pay-TV] business is somewhere under 5-percent penetration. And yet the mobile penetration here is well, well north of that. As an ecosystem, we’ve got to be able to cater to [the majority] of the population that isn’t consuming our content in a linear fashion in a subscription television universe. That’s a big challenge for us and for the operators here.” All the changes underway across the industry are expected to create “a certain amount of chaos,” CASBAA’s Slaughter says. “We’re confident that out of chaos comes a higher form of order, but at the same time it can be confusing and challenging.” The 2013 CASBAA Convention, Slaughter adds, reflects an “acknowledgment of the dynamism of the time.”