While markets such as India and Philippines continue to show strong growth, there is little doubt that satellite pay-TV is facing huge challenges across Asia as Over-the-Top (OTT) competition begins to really bite. Media Partners Asia (MPA) has released its latest pay-TV report, and Vivek Couto, Executive Director, MPA spoke to Via Satellite. He said there has been a general slowdown of Direct-to-Home in markets across Asia, and that this has intensified over the last couple of years. 

“There were approximately 82 million DTH subscribers across Asia at the end of last year. In five years, that might grow to 100 million. If you look at revenues you are looking at total revenues for DTH (subscription and advertising) of $8 billion. It will reach $8.6 billion over the next few years. That is two percent average annual growth growth. So, growth is clearly slowing,” he said. “That will lead to rationalization. India continues to outperform. The operators met the demand of customers. They have great products and have integrated OTT services to their product line-ups, led by Tata Sky and Airtel. DishTV continues to suffer. There could be some more consolidation in India.”

Many countries in Asia have seen a significant under-performance. Couto highlights markets such as Indonesia, Thailand, Australia, New Zealand, where operators have had struggles. 

“Sky New Zealand has been under a lot of pressure and they have fundamentally been restructured their business. Sky New Zealand has been pivoting quite significantly. They have lost core subscribers on their satellite platform. They have two standard SVOD services and have just acquired a third from Spark. We have seen operators like Sky New Zealand and Foxtel almost competing with themselves and creating new types of businesses. They accept that churn on pay-TV will continue. They are trying to retain premium subscribers with stronger high ARPU products. Astro is in a somewhat similar position except they own a lot of local IP. They are growing incrementally. They are investing in stopping piracy and like Foxtel and Sky, rolling out ultra-HD content,” he said. 

Broadband Connectivity

Couto says broadband connectivity is extremely strong in the region on a household basis, as well as a mobile basis. He admits video distribution has seen significant disruption, but it is still growing. “You can clearly see India is a market where video is still growing despite the regulation. Korea is seeing strong growth in IPTV. China is more of a utility market, but it is also transitioning heavily to IPTV. Japan and Australia are down. Most markets in South East Asia had a terrible year last year,” he said. 

The picture is definitely different in many markets. Couto said: “I think India and Philippines have a long flight path when it comes to DTH. DTH is very important in those markets, because outside of tier one cities, provincial areas, there is a lot of demand for satellite driven television. DTH services will always have a place. In other markets such as Malaysia, where Astro owns and operates a lot of local content, they are always going to have a play in the business. But, longer term, they will need to invest more in product innovation, and they need to have a broadband business. They have started to form partnerships with broadband companies. Longer term, could Astro and Maxis come together? That might happen depending on the shareholders.”

Indonesia

While Asia has huge individual country markets, each has their own unique set of dynamics when it comes to pay-TV. While India and China gain a lot of media attention due to the size of their populations, markets like Indonesia and Vietnam are also interesting. Indonesia, with a population, of close to 270 million people is one such example.

Couto says with pay-TV penetration being particularly low in the market, it could still be an interesting market for satellite. He says, “It still has a lot of untapped potential. Growth in broadband had fuelled the demand for online video. The demand for TV services outside of Jakarta is strong, particularly for local content. There is demand for low ARPU Free-To-Air (FTA) services. In Jakarta, telcos such as Telkom are bundling video services. Traditional pay-TV operators such MNC Vision have struggled due to their lack of a broadband play. Outside of Jakarta, it is a very interesting market as you have more than ten million households served by a combination of Ku-band and C-band satellite operators. There has been consolidation in these markets with MNC acquiring K Vision. But legal pay-TV penetration remains low in Indonesia. There are less than 3 million DTH subs in Indonesia. It’s sub optimal.”

Satellite Broadband

However, as one door slowly shuts, another could be opening for the industry. While most of Asia’s big cities are catered for with high-speed broadband, there are large populations of people across the region, who could benefit from satellite broadband services. Couto calls it a “billion dollar” question, but says satellite operators could be in danger of missing the boat, if they don’t launch services relatively soon.

“If satellite broadband services can develop at a scalable cost, it could solve a lot of issues, particularly for satellite operators that are driving value outside of capital cities and in lower ARPU markets, but that have a lot of households,” Couto said. “It could solve a big issue for telcos that are trying to reach customers in those areas, but don’t necessarily won’t to build fiber networks here. It could also solve problems for OTT platforms too. I think the cost and the speed in which this is developing is not happening fast enough. I think this is the year where there needs to be some breakthroughs, and there has to be a go-to-market deployment over the next five years, otherwise the opportunity is going to be lost. Then 4G, 5G connectivity and fiber to the home could ultimately usurp it.”