[10-5-07 – Satellite News]  Shin Satellite, the Thai-based satellite operator, will likely launch its groundbreaking ‘HD Cinema’ service outside of Thailand in the next year. The operator announced this week that it was launching ‘HD Cinema,’a full HDTV service, to customers in Thailand through its subsidiary,     Shin Broadband Internet (SBI). Shin is bullish about the service claiming a world first, saying it is the first service provider anywhere in the world to provide push Video-on-Demand (VoD) HD content. Patompob Suwansiri, head of marketing, IPstar, Shin Satellite told Satellite News that it might not be long before the service is seen outside of Thailand. He said, "We have plans to export HD Cinema in other markets, but not at the moment. The home market is what we want to try first. If we get a good success rate in Thailand, we will definitely try to replicate that in other areas because in Asia as a whole, apart from advanced markets such as Japan, Korea and Australia, the other markets do not have HD broadcasting. Many high-end users have HD ready screens but they do not have HD broadcasting. There is a window of opportunity for us in some of the major markets. We are on the lookout to expand our services still further. We expect to enter into new markets in the next 12 months. We have all the backend, engineering, technical capabilities in order to replicate that in other markets.”

Pricing Models

In terms of how the service works, The HD Cinema system will deliver its HD content via the Thaicom 4 (IPstar) satellite in the form of push Video-on-Demand into the customer’s HD Cinema set-top box. In terms of how the service will be priced, Suchitr Sorojsrisom, HD Cinema Manager, Shin Broadband Internet, commented, "There are two pricing schemes, one where you pay a higher monthly fee and another one where you pay a lower monthly fee. The first one you pay a $200 entry fee and then you pay a $57 monthly fee. The second one you pay $486 entry fee and then you pay a monthly fee of $43. It depends on the consumer whether they want to pay a higher monthly fee or higher entry fee. They got all the hardware equipment included in these fees.”

However, while the service may or may not be a world first, the fact remains that there is small market for Shin Satellite to attack with this service right now. In terms of the size of the market and its targets for the take-up of the service, Sorojsrisom commented, "The total number of HDTVs in Thailand is around 100,000. It is difficult to say what the take-up of the ‘HD Cinema’service will be. A lot will depend on content. But, we have a range of expectations. In the first year, we are looking for anywhere between 3,000 and 10,000 subscriptions. We need to acquire attractive content to hit these numbers. We are looking for around 5,000 – 6,000 customers in the first year.”

Analyst View

However, Mayuree Chowvikran, a satellite equity analyst at Siam City Securities thinks the operator may have been too quick off the blocks in terms of the launch of the service. He said, "In my view, Shin Satellite launched this service too early. We do not have HDTV programs yet. So, it will take a lot of time to educate and build market in Thailand. The fact is HDTV is still expensive in Thailand. Most of the households here are choosing flat TVs instead of HDTVs right now. So, for these reasons, I don’t think HD cinema will have a strong impact.”

Profitability

In terms of when the service will be profitable, Sorojsrisom commented, "In our calculations, our best case scenario is to be profitable in 18 months. In our worst case, it would be over two years.”
Customers will, in theory, be able to get both satellite broadband and TV services from Shin. However, with low-cost DSL services available, it might prove tough to attract customers to both services. Suwansiri commented, "The HD cinema customer will probably be in the city and within reach of DSL. So, they might not subscribe to a broadband satellite service. In Asia and other developing markets, there are DSL services out there, the quality of the DSL service and the time to get the DSL service is a problem in many cities in Asia. It is hard to know what the take-up rate for both services, but I think there is an opportunity there for grade A type customers to add a little bit extra to have a high-quality broadband service.”

Challenges

One major challenge, apart from attacking a very niche market, will be to get the HD content it needs to make the service attractive to customers. Also, as it is a new service, the operator will not be spending huge amounts on HD content initially. Sorojsrisom said, "There is a lot of HD content in the market. What we are trying to negotiate is not costing us too much, yet is attractive to the consumer. A lot is depending on the deals we negotiate. We have content from small-to-medium producers. We have movies, reality TV shows. We have movies like ‘Lives of Others’.  We have some BBC content in HD. We have Hollywood and Asia movies. It is a combination of Europe and U.S. movies.”

Customer education will be key, as making customers aware there is a cost-effective way to get HD content on their new TV sets could be a key factor in the success of the service. "We are looking at the A class demographic potential and planning a special co-promotion with the high-end audio visual outlets, and also with premium mobile service customers. However, since it is a new service with new technology, first we need to educate our target consumer about the benefits of HD. At the moment, the high-end consumer in Thailand has purchased the LCD or Plasma screen at a very high cost. They have found out when they hook it up to their free or cable TV services that the picture quality is not as good as when they looked at it in the store. Those types of high-quality screens are not designed to display standard-definition TV since it will produce such a poor quality images. You need to have the HD signal source feed into those screens. In the same time, we also have PR plan to make our target customer aware of the ‘HD-cinema’service so they can utilize their LCD or Plasma display to its full potential,”noted Sorojsrisom.