[Satellite News 10-05-09] Malaysia, a country with around 25 million people, has seen its pay-TV landscape dominated by DTH operator Astro All Asia Networks (Astro). However, its dominance is likely to be challenged in the next year when Telekom Malaysia  (TM), the country’s biggest telco, launches its IPTV service.
    TM Vice President Jeremy Kung said that after completing trials, TM likely will enter the Malaysian IPTV and high-speed broadband services market in the 2010 first quarter year. “We need to make sure that the combinations of services, content and quality is very high as we are looking to bundle IPTV and broadband services together for customers,” said Kung.
    TM hopes to attract 400,000 subscribers in the first three years of operations. “Initially we will be targeting our broadband subscribers. We have around 1.3 million broadband subscribers that are existing subscribers, but that figure is growing. We have around 6 million households in Malaysia. That is the current market we are looking at. In the TV business, it is all about eyeballs, the more of them you have, the more cost-effective it is to acquire content. In three years, we would like to have around 400,000 subscribers for our IPTV service,” said Kung.
    Standing in the way of TM’s ambitious plans is Astro CEO Rohana Rozhan, who has led Astro to the top of pay-TV services in Malaysia and has been offering services via satellite for a number of years. Rozhan said her company has anticipated TM’s move and has ramped up its own offering to customers over the last two years. “Astro has introduced 35 channels and launched four new packages, including an on-demand service, all of which saw a healthy take up. Malaysian homes thus have an extremely healthy appetite for TV entertainment ranging from premium English language movies to vernacular programs,” she said.
    According to Rozhan, Astro is already at 46 percent penetration of total Malaysian TV households and expects to reach 50 percent in the near future. To support its goals. Astro struck a deal with Measat Satellite Systems for capacity on the Measat-3A satellite earlier this year. “With more channels, we will be able to cater to all relevant demographic segments by age, language and genres while offering superior interactive features further widening the competitive advantage over [free-to-air] TV stations,” she said.
    Kung knows that TM will have its work cut out standing toe-to-toe against Astro’s content arsenal, but that will not stop TM from creating a counter offer. “I think gaining exclusive content will be one of our obstacles where we feel we may not be able to get some of that exclusive content, however, I believe there is still enough good quality in the market,” he said. TM hopes to form partnerships with local content providers to contribute to its IPTV services. “We are looking at many ways of working with content providers. We are looking at areas where we may co-invest with content providers to create local content. They are also areas where local content providers will want to be on our platform using us as a platform to deliver their content probably on a revenue sharing basis,” said Kung.
    TM’s plans are far from cheap. Competing against Astro with an IPTV launch will require a significant capital investment. “We are looking at an initial expenditure of 300 million to 400 million Malaysian ringgits ($83.28 million to $111.04 million) over 10 years,” said Kung.
    However, Astro has also invested heavily to maintain its position. “We have invested over 5 billion Malaysian ringgits ($1.39 billion) in end-to-end digital infrastructure comprising powerful satellites with the highest signal availability, the largest all digital broadcast and production facilities at the Astro All Asia and Cyberjaya Broadcast Centers, high quality content control facilities, set-top box as well as facilities for content creation, aggregation and distribution,” said Rozhan.
    TM sees an opening in the HD market, as Astro has yet to launch an HD service. “We are trying to get as much HD material as we can, both for our linear channels and our non-linear channels, such as our video-on-demand services,” Kung said. “We hope to have at least two to three HD channels at launch. There is not a lot to choose from, but we are definitely on the lookout for this content. We believe that HD content will be a differentiator for us.”
    For Astra, Rozhan said moving forward involves sustaining its growth. “We will do this by adding profitable customers with potential for increased consumption, managing existing customers through a growth path, keeping high-value customers on the service and constant content refreshment and introduction of new content and services,” she said.