IMTV CEO Talks Satellite Pay-TV Prospects in Indonesia

[Satellite News 10-30-12] Indonesia is one of Asia’s top potential markets for pay-TV services. The country, which has a population of close to 250 million people, could offer rich pickings for new DTH players. One such company looking to tap into this is Indonesia Media TV (IMTV), which is working with the likes of the Kudelski Group to bring its services to households in Indonesia. Felix Ali Chendra, CEO of IMTV, which has launched a trial DTH service this month talks about the potential for DTH services in Indonesia, and why the company, which is owned by the Lippo Group, a major Indonesian conglomerate, has decided to launch services and his expectations for developing the service in Indonesia.

SATELLITE NEWS: What are your plans to develop a DTH offer in Indonesia? What are your initial targets for gaining subscribers?

Chendra: The satellite was initially launched in May of this year. It was the JSAT-13 satellite. It has now passed the two months settling down period. We are now doing our trial launch this month across the country. The trial will last for around 60 days, and then we will do the actual commercial launch. So, the commercial launch should take place in the first quarter of next year. In the first 12 months, we have very conservative forecasts. We are mainly targeting communities among the many island communities in Indonesia. In Asia, Indonesia has traditionally been a FTA country with around 11 national and many more local regional channels to begin with. But, because of the geography of Indonesia, watching TV via satellite makes a lot of sense. If you fly to Jakarta, you will see thousands of satellite dishes on the landscape. People have been watching satellite TV in Indonesia for quite a while. But, we will bring greater choice and a different type of offer to the market.

SATELLITE NEWS: What do you see as the growth potential of the Indonesian market?

Chendra: Indonesia, as a market, has grown over the last few years, and we have had encouraging GDP figures. A couple years ago, we have passed the $3000 GDP figure. This is a magic figure as economists have said when you pass this figure people will want to start buying consumer goods such as pay-TV. We are already a member of G-20 and fast approaching becoming a G7 country, and when you get to that stage, people will want pay-TV. The economy has changed as we have had a more settled government. We have also had a more regional focus. People have become part of a regional economy, and they are now ready to start spending on things like pay-TV.

SATELLITE NEWS: What will be your competitive advantage in Indonesia? There are already DTH players there. What will be different?

Chendra: Indonesia as a market has around 60 million households, out of that not last than 40 million of them have TV sets. So, this is the initial market. You have an ‘A’ market of just a couple of million households. That is where some of the operators are looking to make their money. We are very much focused on the ‘B’ and ‘C’ market. So, this potentially is a market of 25 to 35 million households. These new middle classes have the potential to pay up to $20 dollars a month for pay-TV. They all have mobile phones. They watch mainly local channels. Our main differentiation will be providing more local and localised content.

SATELLITE NEWS: What is your ARPU target figure?

Chendra: We are looking at a $10 blended ARPU figure. The concept of our offer is going to be slightly different. This will not be a big pay-TV system. A lot of content will be freeview content.

SATELLITE NEWS: Will there be a lot of HD content available?

Chendra: We own 12 transponders. We can easily put a number of new SD and HD channels into our system. But, looking at the market, we don’t think that HD is going to be highly needed. We will do some HD content. Our associate company, which is targeting primarily the A market is providing this HD service through its cable system in Jakarta, Sutrabaya and Bali. I am assuming we will do around 12 HD channels in our DTH offer. The rest will be SD. Most of the pay-TV operators will buy a set-top box and put it on the balance sheet. We are using a sales model, which is slightly different, so we will be selling the set-top box. The HDTV penetration is still relatively low in Indonesia. You have a market of 60 million households, but only in 2011 did we start to shift towards a selling of HDTVs in the market. The HDTV penetration figure is a very low percentage. I think there needs to be a greater effort to get the HDTV in the house before we can sell such services. I am assuming there are still only around one million HDTVs sold in 2011 in the market. It is still very low. I think 2012 will be more. You could have a penetration then of 4-5 million households then. Our cable operation has 32 HD channels, but that is the ‘A’ market in Jakarta. HD is important, but we will have to wait a few years before it becomes important in our market. It is still a very small part of the market.

SATELLITE NEWS: When will the marketing of the service start? When do you hope to be profitable?

Chendra: We will do some ‘push-pull’ marketing. But, the main thing will be to educate the market that there is a new way to gain from pay-TV. We will tell them that you don’t have to pay high ARPUs, and then try and upsell them once they are there. We expect to be profitable in two-three years.

SATELLITE NEWS: Will you need more satellite capacity?

Chendra: There is a possibility that we will need more satellite capacity. We have the possibility to access further capacity in the next 36-48 months. We could have 500-700 channels on our platform. Indonesia has many languages and communities.

SATELLITE NEWS: You talk about ‘B’ and ‘C’ classes. Is there a demand to get content on smart devices?

Chendra: Our service is a very basic service. We just want to get people into the habit of paying for TV. So, once we are in this 30-40 million households, we can then try to sell them more services. Hopefully, we can start bringing in more higher end content to generate stronger ARPUs. In most countries in South East Asia, getting access to Chinese content is very important. But, also things like Tele-Novelas and British sitcoms are also popular. Indian channels will be important for us.

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