ASIA-PACIFIC BROADCASTING

Asia-Pac’s pay-TV industry reaches tipping point

By Todd Miller

The Asia-Pacific pay-TV industry is now at a tipping point. The past few years have witnessed a marked growth and maturation of the industry, achieving some significant momentum and scale.

In less than two decades, half of all TV homes in the Asia-Pacific region now receive multi-channel TV, according to the Cable and Satellite Broadcasting Association of Asia (CASBAA). This translates to more than 360 million homes and one billion affluent viewers. In the past decade, the number of Asia-Pacific pay-TV homes has doubled. In terms of homes connected, the Asia-Pacific is now the world’s largest pay-TV market.

Also, Asia-Pacific viewers are spending more time in front of the TV now than they did in 2000 as overall media consumption increases. With more viewers paying for TV, pay-TV prime-time ratings are up 20% — so much for the predictions that linear TV, in the Internet age, would be a dinosaur medium.

And there has been explosive growth in the number of pay-TV channels in the region. In India, there are more than 450 channels, up from 120 channels in 2003. The increase is even more dramatic in Australia, where the number of pay channels expanded from 60 in 2008 to over 150 in 2010.

Much upside remains in the region as multi-channel TV further penetrates the mass market, the non-paying half of all TV homes. For a benchmark, subscription TV in North America reaches nine out of every 10 TV homes, so there is still a long way to go towards maturity in the Asia-Pacific. With the region’s economic velocity and rising disposable incomes, there’s every reason to believe that, eventually, Asia-Pacific pay-TV will be as similarly pene­trated as in the US.

However, to get from here to there, localisation, content differentiation and digitisation will be critical factors to propel the Asia-Pacific industry to maturity. Selling pay-TV is no longer just an issue of selling more TV content, but better content that consumers are willing to pay for — month after month. This will require some heavy lifting and serious investment on the part of both platforms and programme providers in the region.

Terrestrial TV ratings around the world tell a very consistent story: local programming holds very strong appeal among viewers. While there’s always an important and highly visible role for international product, viewers tend to gravitate towards local and regional programming with high production values that reflect and resonate with their own experiences, aspirations, customs and language.

What’s interesting now is the scale of the Asia-Pacific multi-channel industry now enables increasing investment in local and regional content, creating a virtuous cycle of a bigger subscriber base and more eyeballs and ad dollars for pay-TV. This, in turn, will stimulate even more local and regional content creation.

Most international channels now have some element of local production, and the proportion of local/regional content will surely increase over time.

For international services, channel customisation in terms of on-air presentation, programming and scheduling is now essential to create a relevant and locally salient product.

Sony takes localisation to heart. We work hard to provide global channels and content that are locally relevant. In the channel space, Animax, for example, ope­rates seven programming feeds in Asia, with a high degree of customisation for each feed, including subtitling and programming. We are preparing to launch a Korean version of AXN in partnership with CU Media, and recently began a tie-up in Taiwan with local movie service LS Time.

Last year, Sony launched a destination channel, SET One, in South-east Asia. This extensively language-localised first window Asian drama and entertainment service is powered with exclusive first-run content in SBS Korea — nearly simulcast with the Korean telecast.

Sony is also a leader in adapting hit shows in local markets, which in Asia range from a mainland Chinese version of Dr Oz to Who Wants to be a Millionaire? in India, a hit on Sony Entertainment Television.

In the US, cable-TV started out as redistributors of terrestrial services to remote areas, and for the first 10 or 15 years of the US multi-channel industry, the business thrived mainly by rerunning and repurposing existing content.

Now, US cable-satellite channels are differentiating themselves and creating brands based on innovative original productions.

I believe a similar pattern is unfolding in Asia, where more original content premieres on pay-TV — such as AXN’s local version of The Amazing Race Asia  and Universal’s The Biggest Loser, and in Australia Showtime’s forthcoming Cloudstreet drama.

Even for international programming, windows are advancing (such as AXN’s premiere of Hawaii Five-O just a few weeks after the show’s US debut) to provide pay-TV subscribers with first and exclusive content — which they cannot get anywhere else.

For many consumers in today’s networked world, TV viewing is no longer just a passive, lean-back experience. Viewer engagement is the new Holy Grail in programming and marketing.   

One of the reasons I am so bullish on the prospects for pay-TV in the Asia-Pacific is the enhanced capability to connect with consumers that digital services enable. While estimates of the digital penetration rates vary from about a third to a half of multi-channel homes, the accelerating take-up of digital services is unambiguously on the rise, fuelled by an increasing availability of HD services.

Among the international programmers, the leading channels in each of the movie, general entertainment, sports, news and factual categories now broadcast in HD. Even in India, an overwhelmingly analogue market, there will likely be some significant action in the HD space this year.

Mobile, some form of catch-up and online communities complement linear services, and are important tools in creating stickiness among subscribers. And 3D, while already present in South Korea, is around the corner for the rest of the Asia-Pacific. All of these digital elements contribute to the pay-TV arsenal of viewer engagement and content differentiation, and add value to pay-TV subscriptions.  

The speed in introducing additional localised, differentiated and digitised services, and the quality of the output, will vastly shape how effective and fast we as an industry convert the other half of all TV households who are not yet paying for subscription TV. It’s a great time to be in this business and in the Asia-Pacific.

At this tipping point, the wind is now at the industry’s back and momentum is on our side as platforms and programmers to work together to realise the full potential of the Asia-Pacific’s multi-channel TV reach.

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