Indonesia is one of the region’s most competitive television markets. Today, there are 14 networks and nearly two dozen local channels vying for a potential TV audience of some 164 million individuals or 35 million households – based on estimates by Badan Pusat Statistik that some 69 per cent of Indonesian households own televisions. This may seem vast, but it is highly concentrated. AC Nielsen estimates that more than 40 per cent of audience share is commanded by Media Nusantara Citra (MNC), which RCTI, Global TV, MNCTV and SINDOtv fall under. The Trans Group (home of TransTV and TV7) follows with a 22 per cent share, then Surya Citra Media/EMTEK (16%) and the Viva Group (10%). Most of these channels are free-to-air; the PayTV segment is considerably smaller, but growing fast. The market is estimated to have grown by some 5 per cent in 2011, with surveys indicating growth projections of anywhere between 3 to 8 per cent through to 2015.
“Compared to other Asian countries, the development of the PayTV industry in Indonesia is slow. The perspective of the majority of the viewing public is that it is expensive and suitable only for the middle and upper class market,” says Elvizar KH, the President Director of TelkomVision, a private satellite and cable broadcaster in Indonesia. “That being said, there is also the perception that free TV programming is becoming increasingly monotonous in theme and selection, while PayTV subscriptions allow a greater variety of programmes.”
Gregg Creevey, Managing Director of Multi Channels Asia (MCA) in Singapore, says the industry has evolved positively this year. “There is increasing competition on an operator level. This, in turn, is creating more demand for channels that offer something compelling and different to help drive not just overall penetration but also average revenue per user. On the operator end, increased competition has seen them chase different market segments and geographic regions, while creating different services, employing different delivery technologies and offering different channel packages. I also see that Indonesia has been a welcome launch pad for many new channels.”
Such launches have been prolifi c this year. Along with MCA introducing the Outdoor Channel HD, BBC Lifestyle debuted on Nexmedia, a newly launched digital pay TV service by the EMTEK Group. Hong Kong’s Tiger Gate introduced KIX and Thrill on MNC’s Indovision and Okevision PayTV platforms, as well as Aora, a pay TV platform by PT Karyamegah Adijaya and TelkomVision. Sony Pictures Television introduced ONE, a dedicated South Korean drama channel, on Groovia TV plus Bloomberg expanded its distribution, and global children’s channel KidsCo launched on a fourth platform.
One of the more established international players in Indonesia is HBO, which has been a pioneer in introducing premium, and more recently HD, content across the archipelago. “Indonesia is an important market for us,” says Jacelyn Kek, Senior Vice President of sales and marketing for HBO Asia. “We have seen tremendous growth in Indonesia over 2011 and there will be even more growth in 2012. We position ourselves as premium channels in Indonesia, and we work closely with our affi liates to add value to our subscribers, including offering Bahasa Indonesia subtitles for all our programmes and dual audio options of Bahasa Indonesia and English for selected prime-time movies.”
In June this year, HBO Asia launched HBO Hits HD on First Media’s pay TV platform, delivering HD content 24 Elvizar KH hours a day.
Going by the activity in the past year, Indonesia’s PayTV scene is defi nitely moving forward albeit still from a small base. According to CASBAA, the PayTV penetration in Indonesia was just over 1.1 million households in 2011 (the Indonesian Statistics Department places the fi gure higher, at 1.7 million). But this number would grow markedly if viewers can be convinced to switch from the multiple terrestrial free-toair channels. Operators are already pushing hard to deliver content at competitive prices, particularly in the urban metropolises of Jakarta and Yogyakarta, and are also experimenting in alternative technologies that latch on to other key digital trends of the country.
Elvizar of TelkomVision states: “We are always trying to change the perception that PayTV is expensive, by offering our subscription packages from a base rate of IDR 20,000 a month (US$ 2.20), scaling upwards depending on the number and type of channels selected.” In addition to pushing traditional PayTV services, TelkomVision has also branched out introducing Indonesia’s fi rst IPTV service – Groovia TV, which was expected to achieve a subscription base of 300,000 by end-2011.
It is a pattern replicated across other PayTV broadcasters too, setting up an affordable buy-in for access and experimenting with nontraditional methods of delivery. Astro Nusantara, a joint venture between Malaysia’s Astro and Indonesia’s First Media, recently introduced a VOD element to its broadcast, based on providing English Premier League replays and highlights on demand. First Media itself launched Showtime VOD in October 2011, partnering with HBO to provide content (First Media also collaborated with HBO to air the fi rst HD TV broadcast in Indonesia in 2010). The potential for VOD and OTT is great in Indonesia, particularly the latter as the smartphone penetration rate in Indonesia is almost twenty times the equivalent rate in PayTV. However, the broadband infrastructure to support mainstream adoption of HD, VOD, OTT or IPTV is still lacking, currently limited to the main urban areas of Java.
In terms of ownership, this year has seen a consolidation amongst Indonesia’s biggest operators, encroaching on anti-competition territory. Unfettered privatization and blasé regulation has led to four media conglomerates controlling 13 of the networks over the past fi ve years (the 14th is TVRI, which is state-owned).
EMTEK purchased the Indosiar channel in May 2011, and in doing so, triggered an investigation by the Indonesian Broadcast Corporation that declared the acquisition illegal, citing a law from 2002 that disallows a company from holding more than one broadcasting licence. The acquisition was eventually cleared, with political ties paving the way.
Despite these hiccups, observers agree that Indonesia is a market of vast opportunities that will only grow as PayTV penetration continues. But aside from just expanding the user base, what else can be done in Indonesia to make it more attractive to industry players, both foreign and local?
HBO’s Kek hopes that the issue of illegal broadcasting will be tackled more aggressively – a major problem in Indonesia where the Association of Indonesian Multimedia Providers (APMI) estimates that there is anywhere between 680 to 2,500 illegal PayTV operators scalping the industry as of end- 2011, with a total subscriber reach of 2 million households, almost double the legal subscription rate. APMI also estimates that PayTV operators would have lost IDR 1.2 trillion (US$ 132 million) in 2011 due to television piracy.
Elizar of TelkomVision believes that cost is an issue too. “I think that content cost is one of the main challenges holding us back. I would hope that content providers can offer more competitive pricing going forward to make it easier for PayTV operators to lower the entry cost and increase the penetration rate of pay TV in Indonesia, as well as curb piracy.”
Dewi Kurniawati, Executive Producer at Five Monkeys, a media production house in Indonesia, which works with international and domestic content makers, hopes there will be a greater push in content made by Indonesians for Indonesia. “We’ve seen a lot of domestic adaptations of international franchises this year, like MasterChef Indonesia, but until there is more belief by the powers-that-be in local talent, the development of Indonesia Intellectual Property will be slow. I’d love to see Indonesia develop as a regional production hub for television content, like Malaysia’s emerging animation scene or Singapore for documentaries, but we have to create a solid production base here fi rst before we can even think of going regional.”
MCA’s Creevey agrees. “Indonesia has a clear advantage in terms of market scale and low cost base, but it would be good to see this stretched a bit more creatively into the production of content for a wider, perhaps ASEAN audience.” Content generation aside, Creevey is more sanguine about the development of the PayTV segment, though he acknowledges that more should be done to develop it . “The Indonesia PayTV market has always possessed great and untapped potential. The sheer size of the population, the expanding consumer class, and the low penetration rate of PayTV arguably makes Indonesia the most exciting market in Asia. To transition into a mature market however, requires a number of challenges to be overcome, not least the entry cost of a basic PayTV proposition. Solving this will require a lot of cooperation and understanding between operators and programmers and whether they want this to be a market of yield or volume.”
According to AC Nielsen, the average Indonesian TV viewer spent four hours and 22 minutes watching television in 2010, a fi ve minute increase from 2009. A similar rise is expected from this past year. Some 60 per cent of the IDR 60 trillion (US$ 6.6 billion) advertising expenditure in Indonesia in 2010 was directed to television. Clearly, this is a thriving market and the industry is far from reaching its plateau.
