The key to the future growth and value of Asia’s Pay-TV and broadband industries is dependent on the next five years of development in India and Southeast Asia. This was the main finding at this year’s Asia Pacific Pay-TV Operators Summit (APOS), held at the Ayana Resort in Bali, Indonesia.
The event, which was represented by more than 400 industry leaders and 16 territories, highlights that in the near future, India and Southeast Asia will account for 90 percent of the growth in Asia (excluding China). Analysis in the Media Partners Asia (MPA) report “Asia Pacific Pay-TV & Broadband Markets 2012” indicated that the Pay-TV market in Asia Pacific added some 35 million net new Pay- TV subscribers in 2011. Excluding the utility-driven China market which remains largely out of reach for global media investors, the region added 15 million new subscriptions.
Commenting on the forecast, MPA Executive Director Vivek Couto said: “Pay-TV in India and Indonesia are growing at a rapid pace, with competition intensifying and structural dynamics changing, while DTH satellite platforms are emerging as key gatekeepers to future distribution value. Similar trends are occurring, though with less intensity, in markets such as Malaysia, Thailand and Vietnam. The key to drive future growth in these markets will depend on ground execution and access to capital, with investors chasing higher returns due to the increasing cost of capital and volatility in risk / reward ratios.”
The report also revealed that India accounted for than more 60% of the new growth in 2011, with Southeast Asia contributing 15%, led by Indonesia with 5%. North Asia remains a significant part of the continent, contributing 17% to net additions in Asia in 2011, driven by Korea at 11%. This was fueled largely by DTH and IPTV.
Other projections indicate that between 2011 and 2020, the market for Pay-TV in Asia will see close to 318 million-plus net new additions, or 125 million in Asia (excluding China). South Asia’s (India, Pakistan, Sri Lanka) contribution to new growth will be more than 75%, with Southeast Asia representing 15% and North Asia coming in at 8%. In addition, digitalisation will have a major impact on industry growth in India, Japan, Korea, Malaysia, the Philippines, Thailand, Vietnam and Taiwan, as operators invest more in upgraded networks to support new services, volumes and higher Average Revenue Per User.
Another encouraging sign, according to the report, is the consumption of TV content and linear channels in India and Southeast Asia, which remains stellar. India is set to undergo a massive digitalisation process that will drive value across the industry ecosystem. Multiple new operators are entering Indonesia’s Pay-TV market, while incumbents are also consolidating and accessing capital markets to fund future growth. In Thailand and Malaysia, new entrants and existing incumbents could drive large-scale growth.
One other notable finding is that the growth of disposable incomes and higher GDP-per-capita levels will make Pay-TV more affordable across Asia Pacific. This, combined with more competition, mass-market oriented strategies and better packaging, will also reduce costs for consumers.
• Pay-TV subscribers in Asia Pacific will climb from 411 million in 2011 to an estimated 695 million by 2020, while
• Digital Pay-TV subscribers for the same period will almost treble from some 203 million in 2011 to more than 623 million by 2020.
• Fixed broadband homes will grow from more than 251 million in 2011 to some 421 million in 2020.
• Total broadband users, powered by mobile, will swell from 396 million in 2011 to 866 million by 2020.
MPA projections measure Pay-TV penetration after accounting for households that opt for multiple services. On this basis, penetration in Asia Pacific topped 50% in 2011, 67% by 2020. Digital Pay- TV penetration will also grow rapidly, driven by China, India and accelerated migration in North Asia, reaching 60% in 2020 versus 23% in 2011.
MPA sees future industry revenue prospects as robust though not optimal, as various structural, competitive and regulatory dynamics will limit consumer spends on Pay-TV though volumes will grow rapidly.
According to the report, the market for local Pay-TV advertising is buoyant, driven largely by China, India, Japan, Korea and Taiwan. Advertising prospects in Southeast Asia have yet to reach their potential due to low levels of penetration, but this will change over time as Pay-TV consumption increases along with viewership, boosting advertising sales on local channels in particular.
The summit’s forecasts further indicate that Pay-TV industry revenues will grow at a 9% Compound Annual Growth Rate (CAGR) from 2011 to 2016, and at 7% between 2011 and 2020, with subscription revenue CAGR at 11% and at 9% for the respective periods, and advertising at 10% and at 8%. Total Pay-TV industry revenues will top US$65 billion by 2016, and grow to US$81 billion by 2020. China, India and Japan will remain the three largest markets, contributing 36%, 19% and 17% respectively to industry sales by 2020, with Southeast Asia at around 10%, Australasia at some 9% and Korea at 6%.
On the whole, the Asia Pacific Pay-TV landscape looks healthy with continued growth. Some territories such as India and Southeast Asia will expand more exponentially compared to others like North Asia, where penetrate rates are beginning to saturate. Nevertheless, the industry shows no signs of slowing down just yet.