Deepak Mathur, Senior Vice President, Commercial, Asia Pacific and the Middle East, SES
Q: Would SAT-IP be considered a sort of OTT? Is there a possibility that it can bypass the pay-TV operators and operate on its own?
A: If we would take a step back and look at OTT today, I think it contains three key elements. One is the notion of multi-screen TV which is being able to watch a subscription on multiple devices. The second is legal OTT, such as Hulu or Netflix. They are essentially an on-demand service that is typically paid for. The third is the illegal OTT component. If we were to look at each of these independently, SAT-IP effectively addresses the multi-device component of it. We see that as where OTT is probably going to head in the future because ultimately linear channel TV is going to continue to be the dominant method of delivery for TV content.
However, we fully appreciate and recognise that people are moving into multiple devices; therefore need to have access to their content on multiple devices. Next is the notion of TV anywhere; when you’re travelling, you want access to your subscriptions. If you look at the successful deployments of OTT, by that I mean a multi-screen TV anywhere; those deployments have typically been in the U.S. in the form of Dish TVs, TV anywhere, Comcast and more. Really what they are is a very important add-on or support to traditional linear TV. They are not, by any way shape or form, a replacement for traditional linear television. There are several reasons for that. One is the notion of content discovery – the ability to know what to watch. In a purely on-demand environment, it’s difficult to know what is available and what you want to watch. Two, none of the networks are capable of supporting high definition content to multiple screens in the home simultaneously in order to replace what is, today, the lean-back experience of watching television on the couch. There is a space for lean-forward, which is wanting to watch Gangnam Style on demand, but it does not by any way replace the notion of lean-back.
The economics of distributing content via the web will change overtime. Presumably, they will come down. However, the advantage of satellite and traditional forms of linear television distribution are so strong that in my view, the replacement of unicast – which is essentially what on-demand TV is – with the economy, will never be the same as broadcast which is what satellite and cable television do. We continue to believe that there is a very strong position or proposition for the distribution of linear TV, the satellite and cable, the traditional forms of distribution, but there is indeed a roll where this can be complemented by alternate forms which lead to multi device, viewership and TV anywhere viewership.
SAT-IP is designed to address very specific problems. It’s designed to address the fact that; in fact, one of the members at one of the board meetings held up a tablet and said, “Guys, there’s no satellite tuning, what are we going to do about it?” So SAT-IP was born out of that question which was to convert standard linear television, the entire bouquet that you subscribe to, to convert that into IP allowing up to eight devices to simultaneously access independent channels within the home. And we think it’s a very important element of enabling multi device viewing in the home.
Q: Would that in any way bypass the pay-TV operators? I think that was the initial fear when it came to OTT or rather streaming technologies as a form of delivery, but I think the industry now does concede that it is not as big of a threat as was initially thought out to be. So what about SAT-IP, is it complimentary?
A: I think SAT-IP sits right in the value chain as an inherent and integral part of the pay-TV offering. It will sit after the set-top box which means after subscription has been paid for and the content has been received. It is simply taking the users’ subscription which means channel 1 through 20 rather than 21 through 40. Let’s say he’s got a package from 1 through 20, the SAT-IP converter will only address the component that he is authorised to watch and that he has paid to watch. So it is really intended as a complement and not as a replacement or for any way to go around the traditional eco system that the pay-TV operators spent an enormous amount of money to build.
Q: What are your thoughts about Myanmar and Indonesia in terms of their potential for the satellite industry?
A: I think Indonesia has the potential and will have similar growth trends that we’ve seen in India for satellite services. The sector is currently dominated by two pay-TV operators. We’re seeing a lot of fragmentation beneath that. Indovision and PT Telkom are sort of major players, then there are a lot of new and emerging players. Given the size of the population, the low penetration of pay-TV, the appetite for TV consumption, the existence of a very vibrant free-to-air market, I think all the signs are there for a very robust pay-TV environment.
A lot of people have not in the past put a substantial amount of KU-band capacity into that market because it was somewhat limited or perceived to be a somewhat limited market. That’s going to change over the course of the next three to five years. There’s going to be a significant investment of satellite capacity into that market. SES in fact, has put one satellite, SES-7, which has KU-band capacity over that market; and we’ll be contemplating that with another satellite called SES-9, which will be co-located and will add a significant amount of capacity into the market. We very clearly see the potential of Indonesia to grow into a significant pay-TV market and we fully hope to participate in the growth of that market.
Now, Myanmar is a little more interesting. Indonesia has passed its inflection point; it is going to go down a very sustainable path. Myanmar is going through a process where the sanctions are still somewhat in place but are being rapidly removed. SES is looking at the market very carefully but we obviously need to comply with Europe and the U.S. sanctions. As soon as those start to unlock, we see a tremendous opportunity; initially for telecommunication services, it will follow the normal path that most developing economies have followed. Initially, the demand is more for very limited television and a significant amount of telecommunications. So the launch of a substantial widening of 2G networks in the country leap frog into 3G or potentially 4G, all of the infrastructure that goes around that as private enterprise sort of starts to move out enabling banking services, e-government services and more. I think as a subsequent step, probably three to four years out, we’re going to see the unlocking of the broadcast sector but I wouldn’t say we’re at that point as yet. I think all the signs are for the wonderful potential of that market and we’re all watching it very closely and we’re hopeful that we’ll be opening up on that market very soon.
Q: Can you share a bit about SES-9?
A: SES-9 is the third satellite that we’ve announced for Asia in the last three years which just goes to show the fact that we are absolutely convinced of the promise in the growth of this market. We announced SES-7 three years ago, SES-8 which is going to be launched this year and in 2012, we announced SES-9. Quite clearly, and we’ve talked about this before, there are three or four key trends that are converging: the size of the population, the favourable GDP growth, the youth of the population across Asia and the increase of HD television. All of these are big drivers which are going to cause DTH and High-Definition television to penetrate very significantly.
If you look at SES-9, we’ve designed a satellite in extremely close cooperation with our existing customers and potential customers to make sure that the beams are designed for exactly what those customers want to them to do, which is the distribution of high powered pay-TV. At the same time we recognise, and in SES’s portfolio in Asia, there’s a very equitable mix between enterprise, and video or media services. We’ve got about 50% of our revenues come from enterprise customers, 50% from video. So we also made sure we’re building for our enterprise customers. I think it’s a very well balanced satellite, it’s been conceived and designed with our customers, and really is our attempt to make sure that we are providing sufficient capacity for the key DTH customers that we have at the 108 orbital slot to provide them with growth, to provide them with redundancy and essentially allow them to capitalise on the opportunity of the market.