[Via Satellite 07-30-2014] The number of Direct-to-Home (DTH) subscribers in Asia is set to nearly double between 2013 and 2018. This was one of the key findings of a major new report by Media Partners Asia (MPA). MPA predicts that DTH numbers in Asia will reach 110 million by 2018, up from 56.3 million in 2013. Interestingly, there will also be a strong drive to HD broadcasting in Asia over the next decade. HD DTH subscribers will grow from 10.4 million in 2013 to 37.3 million by 2023, driven by higher volumes in India and China in particular and steady growth in Japan, Korea and Southeast Asia, according to MPA. Longer-term, DTH’s share of the total pay-TV market will almost double to 24 percent as the DTH customer base reaches 150.4 million by 2023.
The increase in potential subscribers, as well as HD content is good news for the satellite industry as demands for satellite capacity will likely remain strong. While markets like India and Indonesia get a lot of attention, Asia is full of promising markets for DTH. Vietnam and the Philippines, for example, show plenty of potential for growth.
“In the Philippines — despite the effects of Typhoon Haiyan — 2013 represented another year of solid pay-TV subscriber growth, driven by leading DTH player Cignal, which accounted for 76 percent of the 204,000 net new subscribers added in 2013. Its monetization will improve and it did reach EBITDA breakeven in Q1 2014 and it is making a big push on HD. It had 602,000 subscribers at the end of 2013 and is now focusing on upselling more subscribers. There’s also Gsat DTH services at the low end. MPA analysis indicates that Gsat has been growing by about 30,000 to 40,000 subscribers each year,” Vivek Couto, executive director and co-owner, MPA told Via Satellite. “We see Vietnam DTH subscribers growing at 13 percent [Calculated Annual Growth Rate] CAGR over the next five years. This is good growth but not exceptional. It’s more driven by K+, which leads the premium segment with well packaged content and English Premier League football exclusive rights.”
According to MPA, amongst maturing markets, Malaysia is a clear leader describing Astro as one “of the most innovative operators in the world, adept at increasing both subscriber growth and [Average Rates Per User] ARPUs while also investing in product innovation.” It adds that DTH operators in Australia and Japan continue to face headwinds. Hybrid DTH-Internet Protocol Television (IPTV) distribution has helped sustain KT SkyLife’s proposition in Korea.
One of the evolving dynamics in global pay-TV is the onset of emerging Over-the-Top (OTT) alternatives, which could in theory put pressure on DTH subscriber numbers and market potential. “Against cable TV [DTH has performed] very well, even in India and especially in Korea, Malaysia, [and the] Philippines. In Korea, DTH has emerged with KT i.e. KT SkyLife so they have a broadband play and now a TV Everywhere/OTT play. In markets where the operators produce and own a lot of local content and is across multiple distribution points — DTH, IPTV/broadband — it’s not a big issue yet. For example Astro in Malaysia [and] MNC Sky Vision in Indonesia, but execution in both markets on the OTT/IPTV front will need to ramp up in the months and years ahead … the same applies to Foxtel as it launches its triple play in Australia later this year.”
MPA has also released a separate report on the Indian DTH market titled “India DTH Market Overview – Key Dynamics & Future Outlook 2014.” In India, MPA forecasts that the active DTH subscriber base (i.e. paying customers only) will grow from 37 million in 2013 to 60 million by 2018, and 70 million in 2023. According to MPA, this implies a 39 percent share of the overall market by 2023, and a 56 percent share of the digital pay-TV market. MPA believes that ARPU growth in India will be partially limited as DTH expands nationally, with low-income homes coming into the mix, although we also see a greater contribution from high- ARPU HD subs. HD represented 6.9 percent of the total active DTH base in 2013; we expect this to grow to 16.1 percent by 2018, and to 20.1 percent by 2023. MPA sees total DTH ARPUs expanding from $4.0 per month in 2013 to $5.7 by 2018, according to the report.
Improvements in regulation in India could also aid the DTH industry in the country. MPA believes the implementation of mandatory cable digitalization by the government will be an important catalyst for growth in the DTH sector. The research group said DTH operators are relatively well positioned due to the strength of their Business-to-Consumer (B2C) outreach — as opposed to Business-to-Business (B2B) approaches amongst cable Multiple System Operators (MSOs) — and their experience and investment in tiering, subscriber management and billing, and sales and marketing. In addition, as part of its reforms, the government has now permitted international companies to own up to 74 percent of cable and DTH platforms, which MPA said could act as a further boost to the market.
In terms of overall market trends in Asia, Couto believes there could be some consolidation among DTH players in the region, which could reshape the DTH landscape over the course of the decade.
“[We could see] DTH IPOs and M&A in India and improving fundamentals amongst the top five players. We may also see consolidation and growth across Indonesia and more innovation and services at MNC, plus more competition to MNC from Trans Vision and Big TV in particular. We could also see better monetization and economics at Cignal in the Philippines. We could also see a real push on IPTV and OTT by Astro,” he said.
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