“Change is inevitable. Growth is optional.” These are the words of U.S. author John C. Maxwell. In the context of Asia’s satellite operators, inevitable or not, change certainly happened. The last couple of years saw several company leaders step out and be replaced with new executives. How are these new leaders steering these companies? What are their visions for the future?
For AsiaSat, ABS, and Thaicom, there is a constant amidst the change: their video businesses remain strong. As connectivity in Asia improves, demand grows for video. The trend is a move away from the traditional means, where video is increasingly consumed on smaller screens of mobile devices. These consumers want — if not expect — access to video anywhere, and at their convenience. Video-on-Demand (VOD) is, therefore, growing in popularity, and streamed VOD is becoming increasingly prevalent. There is also a growing trend in the consumption of short-form videos through the internet with an increasing amount of content made for YouTube, Facebook, and even chat apps. But, these trends don’t spell doom for linear TV.
According to Carmen Gonzalez-Sanfeliu, CCO of ABS, linear TV still represents close to 80 percent of the addressable Asia market, via both advertising and premium paid means. However, with the rise of Over-the-Top (OTT), this vertical is becoming more fragmented.
“High-Definition (HD) seems to be the mainstream now and many of our video customers are converting their Standard-Definition (SD) channels into HD channels, which have resulted in some growth. This results in a movement from linear delivery to OTT services causing the market to become more fragmented. We see opportunities for various media services as video is no longer delivered in a single screen and single format style,” says Gonzalez-Sanfeliu.
Linear TV resilience is one of the factors that make Asia quite a different regional market compared to the West. While cord-cutting is felt more deeply in Western markets, Asia is still more fragmented, while markets such as the Philippines, India, and Indonesia continue to see growth in linear TV. Another differentiating point is that the propensity to pay is low. This is compounded with easy accessibility to pirated content, be it via the internet or traditional linear delivery means. In numerous markets, low-cost subscription and Free-to-Air (FTA) TV are more popular than premium pay TV.
It’s important to remember that the Asia-Pacific (APAC) region is very diverse. In the more developed economies, the legacy video market has started to go through dramatic changes, with viewers increasingly watching OTT predominantly on mobile devices. But, there are considerable differences between these and the less developed markets, explains Anant Kaewruamvongs, CEO at Thaicom, citing this as a reason for linear TV’s buoyancy.
“The traditional pay TV market and linear TV are still vital and relevant,” says Kaewruamvongs. “In many emerging APAC markets, those watching OTT on mobile devices are complementary to those watching linear TV via satellite at home. Broadcasters can only survive and grow their business if they provide more of what viewers want in terms of how they access content. We believe only those satellite operators who embrace this challenge and are able to provide end-to-end service models as well as a multi-screen content delivery experience can survive in the APAC video market of the future.”
Niche, Localized Content
As delivery cost has gone down significantly, there has been a rise in niche, localized content being exported. Korean content has been quite the success story in recent years and is doing well in markets as far as Latin America, as well as in very culturally different countries like India.
“The growth of the K-phenomenon has plateaued in the last year or so. We are now also seeing more South East Asian content, such as Thai, Indonesian, and Filipino, appearing on Netflix and some OTT apps. This is the area where we see the potential for growth in media services and perhaps new delivery. People like to feel connected to their culture, even when they live far away from their homeland. China is a market set for big growth as well as Australia, Japan and India,” says ABS’ Gonzalez-Sanfeliu.
Roger Tong, CEO of AsiaSat, sees global demand for video and digital content of all types growing rapidly. This is reflected in the continued growth in Asian video content investment, he says, pointing to India and South Korea, both high growth markets where video production budgets have increased.
“India and South Korea have increased by 14 percent and 7 percent in 2017, rising to $4.2 billion and $3 billion, respectively, according to a 2018 report from Media Partners Asia. In parallel with the increase in demand for content, delivery mechanisms are also evolving rapidly and continuously. It is hard to determine how this complex relationship will balance itself out over time. However, given the lack of high quality nationwide infrastructure in the Asia-Pacific, we remain cautious on the video market development in this region,” says Tong.
New Satellites and LEO
With ethnic diversity and cultural vibrancy, Asia boasts a colourful broadcast market spanning a range of genres. But Asia has also given rise to an abundance of small satellite launches and new satellite market entrants, putting Low-Earth Orbit (LEO) in the spotlight. What are these new leaders planning in LEO? What investments in new satellites are on the cards?
For AsiaSat, a cautious watch-and-see approach is being taken. With a “healthy” fleet that has abundant on-orbit fuel, AsiaSat has sufficient time to monitor changes in technology trends before making any capital commitment, says Tong. However, the satellite operator is continuing to evaluate the timely commissioning of its next satellite AsiaSat-10, which will support connectivity demands in aero and maritime services, as well as in vertical markets for enterprise networks and broadband access.
A cautious approach is not just for companies with new leadership. Citing a supply glut in the market, Tan Tian Seng, Singtel’s director of satellite product and marketing, is also taking a careful approach regarding investments in new satellites.
“As for LEO, only Iridium has delivered so far, with the final 10 Iridium NEXT satellites being placed in Low Earth Orbit (LEO) earlier this year. OneWeb, LeoSat, SpaceX, and TeleSat have yet to launch and are looking to deploy LEO broadband networks with service available in the 2020-2023 timeframe. Hence, we are watching the development of LEO closely with a view of possibly distributing their services,” says Tian Seng.
Thaicom sees the coexistence of Geostationary Earth Orbit (GEO) and LEO complementing each other. While Thaicom continues to invest in new GEO satellites, it is, at the same time, considering next-generation satellite technology in co-operation with international partners. This cooperative approach is to reduce investment risk and reliance on Thailand’s concession scheme, explains Kaewruamvongs.
“Drawing from our in-depth experience as the company that launched the world’s first High Throughput Satellite (HTS), we also intend to support the deployment of LEO-enabled broadband services on the ground in APAC. We have come a long way since the launch of IPSTAR and this experience makes us a potential partner for the deployment and marketing of LEO-enabled broadband services. As an HTS pioneer, I can say that a lot of effort goes into the acquisition of landing rights and into building partnerships. This will be challenging for the global LEO players — but here lies our strength. If and when LEO happens, Thaicom will look to participate in part of the LEO value chain,” says Kaewruamvongs.
Growth Markets Beyond Video
Just as the means of how people watch video has multiplied, so have the means with which people consume data also changed. The different ways that people consume information have resulted in the data market gaining tremendous traction in recent years.
“The market has seen notable growth in the aeronautical market and an increased demand for rural connectivity in the developing Asian markets. We believe data will continue to grow and fuel the demand for satellite capacity,” says ABS’s Carmen Gonzalez-Sanfeliu.
AsiaSat’s Tong sees continuing growth in demand for data applications to improve communications infrastructure of many developing countries in Asia. Tong also sees opportunities coming from countries whose governments have established universal service obligations for telecommunications, referring to Australia as an example. Australia has not only imposed such an obligation, but also more recently put the new Universal Service Guarantee (USG) in place. The USG ensures all Australian homes and businesses, wherever they are located, have access to both broadband and voice services.
“In terms of vertical markets, APAC demand for mobility services, including In-Flight Connectivity (IFC) and maritime services, have continued to grow, led by China and India. We also see demand drivers for services such as mobile backhaul and remote communications to support enhanced mobility, and data-driven networks and connectivity for enterprises and home users,” says Tong.
Beyond video, Thaicom has invested in the maritime market, and since introducing Nava, its new low-cost maritime broadband service platform, it is reportedly one of the fastest growing in Asia, says Kaewruamvongs, adding that Thaicom has always followed unique growth strategy.
“Thaicom is the only satellite-enabled end-to-end solutions provider among the Asian satellite operators. We believe in a growth strategy driven by cooperation and partnership,” says Kaewruamvongs. “In response to our fast-changing industry that is driven by big investment, big global operators, and more and more big multi-national companies, we believe partnership business models are the key for us Asian operators to remain competitive and independent in the future. More co-operation among Asian operators is required in response to the new global satellite playing field of new constellations, and the aggressive market expansion of the big global operators into Asia.”
Reconsidering the value chain is key in today’s business, says Singtel’s Tian Seng. “From the plain ‘vanilla’ offering of wholesale bandwidth to enterprises, we are moving up the value chain by delivering managed services and application-based services, such as the Internet of Things (IoT) and Machine to Machine (M2M).”
Tian Seng adds that Singtel is also positioned to offer cyber-security managed services to remote sites. Together with an ecosystem of strong partners and the Singtel-owned Trustwave, the satellite operator has assembled a comprehensive portfolio of cyber-security technologies to confront growing cyber-threats.
Asia is an immensely diverse and dynamic market that has yet to reach its full potential. But this diversity means that while some developed markets are leading, the less developed are lagging behind. Within in this contrasting region, where is the strongest potential; which markets are ripe for growth?
Thaicom, ABS, AsiaSat and Singtel all believe that video still represents opportunity. The migration from SD to HD continues to drive capacity demand while the introduction of 4K has already begun. Looking at internet penetration, Asia has room for growth, which represents other opportunities for telecommunications services providers. Within the vertical markets, maritime represents opportunities as does aviation’s increasing demand for In-Flight Connectivity (IFC). But in which countries are these demands trends strongest?
AsiaSat’s Tong points to China, Indonesia, and India, identifying these country markets as having strong growth potential. “We see continuous growth from Asia’s most populous countries, namely China, India and Indonesia. These Asian countries also rank among some of the world’s fastest growing markets with substantial room for growth in their infrastructure and communications development,” says Tong.
For Singtel, country markets ripe for growth are in Southeast Asia, says Tian Seng, who points to Indo-China, particularly Myanmar, Vietnam, and Cambodia.
Kaewruamvongs reminds us that Asia is the fastest growing region in the world, and that while China and India are leading the way, emerging markets in countries like Bangladesh are just as important to operators. “Looking beyond demand for satellite-enabled services leads to identifying other potential and growth opportunities,” he says.
Thaicom and its regional peers aren’t just identifying country markets. They are also seeking a deeper understanding of how demand in the region is captured. That understanding is crucial to success in Asia’s complicated ecosystem. VS