The next three to five years of video industry development in Asia Pacific could be about two parallel ecosystems, which, depending on the market and the trend, will either collide or coexist. The first ecosystem is that of pay-TV, a $52 billion industry in 2014, according to Media Partners Asia (MPA). The second is the fast emerging and fast growing $4 billion online video marketplace, driven by China and global platforms such as YouTube and Facebook. Subscription based online video services are also proliferating with the subscription-based online video market set to top $1 billion in sales in 2015, according to MPA.
However, while the consumer shift from traditional pay-TV to online has begun, the shift in revenues will likely take much longer on account of the low CPMs in online advertising in the region, and the low pricing of Subscription Video on Demand (SVOD) services. In addition, other factors such as high levels of IP piracy via online platforms and the slow evolution of a policy framework for regulating OTT services will see that traditional pay-TV will continue to dominate.
Within the pay-TV ecosystem, the Asia Pacific DTH satellite industry has experienced a significant phase of growth in recent years, driven by the expansion of DTH pay-TV in India, Southeast Asia, and Korea. However, the growth of broadband, IPTV and OTT is placing a natural limit on future growth while macro concerns and aggressive competition is limiting value. That said, the DTH satellite industry remains robust. MPA analysis indicates that total Asia Pacific DTH pay-TV subscribers grew 9 percent to more than 61 million subscribers in 2014, compared to total pay-TV subscribers of approximately 500 million.
In terms of revenues, MPA forecasts indicate that the total pay-TV industry will grow at a 6.6 percent Compound Annual Growth Rate (CAGR) from 2014 to 2019 as industry sales climb from $52 billion in 2014 to about $72 billion by 2019 and approximately $84 billion by 2023. During this period, MPA forecasts that the DTH industry revenue will grow at a marginally higher rate of 7 percent CAGR — reaching $12.5 billion by 2019 and thereafter grow to reach about $15 billion by 2023.
Key markets driving the growth in DTH are:
India: This is the most important market for DTH pay-TV in Asia Pacific. During 2014, India’s pay-TV industry added 5.6 million net new subscribers. Much of this growth has been driven by DTH satellite, which had a 70 percent share of net new additions in 2014. MPA estimates that India’s active DTH subscriber base will grow from 41 million in 2014 to 75 million by 2023.
Malaysia: DTH is a powerful platform in the market, driven by Astro. MPA forecasts indicate that total pay-TV subscribers will grow from 3.7 million in 2014 to more than 4.5 million by 2023 with DTH having 85 percent market share by 2023. Total pay-TV monthly Average Revenue Per User (ARPU) will grow from $29 in 2014 to $33 by 2023 with DTH climbing from $30 to $35 over the same period. Key drivers include the adoption of HD and DVR services as well as VOD, which continues to scale across the market.
Philippines: The Philippines has emerged as a strong market for DTH growth in recent years, driven by Cignal and Gsat. Total DTH pay-TV subscribers reached 1.06 million in 2014 and will rise to 2.85 million by 2023 with future upside coming from significant HD growth and package upselling, which will help boost ARPUs.
Sri Lanka: The pay-TV market is largely driven by DTH, which is expected to grow from 452,000 subscribers in 2014 to more than 1 million by 2023. A key driver of this growth will be continued expansion of leading DTH operator Dialog TV in both prepaid and post paid categories. The launch of DTH operator Dish TV could also boost the market.
Thailand: While the pay-TV sector is challenged and is expected to only grow from 815,000 subscribers in 2014 to 1.1 million by 2023, unencrypted, free satellite (freesat) has become the dominant means of delivering multichannel TV to viewers. The launch of 24 digital terrestrial TV (DTT) channels is unlikely to alter this dynamic, particularly as the DTT channels are “must carry” on freesat as well as pay-TV platforms. VS
Aravind Venugopa is VP and project manager at Media Partners Asia (MPA). He specializes in the commercial and technical appraisal of broadcasting, content, pay-TV and broadband industries.