Pay-TV and Broadcast Snapshots in Asia

The Philippines: Cignal TV

One of the main pay-TV operators in the Philippines is Cignal TV, which at the end of last year had just less than 1.2 million subscribers. The operator has recently increased the number of transponders it uses, and now relies on eight full transponders. The Philippines, which encompasses more than 7,000 islands in the Pacific Ocean, is a perfect market for satellite pay-TV in Southeast Asia. Jane Basas, president of Cignal TV, told Via Satellite she believes Cignal is the fastest growing pay-TV business in the Philippines in recent years, and that the operator expects to see “significant growth” going forward.

In terms of its capital expenditure plans, Basas revealed that the increasing subscriber-base of Cignal, especially in the prepaid segment, means the operator plans to continue to build and improve its billing and customer service capabilities as its offers become more complex.

According to Basas, the impact of Over-The-Top (OTT) content in the market has been limited. “For Cignal in particular, OTT video options have not made any significant dent in our business as we continue to experience significant growth both in terms of our subscriber numbers and revenues. We think this will continue to be the case in the immediate future as pay-TV penetration, as well as broadband penetration, is still quite low compared to most of our neighbors,” she says. “However, we do acknowledge that there are particular segments of our market that are becoming more and more sophisticated and have specific demands for the kind and breadth of content that they want to access, as well as the manner by which they want to access them. We are preparing for this.”

Basas believes Netflix and similar OTT video providers “are great,” and being able to integrate or bundle their content into its base proposition “would be ideal as this will increase the value of our offering especially among the premium segment,” she says. “But differentiation, and therefore sustainable demand for our product, will happen if we are able to harness and grow our own organic local content that addresses the cultural, language and value considerations that are unique to our market.”

While 4K will look to bring differentiated content to the market, Basas admits Ultra-HD is not on Cignal’s immediate agenda. “Since 4K content and 4K-capable TV set availability is still quite limited, this is not something that we believe will scale up significantly in the near future. We also still have to figure out a business case for 4K given the higher transponder capacity required to deliver this channel,” she adds.

However, despite a more competitive market, the proliferation of pay-TV services in the Philippines is still quite low, according to Basas. She says Cignal is excited about the opportunity to introduce the pay-TV experience to Filipino households.

But it is not a market without challenges. “We do acknowledge that though the majority of the population still primarily consume their content through TV/pay-TV, a growing percentage of viewers, especially younger people, have become accustomed to getting their content from various sources, specifically online. This is a reality that the MediaQuest Group, [owners of the Cignal TV platform and brand], is gearing up to address. With this democratization of content and access, there has never been a better time to be a consumer of videos in the Philippines,” Basas says.

Japan: Sky Perfect JSAT

In Japan, there are around 50 million households and only 14 million subscribe to pay-TV; a penetration that, for a developed market, is still considered relatively low. Sky Perfect JSAT, which is the largest DTH provider in Japan, has around 3.5 million subscribers. Jiro Komaki, director of the board and senior managing executive officer at Sky Perfect JSAT, leads the company’s multi-channel pay-TV business unit. Komaki told Via Satellite that in March of last year that the operator started two 4K commercial channels, which he says were Japan's first. “In November 2015, we also succeeded in transmitting HDR video with our JCSAT-3A satellite. We plan to be a key player in the 4K/8K field,” he adds.

In terms of OTT, Komaki believes that, because of the regulations in Japan, it is tougher for OTT players to make an impact. “In Japan, the broadcasting rights and the IP transmission rights are totally different,” he says. Also, since major terrestrial TV networks in Japan are producing the majority of video content, the IP rights of this content present an issue, making it difficult for potential OTT operators to enter the market and conduct business. However, as the terrestrial TV networks have started on-demand services, the amount of content that now has these IP rights is increasing rapidly. There will not be much difference between broadcasting and OTT streaming in the near future. Komaki also says that the company is getting ready to start an OTT streaming business very soon.

With OTT competition budding in Japan, the future for satellite pay-TV is open to question. However, Japan is a market that has long been a global leader in bringing 4K and 8K broadcasts to consumers, and it is this that could help satellite remain a key component in the country’s pay-TV future. “[Satellite’s dominance] will not last forever, but we expect it to be one of the dominant platforms for a while, as the development of 4K broadcasting will take place on satellite, and as the cost-advantage of broadcasting will stay. As for the next two to three years, the core of our multichannel pay-TV business will be on satellite, along with growth in OTT streaming and distributing content on fiber. However, the spread of LTE networks is making the viewing of [Satellite Video On Demand] SVOD services, and other free content through social media quick and easy. The consumer video habits in Japan keep on changing,” says Komaki.

Hong Kong: PCCW

In some markets in Asia, satellite is not the dominant platform. In Hong Kong, the telco PCCW is one of the leading providers of pay-TV services, with 1.3 million customers and an Average Revenue Per User (ARPU) of $25.40 (HK $197). The company has recently announced the launch of a new Set-Top Box (STB), which will be an all-in-one, 4K ready device that provides Internet Protocol Television (IPTV), Digital Terrestrial Television (DTT) and OTT services.

“[The new STB] is definitely one area of investment for us. We want to make sure what we put in our customer’s home will be their centerpiece of home entertainment, across all the content they want. The other area, in terms of investment, is in 4K content and 4K content delivery,” says Loke Kheng Tham, executive vice president of Pay-TV at PCCW. According to Tham, the telco has plans to expand its 4K presence. She admits that the volume and range of 4K content today is not as broad as the company would like but that PCCW is committed to providing the best services possible to its customers. She says the telco is actively acquiring and curating 4K content so that as the company starts installing its 4K boxes into its customers’ homes, they will be able to enjoy a good mixture of 4K content on-demand across various genres.

Through its Now TV brand, PCCW is now a market leader in Hong Kong. It is one of the major pay-TV success stories in recent years in Asia, and shows how a new player can come in and shake-up the market. When assessing what impact a player such as Netflix could have in the market, Tham says, “When we look at our household service, we want to make sure we have the broadest content possible. On Netflix, we recently announced that we would integrate Netflix into our set-top boxes and we are their first partner in Hong Kong. We see Netflix as a complementary service.”

Tham says the company will soon be including Netflix’s content into the set-top boxes. In terms of market dynamics in Asia, Tham says she sees more personalization, and that people don’t just consume content on a linear basis. She says PCCW sees a lot more viewing on-demand, and also outside of the home. “A piece of content we offer can have up to 70 percent of its total viewing via on-demand or outside of the home on a player, instead of via traditional linear TV. That is the big change,” she explains. “There is a lot more personalization happening and a greater ability for the customers to watch what they want when they want it. We are doing a lot to respond to that change and make it easier for customers to get their content on-demand. We definitely want to up our game in terms of the total experience we offer; we are launching a brand new user interface soon that will make it a lot easier for customers to find the content that they want and watch it on their own time.”

India: Zee Entertainment Enterprises Limited

India has long been one of the world’s fastest growing DTH markets, both in Asia and globally. It is a great market for broadcasters such as Zee Entertainment Enterprises Limited (ZEEL), which has plenty of ways to distribute their content. ZEEL CEO Punit Goenka tells Via Satellite that, over time, ZEEL has evolved from being a broadcaster to a content company. ZEEL has expanded into new areas, such as music rights and movie and theater production, as it aims to produce any and every type of content.

In terms of how ZEEL imagines its role in 4K adoption going forward, Goenka says video needs an end-to-end 4K ecosystem, from a streaming/broadcasting as well as deliver/viewing perspective. He believes delivering content on 4K is “pretty simple” but that it makes sense to invest in delivery of this content only when the ecosystem is evolved enough. While ZEEL is building its content expertise to be 4K ready, the strategy will keep evolving as the ecosystem develops in India and most international markets, according to Goenka.

However, the viewing landscape is certainly changing in Asia. Goenka cites the fact that a number of people now have phones with larger screens and how this is resulting in a lot of the video consumption happening through mobile devices. “This has also resulted in shorter videos being all the rage. Snack-sized video content is proliferating across Whatsapp, Twitter and Facebook. The ability to view and share these videos with ease is resulting in a whole new genre of bite-sized entertainment. Binge-watching is thus a phenomenon of our times,” he says.

India will remain a strong DTH market, particularly as new phases of digitization roll out. As the digital space grows in India, Goenka believes there is likely to be a huge uptake in the nascent video-on-demand market in the long-term. “We will also witness the entrance of more OTT and content-streaming players, both Indian and international, into the market. DTH has been in India for over 10 years and has helped to make the sector more organized with greater transparency. Consumer ARPUs are higher so there is better realization for content offered.” VS