Economic challenges and the emergence of new legal and pirated options for content will result in a slowdown in the growth of Asia Pacific’s pay-TV industry, Media Partners Asia says in a new report.
Asia Pacific Pay-TV & Broadband Markets says that the region’s pay-TV sector will grow at an average annual growth rate of 5.8 percent from 2016 to 2021. Pay-TV industry sales from 18 AsiaPac markets will total $54 billion this year, rising to $72 billion by 2021. By 2025, revenues are expected to reach $81 billion.
In terms of subscribers, the region, excluding China, added about 9.6 million net pay-TV customers last year. This marks the slowest pace of growth since 1997-98. MPA projects 10.4 million net additions this year, driven by India’s cable digitalization. Thereafter, sub growth will decelerate, with between 4 million and 8 million net additions each year from 2018 to 2022. With China included, the region’s pay-TV subs base should hit 764 million by 2025, up from 567 million in 2016. The penetration rate should rise to 61 percent by 2025, up from 55 percent this year. By 2025, the digital pay-TV penetration rate will reach 91 percent. HD penetration of digital pay-TV subs is forecast to increase from 30 percent this year to 46 percent in 2025.
The pay-TV sectors in Hong Kong, Indonesia, Malaysia and Singapore have been hit particularly hard by the slowdown, with subscriber growth declining or “substantially” decelerating. MPA has lowered its subscriber growth forecasts for most of Southeast Asia, notably in Indonesia, Malaysia and Singapore. Both Malaysia and Singapore, however, should continue to see “resilient” ARPUs.
India and Korea remain significant pay-TV markets with the most scalable opportunities. MPA also forecasts accelerated revenue growth in Australia and the Philippines, boosted by subscriber gains.
China’s pay-TV industry is the region’s largest but growth opportunities are limited for broadcasters, MPA says, as a result of more regulation and the continued growth in AVOD and SVOD online services.
Outside of China, MPA says SVOD’s impact on pay TV has been “negligible” so far. Cord-cutters and cord-shavers are instead moving to illegal online services or ad-supported platforms.
Pay-TV operators are tapping into online opportunities by rolling out connected set-top boxes that incorporate OTT services. Telcos, in particular, are leading the charge in terms of bundled services that deliver pay-TV channels and high-speed broadband. This development is boosting subscriber growth, in particular in Southeast Asia.
“Pay-TV providers are increasingly focused on repackaging and repricing both linear and on-demand services,” said Vivek Couto, executive director of MPA. “Local and regional Asian programming is also becoming increasingly important. At the same time, sports, kids, infotainment and Hollywood movies will remain mainstays of the pay-TV bundle, although channels offering Hollywood TV series are being disrupted by both legal and illegal OTT. Few pay-TV operators have been able to capture or monetize large-scale online video viewing so far, although early results in Hong Kong and Korea are encouraging. The goal is driving the next cycle of customer growth and consumer spend. Pay-TV user interfaces and data analytics are improving, although often too slowly to effectively compete with legal and illegal OTT rivals. Increasingly, viable pay-TV operators will become drivers and targets for M&A and consolidation, as the worlds of pay-TV, broadband and OTT collide and converge in the wider context of media and telecoms.”
Value-added services will be the fastest growth segment of the AsiaPac pay-TV sector over the next five years, led by VOD. Australia, China, Japan and Korea will be the biggest markets for VOD revenue growth.
Pay-TV advertising will generate $16.2 billion by 2021, up from $11.6 billion this year, with India, Korea and China among the leading growth markets.