The pay-television market in the Asia Pacific region is looking at a phase of consolidation as subscriber growth and spend deteriorate across key territories, according to a report by independent research and consulting group, Media Partners Asia (MPA).
According to the latest edition of MPA’s Pay-TV Networks Channel Database, aggregate revenues across 13 major pay-TV networks in Asia Pacific grew by just 1% in 2018 to reach $4.9 billion (following 5% growth in 2017), while combined Ebitda fell by 5% in 2018 to $0.9 billion, approximately the same rate of decline as 2018.
“Consumer demand for traditional pay-TV has been impacted forever by high-speed broadband, which is driving rapid increases in online video consumption as well as piracy," said Vivek Couto, executive director, MPA.
These trends have intensified downward pressure across Asia’s pay-TV ecosystem, especially in south east Asia, led by Singapore and Malaysia, alongside secular shifts in Australia and New Zealand and are likely to accelerate consolidation as well as major shifts in how channels and content are marketed and sold, Couto said. The first big wave of pay-TV consolidation has been led by Walt Disney buying 21st Century Fox and AT&T buying branded networks from Turner and HBO, which will play out with momentum across Asia Pacific over the next year. Future consolidation and rationalization will be defined by global moves and M&A (merger and acquisition) possibilities involving large assets in India. Major players such as Discovery, CBS, Viacom, A+E, Sony and Universal are now competing for consumers’ attention along with Disney and a newly integrated WarnerMedia within AT&T.
India stands alone as the last major buffer against the increasingly weakening pay-TV model in Asia, although new regulations threaten pay-TV subscription and advertising growth in India too, at least in the near term. According to the new tariff regime proposed by the Telecom Regulatory Authority of India (Trai), consumers can choose the TV channels they want to watch and pay only for them at maximum retail prices (MRPs) set by broadcasters. This is likely to threaten the entry of new channels into the market and lead to more consolidated bouquets. Across the 13 groups covered by the research, India accounted for 62% of Asia Pacific pay channel revenues in 2018, led by Star India (now owned by Disney) and Sony.
Meanwhile, Asia’s relatively young online video market continues to expand rapidly, fuelled by advertising scale in particular. Online video revenues in Asia Pacific grew 40% in 2018 to total $8 billion, according to MPA. As part of this, online video advertising grew 36% to reach more than $5 billion while subscription revenue grew 50% to surpass $2.8 billion. Outside China, Google (YouTube), Facebook, Netflix and Amazon still dominate advertiser and wallet share, although local players are starting to emerge with scale, including Stan in Australia, Hotstar (now owned by Disney) in India, Hulu in Japan and Viu in Hong Kong and Southeast Asia.
Pay-TV and telecom operators are also increasingly investing in platforms and technology to aggregate OTT (over-the-top) services and provide more choice to their customers along with simpler packages of pay channels with digital rights. In India, all major telecom players like Reliance Jio and Bharti Airtel have tied up with streaming services like Amazon Prime Video, Eros Now and others for their content to be available on their platforms.