Alliances and acquisitions between telcos and pay-TV platforms have already transformed the landscape in mature TV markets, underscoring the importance of broadband – often bundled with content – as the industry’s primary motor of future growth.

Now, the same trend is starting in Southeast Asia, as premium tiers and services from traditional cable and satellite platforms lose some of their appeal in favor of OTT and IPTV.

Even DTH services, which have hit a ceiling in subscriber growth in Indonesia and Malaysia, are finding it harder to push up Arpu across the region.

Some DTH players can still nudge up revenues by upselling SD customers to HD. On the whole however, higher-tier subs are becoming less keen to shell out for premium sports and movies, as competition from OTT and other services increases.

“Previously, DTH operators had an opportunity to push up Arpus by getting people onto higher-priced packs,” notes Aravind Venugopal, VP of industry analysts Media Partners Asia (MPA).

“A lot of that opportunity has been taken away now because of the emergence of better broadband connections,” Venugopal continues. “HD is no longer a big selling point.”

Eventually, DTH companies will have to embrace broadband to survive.

New Zealand’s pay-TV incumbent Sky TV, a DTH platform, has recently taken shelter in a merger with the country’s biggest mobile operator, Vodafone NZ, following a decade of informal co-operation between the two.

In Korea meanwhile, where converged pay-TV and broadband services are increasingly common, the pay-TV industry should capture a large slice of new TV revenue for the foreseeable future, according to forecasts from MPA.

That's not the case in other developed economies in the region, such as Australia and Japan, where online video stands to be the biggest beneficiary of future TV growth.

In Southeast Asia, DTH operators are most proactive in markets where pay-TV subscriber growth is flattening out: Indonesia and Malaysia.

At the end of last month, Indonesian incumbent MNC Sky Vision (MSky) launched DTH and broadband bundles in more than 60 cities after tying up with two telcos, XL Axiata and Indosat Ooredoo.

The deals deliver a significant boost in two-way connectivity for MSky, which is also slowly acquiring a complementary fixed broadband offering via sister company MNC Play.

Rivals for upscale subs include Jakarta-centric broadband and pay-TV operator LinkNet, with another, state-owned telecoms company Telkom, becoming more prominent.

Telkom has emerged as a significant player over the last 12 months, upgrading its fixed broadband networks to fiber while extending its coverage at the same time.

Its triple-play consumer offering, IndiHome, includes hard-bundled channels from the likes of Disney, Fox and HBO.

Network and scale

In Malaysia meanwhile, where Astro’s DTH service is the dominant pay-TV platform, the company has strengthened its on-demand services as well as its selection of day-and-date content as a defence against rising competition.

New OTT entrants such as Iflix and Viu have integrated into telco bundles. Partners include TM, the leader in fixed broadband and, with a modest IPTV offering, Astro’s only significant rival in pay-TV.

Astro also has a small IPTV base, thanks to tie-ups with Maxis and Time, but still lacks its own two-way pipe. That's a potential Achilles heel that could be addressed by a satellite broadband service in the future.

Increasingly, operators across APAC need a broader product suite – that includes more driver local content as well as earlier windows and multiscreen services – to kick start the next phase of growth, a key theme in MPA’s latest Asia Pacific Pay-TV & Broadband Markets report.

At a broader scale, this will be partly enabled by ongoing cable digitalization, especially in India, Korea and Taiwan, as well as by small-scale and large-scale M&A.

This is evident in some of the region’s largest cable markets – China, Japan, Korea and Taiwan – and may also become the prevailing reality in India.

Cable broadband can also help offset cord cutting and churn, increasingly prominent among affluent tiers in growth markets such as the Philippines and Thailand, as well as in richer territories such as Singapore and Taiwan.

“At this point in time, a second pipe into the home is starting to be more of a necessity than a luxury,” Venugopal says.

At the same time, high margins from fixed broadband can subsidize the cost of pay-TV content in double-play bundles, Venugopal notes.

This competitive dynamic, present in Indonesia and Malaysia, is increasing the pressure on pay-TV platforms without a broadband offering of their own.

“Broadband is necessary if you want to increase Arpu,” Venugopal adds.

“Pay-TV pricing is coming down in many markets due to price-based competition, from both pay-TV competitors as well as OTT services."