These days, discussions between international content majors and leading pay-TV operators in Asia are less about what’s for sale, and more about when it can be delivered.

Premiums for foreign shows and movies haven’t disappeared, even as growing pay-TV audiences encompass more local tastes.

However, the value equation for Hollywood and other popular overseas fare is shifting inexorably towards live or near-live content, reframing negotiations already grappling with the rise of broadband.

“There’s a place for linear channels, more premium, more HD, more differentiated,” commented Rohana Rozhan, CEO of Malaysian DTH operator Astro, speaking at the recent Asia Pacific Pay-TV Operators Summit (APOS), hosted by Media Business Asia publisher Media Partners Asia, in Bali.

“But what people want more of now, and what we’re seeing from our consumer base, is the immediacy of it, the first window, the live events and sports,” Rohana added.

“They’re willing to pay for it without any complaints.”

Content dynamics in Asia's growth-oriented pay-TV markets are in flux.

As more households subsribe, operators are catering to increasingly diversified audience bases, while responding to emerging competition from multichannel digital free-to-air television as well as online alternatives.

In the course of this transition, competition has rubbed off some of the premium sheen from familiar Hollywood content, Rohana noted.

At the same time Astro subscribers are open to paying more for well-made local shows.

“We see those interesting shifts happening in our marketplace,” she said.

“I believe it is also happening in the larger Southeast Asian region where there is an increasing vernacular and Aseanization aspect.

"International content is more widely and freely available, local relevant content has the scarcity value.”

Ambitious operators

Astro has come to exemplify a new breed of platform in Asia, willing to make big investments in self-produced shows and channels.

These are giving operators greater control of their destiny, while de facto exclusive content shores up their subscriber appeal.

With a presence in more than half of Malaysian homes, making it Southeast Asia’s largest pay-TV company, Astro is at the forefront of this trend, leaving its origins as a pure-play distributor behind with 71 branded offerings of its own, including on-demand and HD services.

Others in Asia are evolving along similar lines, including Hong Kong’s Now TV with 26 self-developed channels, Thailand’s TrueVisions with 20 and Indonesia’s MNC Sky Vision with 16.

“The notion of distribution pipes is important but successful pay-TV companies are not set-top box businesses anymore,” noted Vivek Couto, executive director of Media Partners Asia, in his customary opening overview of industry dynamics at this year’s APOS.

“They’re not just about technology and engineering,” Couto continued. “They don’t see themselves just as distributors or with last mile billing capability.

"They are progressing to become real consumer and real content plays.”

Astro has also been broadening its distribution options, securing broadband access to 1.4 million homes (including 1.1 million that are existing Astro customers) via deals with local providers to complement its DTH footprint.

The most recent, with local telco Maxis at the end of April, established Astro as the largest broadband provider in Malaysia, Rohana announced.

Tellingly, in a nod to its media rather than technology-based aspirations, Astro plans to steer clear of overt sales pushes that combine pay-TV and broadband, offering pay-TV subscribers deals on broadband speeds instead.

“What’s premium is content,” Rohana said. “We shy away from bundles.”

Windows under pressure

The spread of video-capable broadband networks highlights the value of providing access to internet-connected devices beyond the TV, commonly known as TV Everywhere services.

At the same time however, online networks are fueling demand for the most popular content, via social networks as well as legal and illegal seeding of content.

This is applying ever more pressure to traditional monetization windows in overseas markets.

“A lot of people, younger people in particular, steal stuff because they want it immediately, they want to participate in the conversation online about it,” noted Richard Freudenstein, CEO and MD of Australia’s dominant pay-TV operator, Foxtel.

“If we bring it to them within hours of it being on the US, in beautiful high definition, it’s a way of combating piracy and adding value to the service.”

At the end of last year, Freudenstein delivered on the promise, signing a landmark deal with HBO to air its first-run shows legally within a day of their US broadcast.

HBO’s current hit Game of Thrones enjoys the dubious distinction of being Australia’s most pirated show in 2012.

The agreement also closed off a second window for HBO content for five years. The network had been selling shows for free-to-air broadcast in Australia approximately two years after their US run.

“We’re now called the home of HBO,” Freudenstein declared. Similar deals to lock up content from Disney and the BBC have followed.

Foxtel is a sizable business, spending US$1.4 billion each year on content compared with Astro’s annual budget of US$420 million (though that is by far the largest in Southeast Asia).

However, with pay-TV penetration at 30% of Australian TV households, significantly lower than in Malaysia, Freudenstein faces a tougher challenge of protecting margins while persuading more households to sign up.

Two-pronged strategies

Nontheless, both companies are deploying similar strategies, rolling out smaller and cheaper services to attract homes that have been unwilling or unable to try out pay-TV so far, while sustaining investment in both in-house and third-party content to keep existing customers loyal.

As demand from new digital platforms gives content owners a stronger hand, such bets help keep content negotiations on an even keel.

“We own a range of channels across most genres, which we think is very important because it allows us very easily to shape the debate,” Freudenstein said.

“We make sure with all our channels that we get the rights for Foxtel Go, rights for Foxtel Play, free catch-up rights for all the programs, and then we encourage our channel partners to do the same thing.”

Historically, deals between channel providers and pay-TV platforms rarely leave both parties satisfied.

However, with new technologies threatening the ecosystem both depend on, recent long-term deals in Europe and the US reflect a desire for closer collaboration and more mutual benefit.

Leading platforms in this part of the world, where younger demographics and the absence of legacy infrastructure promise to accelerate technological disruption in the medium term, are adopting similar approaches.

“We are in the business of addressing consumer needs,” Rohana said. “We have no egos about partnering with anyone for the right consumer proposition.”