Asia’s pay-TV industry added 26 million net new customers in 2013, the lowest annual growth since 2007, according to the latest annual research report from industry analysts Media Partners Asia (MPA).

This reflects deceleration in China and India as well as softer growth in Southeast Asia, especially Thailand, which actually lost customers.

Net additions will reaccelerate over 2015-16, largely due to gains in India from the next, delayed phase of digital cable rollouts, part of a government push to phase out analog networks.

Adjusted for multiple subscriptions, MPA analysis indicates that pay-TV penetration in Asia-Pacific will rise from 53% of TV homes in 2013 to 60% by 2018.

India and Southeast Asia

On an active paying basis, India had ~65 million paying digital subscribers at end-2013 (37 million from DTH and 28 million from cable). By 2023, MPA expects India’s pay-TV universe to grow to 180 million customers, from 130 million in 2013, hitting 70% digital penetration by 2018.

As cable and satellite growth matures in India, potentially disruptive platforms such as free satellite (through Free Dish, offered by state-owned broadcaster Doordarshan), as well as over-the-top mobile video platforms, could gain share.

Meanwhile, net customer additions in Southeast Asia slowed by almost half last year, from 3.7 million to 1.9 million. More than 45% of this growth came from MNC Sky Vision in Indonesia and Astro in Malaysia.

Net additions in Southeast Asia will revive to about 2-2.5 million a year over the short-to-medium term, driven largely by Indonesia, as well as steady growth in Malaysia, the Philippines and Vietnam.

MPA expects continued disruption in Thailand however, with pay-TV adversely impacted by both free satellite and digital terrestrial TV (DTT). Both these segments will drive future investment activity, while international groups are likely to form more alliances and JVs to capitalize on the opportunity.

In Indonesia, pay-TV penetration is projected to climb from 9% of TV homes today to 16% by 2018, a lower forecast than before as platforms consolidate. Indonesia’s marketplace is developing around three major media groups as smaller, less capitalized platforms fall by the wayside.

China and North Asia

Korea contributed 80% of last year’s growth in North Asia (comprising Hong Kong, Taiwan, Japan and Korea), largely from new customers on IPTV and DTH platforms in a market where pay-TV penetration exceeds 100%.

Pay-TV in Korea will continue to benefit from incremental growth in digital cable, DTH and IPTV. Ongoing cable consolidation is expected to increase over the next 12–18 months, spurred by deregulation.

Subscriber growth in Hong Kong, Japan and Taiwan meanwhile will be largely flat, although Taiwan will remain highly actionable for existing media investors and distributors. Traditional pay-TV growth around cable and DTH in Japan has hit a brick wall, although IPTV will attract some new subs.

In Australia, Foxtel’s triple play strategy, together with its plans to potentially repackage and recalibrate, are positive. MPA’s forecasts suggest that pay-TV growth in Australia will also largely be anchored to IPTV, as will New Zealand plus some DTT.

Finally, in China, real subscription-based models may emerge in the future, driven by IPTV instead of cable. There could be even more upside as operators are challenged by a new regulatory policy for online access via set-top boxes, enabling online video operators to form partnerships to enter the internet TV space.