Future prosperity for pay-TV providers depends on the ability to navigate two strategic fronts created by wider access to high-speed internet.

One is a relatively familiar world for operators, where they can build on the value of existing services by offering households broadband bundles and multiscreen access, strengthening retention and Arpu growth in turn.

The other represents new territory however, prompting platforms to consider specific individual needs by offering less rather than more. These are more discrete streaming and on-demand options that can supplement or possibly replace traditional pay-TV.

“There is the world as we know it, and – for want of a better term – the scary world,” remarked Rohana Rozhan, executive director and CEO of Southeast Asia’s biggest pay-TV platform, Astro Malaysia, speaking at APOS 2015.

Astro already serves about 65% of Malaysian homes; around 50% with pay-TV services and about 15% with a mainly free satellite service called Njoi.

Rohana foresees little trouble sustaining Astro’s current momentum, targeting 85% household reach within five years, mostly through Njoi, while focusing on a core of ~2 million premium pay-TV customers (from Astro's 3.5 million pay-TV base) to drive up subscription revenues, via ongoing improvements and value-added extras to the pay-TV service.

At the same time, Astro executives are also pondering new models, where the path to success and profitability is less clear, but could represent an avenue for long-term growth, at home and abroad.

“We are probably not ready to completely provide an engaging and immersive experience there,” Rohana said. “But there’s definitely a world where we are going to start doing stuff in earnestness, setting targets and milestones, putting in products and services.”

The process is underway. Rohana is working on making it easier for people who’ve rented or bought digital content to watch it how and where they like.

Streaming mobile app Astro On-The-Go, which has been downloaded 15 million times, will soon allow people to download content for example, so the viewing is unaffected by patchy mobile broadband networks.

Streaming services, including those for existing subs at present as well as potential standalone offerings in the future, must set their own standards, Rohana stressed.

“Just to have a me-too service – without taking care of the customer experience and making sure that experience is on-brand – is not good enough,” she said.

Astro’s recent move into home shopping also paves the way for possible added-value services for advertisers too.

“Imagine a world where advertisers can use us to fulfill their order payment and physical distribution,” Rohana said.

“Those are new opportunities, and we have every intention to go down that route and that path as well.”

Foxtel's Fight For Arpu

Australian pay-TV operator Foxtel, while facing different market dynamics, is also balancing the needs of households and individuals in a multiscreen world.

The company has been adding more content and digital services for its household subs, including the company’s first broadband bundles, while retuning its SVOD venture Presto as competition intensifies in streaming video, including a local service from Netflix that launched earlier this year.

Foxtel is Australia’s dominant pay-TV provider, with Arpus among the highest in the world, at US$95/month.

The company has struggled to push penetration beyond 30% of Australian homes however, prompting a major overhaul of its packaging to resuscitate subscriber growth.

Entry-level pricing fell, while Foxtel beefed up existing products and services to encourage people to stick with or upgrade to pricier tiers.

According to analysts from Media Partners Asia (MPA), these new packaging and pricing plans resulted in more than 100,000 new customers through to March, although the level of up-selling to expanded basic packs remains unclear.

The revamp is a bid to compete on value, rather than price, stressed Foxtel’s CEO Richard Freudenstein.

“We’re not trying to lower our Arpu,” Freudenstein said, speaking on the same session as Rohana at APOS.

“Our aim was to make customers readdress thinking about Foxtel. We’ve been perceived as expensive and people had stopped listening to our marketing.”

So far, subscriber numbers have been unscathed by Netflix’s arrival, a feat Freudenstein attributes to Foxtel’s ongoing focus on retention, as well as acquisition.

Churn has fallen, from 17.6% three years ago (after merging with Austar) to 11.4% today.

Netflix is good news for the marketplace, Freudenstein argued, enabling more Australians to experience paid television in the medium term, which he feels will help clarify the value of Foxtel’s content and services.

“We do more original first-run programs in a week than Netflix does in a year,” Freudenstein said. “People will start to understand why one product is worth ten dollars, and one product is worth a lot more.”

Freudenstein is taking a similar tack with Foxtel’s new broadband offering, keen to compete on value despite aggressive price competition from Optus, Australia’s second-largest telco.

“We are very competitively priced,” he asserted. “We haven’t started marketing the service yet because operationally we want to make sure we get it absolutely right."

Freudenstein added: "We think we’ve got a real opportunity to be the best customer experience. We are not going to get that wrong.”

Both Rohana and Freudenstein emphasized the rising importance of early windows and premium content to sustain pay-TV’s value, a trend that will focus their own content investments, including their own IP where they have more control.

This will also reframe relationships with broadcasters and content providers.

“It is very important going forward that we get all the rights we need to cope with this new world,” Freudenstein said.

"We have to focus on channels and programming that make a difference. We want to work to make sure that channel brands continue to mean something in an on-demand world," he continued.

"We are going to continue to invest in sport – that’s a clear differentiator for us. It’s really looking at stuff that can make a difference to our customers, and getting all the rights we need to do that.”