The Asia-Pacific pay-TV industry will grow at a 6.6% average annual rate from 2014 to 2019, according to a new report, Asia Pacific Pay-TV & Broadband Markets, published today by industry analysts Media Partners Asia (MPA).
MPA projects industry sales to climb from US$52 billion in 2014 to ~US$72 billion by 2019, and to ~US$84 billion by 2023.
Despite robust growth, the region’s pay-TV industry is under pressure however, as the pace of both subscriber and revenue growth decelerates.
In Southeast Asia, a slowdown in Indonesia and Thailand as well as late-cycle maturity in Singapore will apply the brakes to regional momentum, partially offset by significant expansion in the Philippines and decent gains in Malaysia.
Revenue growth will be at its most robust and scalable in large territories such as India, Korea and China as well as smaller markets such as Hong Kong and the Philippines.
Australia will offer much improved subscriber momentum, although revenue expansion will lag.
“Pay-TV operators are striving to either reignite growth or sustain existing momentum with a new cycle of value creation,” says MPA director Vivek Couto.
“A number of operators are repackaging products with improved price points (i.e. Australia), tiering (i.e. Hong Kong) and slimmer, low-Arpu packs (i.e. Philippines).
“Most players have invested to enhance program windows and offer more VOD. Others are climbing the curve of product innovation with all-HD platforms, with more local and Asian content, as well as live sports, a key mainstay for pay-TV.”
Ex-China, which remains a utility oriented and highly regulated pay-TV market, Asia added ~10.8 million net new pay-TV customers in 2014, slower than the ~11.2 million added in 2013 and significantly slower than the average 15-18 million net additions that occurred between 2008-11.
MPA projections indicate a spike in net additions will occur in 2016, due to India’s next phase of cable digitalization, with a steady deceleration likely to follow.
Including China, MPA sees total pay-TV subscribers in Asia-Pacific growing from ~500 million 2014 to ~598 million by 2023. Adjusted for multiple connections in a household, pay-TV penetration of TV households will grow from 54% in 2014 to 61% by 2023. In Asia ex-China, adjusted pay-TV penetration is expected to grow from 55% to 60% over the same period.
Digital penetration of pay-TV subs in Asia-Pacific will increase from 70% in 2014 to ~90% by 2023 as all major pay-TV markets covered in the report go 100% digital except for India (~70%), Pakistan (32%), Sri Lanka (~94%), and Thailand (53%).
HD penetration of total digital pay-TV subs will grow from 24% to 44% over the same period, with penetration between 50-90% in Australia, China, Korea, Japan, Malaysia, New Zealand, the Philippines and Singapore.
In a number of markets – including China, India, Korea and Taiwan – digitalization of cable infrastructure remains a value driver, along with the growth of IPTV platforms and DTH.
In Australia and Hong Kong, new repackaging and marketing should help revive subscriber growth.
In the Philippines, a strong economy, favorable market dynamics and competition will help boost subscriber growth.
Malaysia will experience slower subscriber growth but at higher yields due to significant penetration of HD, VOD and SVOD, as well as premium channel services.
Meanwhile, pay-TV subscriber growth in high potential markets (Indonesia, Thailand) is slowing on the back of structural issues, including piracy, execution and the growth of free satellite services and digital terrestrial TV (DTT).
Pay-TV subscriber growth and penetration will remain suboptimal in Japan, adversely impacted by the growth of OTT video services.
Over 2014-19, value-added services, driven by VOD, will be the fastest growing segment for APAC’s pay-TV industry, as revenues climb at a 13.2% CAGR from 2014-19. Key market drivers of VOD include Australia, China, Japan and Korea, while Malaysia and Hong Kong lead amongst smaller markets.
Authenticated TV Everywhere (TVE) services will not generate meaningful revenue but remain a churn reducer in most markets.
In standout pay-TV markets such as India and Korea, a combination of high volume and a level of Arpu upside (partially offset by price competition), in aggregate, will drive subscription revenue growth.
Higher yields will also boost growth in Hong Kong, Malaysia, the Philippines and Vietnam.
According to MPA, pay-TV advertising will grow from US$10 billion in 2014 to ~US$14.3 billion by 2019, with growth driven by high base markets such as India and Korea along with China. Australia, Japan and Taiwan will remain material, although growth in each of these markets will soften.
The pay-TV ad opportunity in Southeast Asia will remain under-exploited, partially due to limited penetration in most markets, but also because of poor execution.
Across Southeast Asia, Malaysia and the Philippines will remain the standout markets for pay-TV advertising, while Vietnam promises significant long-term opportunity.
As a leading independent consulting and research provider focused on Asia media & telecoms, MPA offers a range of customized services to help drive business development, strategy & planning, M&A, new products & services and research. Based in Hong Kong, Singapore and India, MPA teams offer in-depth research reports across key industry sectors, customized consulting services, industry events to spread knowledge and unlock partnerships, and publications that provide insights into media & telecoms.
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