India, China prime drivers of pay-TV revenue growth in Asia, says MPA

MUMBAI: Asian tigers China and India together are expected to contribute almost 69 per cent of pay-TV revenues in the Asia Pacific from 2012 to 2020, according to findings of a new report by Singapore-based pay-TV research firm Media Partners Asia (MPA).

MPA analysis shows that China and India will contribute 46 per cent and 23 per cent respectively to pay-TV industry revenue growth between 2012-20. Excluding China, India‘s contribution grows to 42 per cent, followed by Korea and Japan at 12 per cent and 13 per cent respectively, and Australia at 7 per cent.

According to MPA, India‘s contribution reflects large volumes, a significant growth in accessible digital subscription revenues (distributed evenly across the value chain) and a large local advertising pie.

In Southeast Asia, Malaysia leads with a 5.5 per cent contribution to revenue growth, driven by the growth of ARPUs and ad sales. Advertising revenues will also experience significant growth from a low base in key Southeast Asia markets such as Indonesia, Philippines, Thailand, and Vietnam.

MPA forecasts indicate that Asia Pacific pay-TV industry revenues will grow at a 7.6 per cent CAGR between 2012 and 2020, doubling from $48 billion to $86 billion.

Within this segment, subscription fees will grow at a 7.4 per cent CAGR, rising from $37 billion to $65 billion over the same period while net advertising revenues, calculated after estimated discounts, will grow at 8.1 per cent CAGR, reaching $21 billion in 2020 versus $11 billion in 2012, the report says.

The digital pay-TV homes in Asia are projected to reach 696 million by 2020 from 444 million in 2012 driven by strong subscriber growth in India and China. Asia Pacific is expected to have 631 million digital pay-TV homes by 2017.

The report adds that China and India will contribute 66 per cent and 21 per cent respectively to Asia Pacific pay-TV subscriber growth between 2012 and 2020.

According to MPA, the Asia Pacific pay-TV subscriber growth is expected to witness robust growth with 13-14 million new subscribers added every year between 2013 and 2016, moderating thereafter though still adding close to 7 million subscribers per year by 2020.

In Asia excluding China, India accounts for a massive 63 per cent of new subscriber growth between 2012 and 2020, underlining its huge importance to the pay-TV ecosystem, while Southeast Asia will contribute 16 per cent led by Indonesia at 7 per cent.

Adjusting for multiple connections or homes, pay-TV penetration in Asia excluding China will grow from 53 per cent in 2012 to 61 per cent by 2020.

Net new subscriber additions totaled 31 million in 2012, with year-on-year customer growth at 8 per cent. Excluding China, new pay-TV subscribers came in at a somewhat milder 13.4 million in 2012, taking the overall Asia ex-China subscriber base to 211 million.

The growth in Southeast Asia was strong with 3.5 million new subscribers. India experienced a slowdown but managed to add close to 6 million new subscribers.

Driven by digital TV (DTV) transition in China, India, Korea and Taiwan and the steady growth of DTV pay subs in Southeast Asia, MPA sees total digital subscribers growing from 257 million in 2012 to 539 million in 2017, and 626 million by 2020. Digital penetration of total pay-TV subs will grow from 58 per cent in 2012 to 90 per cent by 2020.

After adjusting for multiple connections in a household, the MPA forecasts indicate that pay-TV penetration will climb from 51% in 2012 to 68% by 2020.

The HD pay-TV subscriber universe is expected to rise exponentially to 160 million by 2020 from 37 million subscribers in 2012, while DVR subscribers will grow to 18 million from 6 million over the same period.

China will be the major contributor to HD growth, followed by India, Japan, Korea, Australia, Taiwan and Malaysia, the report explains.

The projections are published in a new report called Asia Pacific Pay-TV & Broadband Markets, an analysis of consumption, investment and revenue generation across pay-TV, broadband, digital TV and interactive value added services in 18 Asia Pacific markets.

Commenting on the findings, MPA director Vivek Couto said, "A steady growth in population and a young demographic, combined with a rising middle class and the spread of wealth amongst local groups, is driving strategic decisions and execution in the pay-TV industry. These factors, in turn, will help boost household formation and consumer spends. This will also help grow pay-TV consumption and investment."

According to Couto, subscriber growth and revenue generation will be driven by: (1) Continued investment in local content, and the growth of localization among global and regional brands; (2) Digitalization in emerging markets; and (3) The growth of HD, premium and on-demand services in more mature markets.

Significantly, the MPA report also notes: The growth of mobility and broadband penetration (with fiber expected to play a larger role in the future) is also influencing pay-TV strategy, execution and consumption.

Fragmentation of eyeballs is growing with the proliferation of multiple devices. This is also driving consumption of illegal online video in many territories. The response of pay-TV companies has been defensive and aggressive in equal measure, the report notes.

In 2012, TV Everywhere (TVE) type solutions with improved windows have been deployed across most of the region largely authenticated to customers with a pay-TV connection.

Arguably, the most aggressive responses have come from content powerhouses that own most of their IP with clear packaging and a commitment to product innovation, the report concludes.

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