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Taiwan digital video still underperforming

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MUMBAI: A key meeting of government officials, political leaders, industry regulators, business heads and international and local experts in Taipei has called for removal of investment constraints in the multichannel video industry, and increased attention to online piracy, as the Taiwan market reshapes itself as an all-digital (and often mobile) regional communications hub.

Participants in the meeting, convened by regional industry body CASBAA on June 22nd, heard that a major hurdle blocking further development of the Taiwan digital video industry is the rigid application of the “No state/No party ownership” rule prohibiting any “government official, political party, or elected official to invest, directly or indirectly”, in cable system operators. ** The meeting heard that the rule is interpreted to prohibit acquisition of cable equities by companies where their corporate parents, several levels up, have even a single share owned by a government entity.

“Because of these rigid restrictions, only introduced in 2005, urgently needed mergers between telecom carriers (fixed-line and mobile) and cable TV operators have proved almost impossible,” said CASBAA CEO Christopher Slaughter at the end of the meeting.

Slaughter added that the “No state/No party” investment rule flies in the face of global industry experience over the past 20 years. “This is preventing Taiwan from enjoying the most compelling aspects of the twenty-first century media revolution,” he said.

Proliferation of online piracy networks were cited as another major problem.

Representatives of start-up OTT operators trying to market bouquets of programming to Taiwan consumers observed they faced huge obstacles, as long as pirate networks based offshore were free to steal the programs and distribute them for free. They warned that the development of innovative, indigenous Taiwan programming was at risk.

Earlier points made during the packed agenda for the 130 Taiwanese government and media-industry decision makers included lively discussion of pay-TV pricing issues (the basic tier programming package is tightly controlled) and the desire of the government to promote broadcast of more Taiwan programming.

By Y/E 2017, online video in Taiwan should attract 15 per cent of US$120 billion in revenues accrued by TV/telecoms industry from traditional free-to-air TV, pay-TV and OTT services, according to research house MPA.

In the meantime, the rising level of mobile broadband penetration in Taiwan is benefitting cable TV and IPTV operators such as the dominant state-owned telco Chunghwa Telecom as they develop their own local-language, multiscreen services.

No longer limited to traditional TV viewing, Taiwan’s mobile broadband subscribers are downloading apps and logging-in to pay-TV programming of all kinds. The largest group of OTT followers in Taiwan are young women aged 18-34, some 42 per cent of the total. Together with 18-34 year-old males, almost 70 per cent of OTT subscribers are “binge” viewers.

While the CASBAA meeting was generally upbeat, warnings of the cost of revenue leakage i.e. piracy) were a recurring theme. “The hugely damaging level of content piracy is not only holding back growth of both traditional pay-TV and innovative OTT offerings, but also the overall economic development of Taiwan as a whole,” said CASBAA chief policy officer John Medeiros.

“Living with massive revenue leakage from piracy while blocking sufficient investment in the digital economy, Taiwan is falling behind its natural potential as a regional communications hub,” added Slaughter.

(** 
The island of Taiwan and its 23 million people are served by 61 cable operators, 36 of which are controlled by five Multi-System Operators, plus 25 smaller independent providers. As of Y/E 2016, the five MSOs controlled 73% of Taiwanese cable subscriptions.)

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