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Tuesday, June 25, 2024

Amid Increasing Competition, are East Asian Pay TV Operators Innovative Enough?

East Asian countries share a common demographic downturn. Japan was the first country in the region to experience negative population growth, before South Korea and China reported a similar phenomenon for the first time in 2021 and 2022 respectively. As Taiwan also seems to reach its demographic peak, local pay TV operators must cope with a stagnating or even shrinking market size, and must battle fiercely to capture market shares and offer value-added services to retain their customers.

Against this backdrop, the East Asian pay TV markets are impacted differently by the trends one can observe in other regions of the world, such as the rise of IPTV or the withering of pay DTH and cable TV.

With high speed broadband becoming more accessible, TV distribution over Internet protocol networks has been rapidly expanding, as exemplified by China and South Korea. The Chinese IPTV subscriber base has displayed an impressive growth over the past three years, accounting for more than 373 million households at Q3 2022, up from 270 million at Q3 2019. Revenues also surged over this period from CNY 4.19 billion (USD 598 million) to CNY 5.98 billion (USD 873 million), thanks to growing ARPUs fueled by the provision of various additional services by the three telecom giants, namely China Mobile, China Telecom and China Unicom. Likewise, South Korea has experienced a strong growth of its pay TV subscriber base, which can be largely attributed to IPTV distribution. While the total number of direct pay TV subscribers grew from 21.5 million at Q3 2019 to 25.1 million today, 4 of the 4.6 million new subscriptions (or 87 percent) were IPTV. The larger telecommunications operators of the country (Korea Telecom, LG Uplus, SK Telecom and SK Broadband, the latter two being both part of the South Korea Group chaebol) have positioned themselves to gain control over what has become the paramount pay TV distribution access.

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