Friday, May 24, 2024

When the Challengers are Challenged

While the mainstream focus over the last decade or so has been the impact on free-to-air broadcasters by IPTV and OTT players, the day has well and truly arrived where cable and satellite players have joined the “Legacy Media Club”.

The transformation of CASBAA (the Cable and Satellite Broadcasting Association of Asia) into the Asia Video Industry Association (AVIA) was perhaps the APAC industry’s first real acknowledgement of the changes in technology and viewer habits, but recent findings from market research firm Dataxis lay these changes bare for all to see.

An article by Dataxis Analyst Lucas Ackerer entitled, “Amid increasing competition, are East Asian pay TV operators innovative enough?”, starkly shows the dominance of new delivery technologies in a number of markets with a “withering” of traditional pay platforms such as satellite and cable.

“With high speed broadband becoming more accessible, TV distribution over Internet protocol networks has been rapidly expanding, as exemplified by China and South Korea,” says Ackerer. “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.

“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%) were IPTV.”

While China could be characterised as one big walled garden (the Pay TV tech split is roughly IPTV 70%, Direct Cable 30%), IPTV delivery in South Korea is greater than DTH and direct and indirect cable (where the landlords of multi-dwelling units on-sell subscriptions) combined.

Pay subscribers in Hong Kong, meanwhile, have shifted to OTT (roughly 50%) and IPTV (40%) with the remainder made up largely by direct cable.
Where legacy cable delivery has held ground is in Taiwan (just under 60%) and Japan (just over 40%). DTH also remains strong in Japan (approx 25%), while both territories boast solid IPTV subscriptions (over 25%). Telco-led AppTV also caters to around 10% of the Taiwan market.

So, what are the legacy players doing to shore up their positions in the market?

“The best example of a pivot made by players in the market is that of Chinese cable operators,” says Dataxis’ Lucas Ackerer. “Experiencing tough market conditions, some of them decided to develop what regulation authorities report as the “cable video-on-demand users” segment to add value to their service. Between Q3 2019 and Q3 2022, the rate of VOD users surged from one third (70 million over 205) to over half (95 million over 172) of the total customer base, thus directly responding to the fierce competition from outside the market.

“As a matter of fact, pay TV operators have been increasingly challenged by streaming platforms and struggled to find the right way to cope with them. The total revenues of the pay TV market have gone down in Japan (-4% over three years) and China (-2%). Against the rising popularity of the numerous SVOD and AVOD services offered either by streaming pure players or by FTA broadcasters, going OTT seems to be only one out of many ways for pay TV distributors to keep the pace. The three Chinese giants seem to have a clear view of the future development of IPTV, considering it as a part of a bigger picture, where the IPTV gateway paves the way for smart home applications.”

Other APAC players in other territories have opted for a “spread your bets” approach. Australia’s Foxtel, for example, has unbundled the bouquet with OTT offerings now including Kayo Sports, Binge (a VOD movie and episodic service) and the Flash news service. The company also offers an OTT version of its traditional cable and satellite services. Streaming subscribers now represent 62% of total subscribers. Foxtel, like ASTRO in Malaysia, has also embraced “aggregation” by offering subscribers UI access to new “fremenies” like Netflix, Disney+ and Prime Video.

As I’ve said before, we are still midstream in this tech transition. There will be more to come.

You can read more of the Dataxis report at https://dataxis.com/researches-highlights/1054012/amid-increasing-competition-are-east-asian-pay-tv-operators-innovative-enough/

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