The all too familiar mantra in the pay TV industry is that content is king. But with the speed of technological development and changes in media consumption habits, content may soon need to share its throne. Multiple platforms, on-demand viewing options and the convergence of broadcast with online and mobile are fast redefining the pay TV experience.
According to Simon Twiston Davies, CEO of the Cable and Satellite Broadcasting Association of Asia (Casbaa), the most important development in the pay TV world is the genuine deployment of triple play among telcos and operators. The growing availability of pay TV, telephony and broadband packages in many markets is expanding greatly the breadth and quality of consumption possibilities including HD, video-on-demand, (VOD), interactive home shopping, time and date shifting,mobile TV and more.
“In the world of convergence, reality is finally catching up with the hype,” says Twiston Davies. The market is certainly out there. A survey from Frost and Sullivan suggests that by the end of 2008,nearly 21 per cent of households across 14 Asia-Pacific countries had already subscribed to multiple services — a combination of broadband, TV and fixed and mobile services. And yet despite this growing demand, progress has so far been slow. The sticking point has been the lack of speed with which the pay TV industry has responded to changing viewing habits,held back by regulation and cost issues, as well as technological limitations.
Twiston Davies admits the slow adoption of new technology has been frustrating, but believes the breakthrough is getting closer.“Penetration of digital is still not high across the region,” he says. “But this is changing, driven by competition. Broadcasters are providing more sophisticated content. It is a case of build it and they will come — consumers want it and the carriers want it.”
Leading the digital charge are the pay TV operators, in particular the infrastructure-rich telcos, which are evolving into triple and even quadruple play providers. In the past 18 months, for instance, investment in digital technology and consumer services have been seriously ramped up.In Singapore, cable operator StarHub launched its two-way enabled Hub-Station and HubStation HD devices that allow users to record and playback their favourite TV programmes with a click of the button, and put together a personalised programme line-up that they can watch at their own leisure and convenience.This situation is being repeated elsewhere, especially in the region’s more mature markets such as Hong Kong and Korea.
“While content is the driver for any pay TV business,we have been able to sharpen our competitive edge with new technology and continue to delight our customers with improved service offerings,”says Ong Bee Lian, StarHub’s vice-president of home solutions.
“We have harnessed several technological advancements to give our customers a seamless experience, and offer them not only more choice in ‘what’ they watch, but also more flexibility in ‘when’ and ‘how’ they watch our programmes.”
And as operators create shelf space for broadcasters, content owners and distributors are acting fast to fill it, rolling out of HD, VOD and other types of programming that maximises the technology. Fox International Channel’s National Geographic Channel has been HD in Asia for three years and plans to have as many as eight of its brands in Asia available in the format within the next 12 months. Likewise, HBO last month announced the gradual launch of its HD movie channel in Asia,beginning in the Philippines, Singapore and Hong Kong. “Operators are looking for an edge against the competition.
HD has been a very effective tool to retain subscribers and sign up new customers,” says Ward Platt, president, Asia-Pacific and the Middle East at Fox International Channels. Crucially, for both operators and content providers, is that the business models are solid.Consumers certainly want the advantages of a higher quality and more convenient viewing experience, but the challenge is getting them to pay for it above and beyond what they currently pay for linear pay TV. “The goal is to offer the services at a relatively small incremental price,” says Platt, talking about Fox’s HD offerings.“
It is not meant to replace the linear channel, but to support it.We have found that if we offer these services at a small premium, the take up if very high — which gives growth across almost the entire revenue stream. These services are huge.We have to offer them to stay in business.”
Platt argues that the digital business model has already proven to be successful in markets outside of Asia. In the US, for example, DirecTV and EchoStar TV were growing at roughly the same rate per month until Direct took a more aggressive approach to digital.Subsequently,the take-up rate between the two changed,with Direct TV’s accelerating rapidly.
In Asia, though, it is still early days. “We have an advantage in Asia in that we are seeing how technology is impacting different markets in different ways,”says Angel Orengo,senior vicepresident, distribution,Asia-Pacific at
Sony Pictures Television. “At times, new technology adds to our business, while at other times it replaces it. Often, though, it doesn’t even exist yet.Generally speaking there are new revenue models that are being added.However, sometimes not at the levels we may expect. It is a ‘learn as you go’ process as we watch how consumers adapt to the new technology.”
Key to the success of new digital revenue streams will be the ability of operators and content owners to convince
advertisers to climb on board. “Advertising has not been generated yet from air time on HD,” says Platt. “The exception is Japan, which has HD spots because of the high HD penetration in the country.”
Instead,Fox has been pushing partnership deals with HD TV manufacturers such as Samsung, or offering brand tie-ups online — for example giving consumers the chance to watch the first episode of a new series online, but with advertising.
“There is still an education gap between the possible and the desirable. It is up to the industry to tell people what is out there,” says Twiston Davies. “Clients are getting more sophisticated. They are demanding to be provided with a more sophisticated offering.”
In particular, the ability of digital technology to provide advertisers with detailed audience metrics is seriously under-exploited.
“Technology can create environ-ments for targeted advertising,” says Bengt Jonsson, vice-president Asia-Pacific at Irdeto, which provides digital software solutions to the pay TV industry.“It can measure audiences in different ways, can see how they react to certain advertising. New technology will enable a new kind of advertising business model.”
According to Oregno, the current recession has dampened some efforts of advertisers to try non-traditional method of advertising. “We have more access to information,” he says. “We have more info about who is watching our programmes — we can use this and put it to work for the benefit of advertisers. More effort and more trials and tests are needed.”
What is clear, though, is that pay TV’s future will be determined largely by how it reacts to technological change. “Digital is going to be the standard by 2015 and that will offer so many opportunities — for content owners, for carriers and for advertisers,” says Twiston Davies.
But before the obituaries for linear TV are written up, it is worth noting that the vast majority of pay TV viewers do so through linear channels — 315 million of them in Asia,according to Casbaa “Linear broadcasting is going to be the backbone of the industry for many years to come,”says Jonsson.“It is not a revolution — replacing linear with something else — but evolution. Linear operators have great strength — the consumer base, the content. As long as they evolve and deliver content to the end user in the way that consumers are demanding, they will continue to be in business.
According to Simon Twiston Davies, CEO of the Cable and Satellite Broadcasting Association of Asia (Casbaa), the most important development in the pay TV world is the genuine deployment of triple play among telcos and operators. The growing availability of pay TV, telephony and broadband packages in many markets is expanding greatly the breadth and quality of consumption possibilities including HD, video-on-demand, (VOD), interactive home shopping, time and date shifting,mobile TV and more.
“In the world of convergence, reality is finally catching up with the hype,” says Twiston Davies. The market is certainly out there. A survey from Frost and Sullivan suggests that by the end of 2008,nearly 21 per cent of households across 14 Asia-Pacific countries had already subscribed to multiple services — a combination of broadband, TV and fixed and mobile services. And yet despite this growing demand, progress has so far been slow. The sticking point has been the lack of speed with which the pay TV industry has responded to changing viewing habits,held back by regulation and cost issues, as well as technological limitations.
Twiston Davies admits the slow adoption of new technology has been frustrating, but believes the breakthrough is getting closer.“Penetration of digital is still not high across the region,” he says. “But this is changing, driven by competition. Broadcasters are providing more sophisticated content. It is a case of build it and they will come — consumers want it and the carriers want it.”
Leading the digital charge are the pay TV operators, in particular the infrastructure-rich telcos, which are evolving into triple and even quadruple play providers. In the past 18 months, for instance, investment in digital technology and consumer services have been seriously ramped up.In Singapore, cable operator StarHub launched its two-way enabled Hub-Station and HubStation HD devices that allow users to record and playback their favourite TV programmes with a click of the button, and put together a personalised programme line-up that they can watch at their own leisure and convenience.This situation is being repeated elsewhere, especially in the region’s more mature markets such as Hong Kong and Korea.
“While content is the driver for any pay TV business,we have been able to sharpen our competitive edge with new technology and continue to delight our customers with improved service offerings,”says Ong Bee Lian, StarHub’s vice-president of home solutions.
“We have harnessed several technological advancements to give our customers a seamless experience, and offer them not only more choice in ‘what’ they watch, but also more flexibility in ‘when’ and ‘how’ they watch our programmes.”
And as operators create shelf space for broadcasters, content owners and distributors are acting fast to fill it, rolling out of HD, VOD and other types of programming that maximises the technology. Fox International Channel’s National Geographic Channel has been HD in Asia for three years and plans to have as many as eight of its brands in Asia available in the format within the next 12 months. Likewise, HBO last month announced the gradual launch of its HD movie channel in Asia,beginning in the Philippines, Singapore and Hong Kong. “Operators are looking for an edge against the competition.
HD has been a very effective tool to retain subscribers and sign up new customers,” says Ward Platt, president, Asia-Pacific and the Middle East at Fox International Channels. Crucially, for both operators and content providers, is that the business models are solid.Consumers certainly want the advantages of a higher quality and more convenient viewing experience, but the challenge is getting them to pay for it above and beyond what they currently pay for linear pay TV. “The goal is to offer the services at a relatively small incremental price,” says Platt, talking about Fox’s HD offerings.“
It is not meant to replace the linear channel, but to support it.We have found that if we offer these services at a small premium, the take up if very high — which gives growth across almost the entire revenue stream. These services are huge.We have to offer them to stay in business.”
Platt argues that the digital business model has already proven to be successful in markets outside of Asia. In the US, for example, DirecTV and EchoStar TV were growing at roughly the same rate per month until Direct took a more aggressive approach to digital.Subsequently,the take-up rate between the two changed,with Direct TV’s accelerating rapidly.
In Asia, though, it is still early days. “We have an advantage in Asia in that we are seeing how technology is impacting different markets in different ways,”says Angel Orengo,senior vicepresident, distribution,Asia-Pacific at
Sony Pictures Television. “At times, new technology adds to our business, while at other times it replaces it. Often, though, it doesn’t even exist yet.Generally speaking there are new revenue models that are being added.However, sometimes not at the levels we may expect. It is a ‘learn as you go’ process as we watch how consumers adapt to the new technology.”
Key to the success of new digital revenue streams will be the ability of operators and content owners to convince
advertisers to climb on board. “Advertising has not been generated yet from air time on HD,” says Platt. “The exception is Japan, which has HD spots because of the high HD penetration in the country.”
Instead,Fox has been pushing partnership deals with HD TV manufacturers such as Samsung, or offering brand tie-ups online — for example giving consumers the chance to watch the first episode of a new series online, but with advertising.
“There is still an education gap between the possible and the desirable. It is up to the industry to tell people what is out there,” says Twiston Davies. “Clients are getting more sophisticated. They are demanding to be provided with a more sophisticated offering.”
In particular, the ability of digital technology to provide advertisers with detailed audience metrics is seriously under-exploited.
“Technology can create environ-ments for targeted advertising,” says Bengt Jonsson, vice-president Asia-Pacific at Irdeto, which provides digital software solutions to the pay TV industry.“It can measure audiences in different ways, can see how they react to certain advertising. New technology will enable a new kind of advertising business model.”
According to Oregno, the current recession has dampened some efforts of advertisers to try non-traditional method of advertising. “We have more access to information,” he says. “We have more info about who is watching our programmes — we can use this and put it to work for the benefit of advertisers. More effort and more trials and tests are needed.”
What is clear, though, is that pay TV’s future will be determined largely by how it reacts to technological change. “Digital is going to be the standard by 2015 and that will offer so many opportunities — for content owners, for carriers and for advertisers,” says Twiston Davies.
But before the obituaries for linear TV are written up, it is worth noting that the vast majority of pay TV viewers do so through linear channels — 315 million of them in Asia,according to Casbaa “Linear broadcasting is going to be the backbone of the industry for many years to come,”says Jonsson.“It is not a revolution — replacing linear with something else — but evolution. Linear operators have great strength — the consumer base, the content. As long as they evolve and deliver content to the end user in the way that consumers are demanding, they will continue to be in business.
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