But grim economic times have forced Asia's cable and satellite
operators to take stock, switch channels and bring the focus back to
traditional development goals. Which explains the race among rivals to
sign new content and distribution pacts.
In the twists and turns of the multi-billion dollar battle for regional
supremacy, cable and satellite operators have downgraded the importance
of the internet on their business development priority list - at least
for the moment.
It's now a matter of refocusing efforts along more traditional lines
after the dotcom bubble burst and pessimism grows about the state of the
global economy.
As with other business sectors, many of the industry's major players had
invested heavily in the internet last year. Pockets were opened in the
belief that the web held the key to the future. The idea of convergence
- the merging of television and the internet - was too dazzling a
proposition to ignore. Although the internet has lost much of its gloss,
convergence is still viewed as visionary stuff, but something to embark
on in the longer term.
More pressing matters are at hand. The sagging economy has prodded the
majority of operators to redirect resources and redouble efforts to
providing the best quality content to viewers and developing more
innovative, value-added marketing packages for advertisers.
The strategy these days is far more basic: find ways to stop viewers
from cancelling their subscriptions, while giving advertisers more
compelling reasons to book campaigns on a regional platform.
So far so good - a number of the large satcasters claim their revenue
base continues to grow strongly year-on-year.
The reason, they say, is because they continue to achieve steady gains
in penetration through delivering better quality programming. In the
last few weeks alone, a number of content-boosting deals have been
struck.
Among them are Star Movies' deal to air Hollywood blockbusters owned by
Canal+, including Billy Elliot, Bridget Jones' Diary, Mulholland Drive
and Apocalypse Now; National Geographic and ESPN Star Sports (ESS)
securing a new distribution pact with Cable TV in Hong Kong; and AXN
clinching the sole regional rights to broadcast Survivor Africa, the
third and latest installment of the hit Survivor series.
Each of the announcements has been loudly trumpeted. In Star's case, it
heralded the deal with Canal+ as an opportunity of positioning Star
Movies as "the only choice in Hollywood movies on TV" in Asia.
The focus on content is where the ratings skirmish is being fought today
as competition grows more intense. As Cable & Satellite Broadcasting
Association of Asia (Casbaa) president, Frank Brown, puts it: "As
advertisers become more cautious in their spending in recent months,
media companies have been forced to refocus on their core brands to
ensure they meet their financial objectives."
In part, this means ensuring quality content. National Geographic
Channel Asia managing director, Ward Platt, adds: "We're concentrating
on programming content more. There's no difference between our
programming blocks and our 24-hour channels - the name of the game more
than ever before is to make the programming as popular as possible."
AXN Asia managing director, Todd Miller, notes: "Our investment now is
in programming and marketing. That will be the case for some time."
But the process of building up viewership numbers doesn't stop
there.
Distribution is another crucial variable, and with that comes more
dedicated feeds for specific markets. For instance, Channel V and MTV
beefed up their operations in Korealast month; this month, ESS rolled
out an encrypted Southeast Asia feed; and National Geographic appears to
be on the verge of launching an operation in Japan. In the recent past,
National Geographic and BBC World also added Korea to their
networks.
Mark Froude, CNBC Asia-Pacific vice-president of international sales,
says: "CNBC is no exception to the rest of the field. We'll have more
customised feeds where appropriate. It's driven by language and cultural
factors and the fact that we are striving to meet the needs and wants of
markets in which we believe we can deliver a programming schedule in a
cost-effective manner."
Being able to offer a multitude of customised feeds, including local
language subtitling, is a big drawcard for advertisers because it allows
for greater choice and for marketing communications campaigns to be
rolled out in an integrated fashion.
Froude says a diverse network is crucial because advertisers don't
normally go for regional buys unless they want to air a corporate image
campaign.
"The majority of clients, about 80 per cent, go for specific feeds like
Japan, India or Australia, or they choose a mix such as East Asia and
India."
One of the main reasons for having split feeds is to counter advertisers
going for terrestrial buys in what is perceived as a way of cutting
costs as the economy takes a tumble. The major cable and satellite
players claim that despite the slowing economy, they have managed to
keep revenue growth at a respectable rate because they can deliver
specific feeds to specific markets and they target an audience which
represents the elite of that market.
Says Casbaa's Brown, who is also the president of MTV Networks Asia:
"The more customised feeds you have, the more you can deliver what the
terrestrials offer but with a lot less wastage."
The consensus is that more customised feeds are likely to pop up in the
near future. If the issue of foreign ownership of media entities is
resolved, China for instance could offer opportunities for having
separate feeds for the major cities of Guangzhou, Shanghai and
Beijing.
But while the current emphasis is on bolstering viewership figures and
enhancing the distribution network, the internet has not been totally
forgotten, although convergence is more wishful thinking than
reality.
AXN's Miller says: "Convergence for us is something that is still far
off. Broadband to allow convergence is only available in a few thousand
households - primarily Singapore, Hong Kong and Korea. Everyone knows
that watching TV without broadband is not a pleasurable experience but
the change to large-scale broadband usage is further over the horizon
that we had originally anticipated."
Last year, the industry followed the dotcom craze with major investments
in cyberspace. That, according to CNBC's Froude, is a thing of the
past.
"We weren't the first movers in this area, but it's safe to say that the
internet is less of a priority at this moment in time."
Platt of National Geographic adds that the concept of convergence is not
without its pitfalls for the industry. "In the era of convergence, when
people can log onto the internet and download programmes to watch, there
is a danger that the channel's identity and purpose could lose its
importance. It's something to think about."
However, the internet is recognised as having tremendous value when it
comes to customer relationship management (CRM) and branding. BBC
Worldwide Asia head of network development, Nic van Zwanenberg, says:
"The internet has become an indispensable marketing tool. It's not just
for promotional purposes but, more importantly, for receiving feedback
from our audience."
Many agree, adding that the web formed the backbone of advertisers'
desire to integrate campaigns in as seamless a way possible. An example
is AXN's hugely successful Eco-Challenge show. "With Eco-Challenge, our
on-air presence is complemented by daily updates on our website and this
adds greater impact to our programming as well as to the branding of our
sponsors," Miller says.
Brown says that MTV is already using convergence technology: the screen
is split so that viewers can watch the video and the VJs, send messages
to the VJ and other viewers and finally read the replies on scrolling
text.
But he stresses that the roll-out of the technology across the region
will be gradual, with markets like Japan, Taiwan, Hong Kong and
Singapore leading the way, not just in Asia but across the world.
Which is also the view of Star's vice-president of corporate affairs and
publicity, Jannie Poon, who says that an enhanced television system,
which gives viewers more interactive options, will be unveiled in Taiwan
and India next year.
"The uptake of new technology in those two markets is high. The only
difference is that cable penetration in Taiwan is much higher. However,
in absolute numbers, India's market size is several times the Taiwan
figure," she says.
This is underlined by ACNielsen figures which show that the average
weekly cumulative audience in India was 58 million at the end of July,
more than three times the 17 million for Taiwan.
But despite the harsher operating environment and keener levels of
competition, the industry is optimistic about its long-term
prospects.
CNBC's Froude says: "The upside potential remains high. Penetration has
by no means reached saturation point. In some countries, penetration is
just 20 per cent of what we perceive that market to potentially be,
while in others it's around 80 per cent. There's still a lot of play
left."
China is the market that the industry is keenest on. The country's
economy continues to grow at a rapid clip, making it a likely hub of
cable and satellite activity in the future.
However, legal restrictions limit the industry's distribution potential
to hotels, foreign compounds and programming blocks on local cable
channels.
But optimism remains strong. The BBC's Zwanenberg says: "With WTO
looking like it's just around the corner and the 2008 Olympics, it's
going to be a very different ball game to what it is now in a few years'
time."
