VIEWPOINT: China pay-TV plan still too premature

On several counts, the brief to national broadcaster China Central Television to launch 10 pay-television channels later this year is perhaps a little too premature. With locals spoilt for choice from increased satellite coverage and the availability of content through other media, China could be accused of putting the cart before the horse.

In successful pay-television markets, viewership is largely driven by sports - think Rupert Murdoch and his successful Sky Sports franchise - and films. Admittedly, China can count on sports, an emerging passion to provide much-needed eyeballs in the shift from utility to premium television pricing.

That said, the operative word is "emerging". At this stage, China's sporting passion is really confined to basketball and football, because of the presence of Chinese stars. On top of that, the internet - thanks to rising penetration and the growing affordability of broadband - provides the same immediacy as pay-television. As for the provision of films and other must-watch fare, the issue is even murkier to resolve because of the political challenges it throws at the leadership. Not least are regulations that limit the number of foreign films screened in China to about 20 a year, although rampant DVD piracy makes a mockery of the quota. To say the least, the Chinese Government faces a delicate high-wire act. Content must satisfy 900 million rural residents as well as 500 million upwardly mobile urban nationals. No easy feat, when the rural population is growing increasingly restive over the rising income disparity with urban centres.

On top of that, rampant piracy and China's seeming inability to control the problem also raises crucial questions on the commercial viability of pay-television. Harvard Business Review estimated the value of China's pirate DVD market in films and music at a staggering Rmb 1.3 billion (US$157 million) last year. It's equivalent to about 100 million viewing hours.

Underlining the speed of the pirates and the seemingly insurmountable task facing the Government, a pirated copy of the second Harry Potter movie hit the streets just three days after its US release for about eight yuan (US$1). And let's not forget the problem of signal piracy. Piracy strikes at the very heart of pay-television especially in a fledgling system. Unless there is a concerted piracy crackdown and a relaxation on content issues, CCTV will need deep pockets to sustain the venture, because the broadcaster's plan to hang its pay-TV offer on English-language learning services and music is off track by a very long shot.