India and China stand out in otherwise sluggish 2019 for APAC pay-TV

India and China were the only Asia-Pacific pay-television markets to show strong revenue and subscriber growth in 2019, and there were significant subscriber declines in several territories, according to research firm Media Partners Asia.

MPA told SportBusiness that sports content remains vital to pay-television in Asia-Pacific markets, and is being used by operators to retain their premium subscriber bases amid widespread ‘cord-cutting’ – subscription cancellations – and competition from global online video platforms.

Asia-Pacific pay-television industry revenue, made up of subscription fees and local and regional advertising sales, rose by 6 per cent in 2019 to reach $57bn, according to MPA’s new report Asia Pacific Pay-TV Distribution 2020.

The research covers 17 markets; Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Myanmar, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam.

India and China together accounted for $34bn – or 60 per cent – of the 2019 pay-television revenues. The revenue growth across the 15 markets outside India and China was only 1.3 per cent.

Across the region, there were 12.8 million new pay-television subscribers in 2019, an increase of 2 per cent, taking total subscribers to 630 million. MPA said this represented 62-per-cent penetration of television homes.

India and China accounted for nearly 11 million of the new subscribers. One other bright spot was South Korea, where there were around 840,000, driven by a growing telco IPTV sector.

But declines in pay-television subscribers were reported in Australia, Hong Kong, Malaysia, New Zealand, Singapore and Thailand. There was a net decline of close to 1 million across these six markets.

MPA described 2019 as “a peak year of cord-cutting”, and subscriber erosion would “moderate” in future years. But it said Australia and Singapore looked particularly prone to continued declines, and the “incremental” growth being seen in markets such as Indonesia was “fragile due to funding requirements and the management of currencies and content costs”.

Industry forecast

MPA projects that revenues across the 17 markets will grow at a compound annual growth rate (CAGR) of 3 per cent between 2019 and 2024, to $66bn. India is expected to grow at the fastest pace, 6 per cent CAGR. However, recent regulatory changes in India, including the introduction of new pay-television channel price caps, have created “significant near term uncertainty” in the market.

China and South Korea are to grow at 3-per-cent CAGR. Australia, Hong Kong, New Zealand, Malaysia, Singapore, Taiwan and Thailand are expected to see “CAGR revenue declines in the range of 1-5 per cent over 2019-24 while growth will moderate in the Philippines and Vietnam”. Total subscribers across the markets are expected to grow at only 1 per cent CAGR in 2019-24, to 663 million.

Commenting on the figures in the report, MPA executive director Vivek Couto said: “Mushrooming consumer choice and piracy across the digital ecosystem has created cracks in the traditional pay-TV ecosystem. Business models remain dependent on the monetisation of branded channels and sports rights in the pay-TV window. But the growth of legal online video services means that pay-TV operators and content providers are striving to distribute and monetise online.

“Inevitably, this strategy is being executed at a significant potential cost, with the risk of cannibalisation and growth at the expense of household-based pay-TV. For pay-TV operators with a broadband business, such a strategy could lead to fresh opportunity as key players re-aggregate new bundles of branded channels and OTT video.

“For others, long-term subscriber erosion is a reality with the emphasis on serving and retaining existing premium customers and managing content costs and where possible, entering into partnerships and M&A with telcos and broadband operators.

“Operators are increasingly focused on tighter bundles and packages, stronger brands and flexible options for customers, anchored to improved technology with online options. The pace of operator execution is uneven however, which becomes time critical when measured against the impact of disruptive change and the management of legacy infrastructural costs.”

Sport’s place

Exclusive sports content is being used alongside product innovations like OTT video-on-demand and ultra high-definition production to justify the premium pricing of pay-television bundles, MPA told SportBusiness.

“Sports is an integral part of this premium layer,” said Srivathsan A R, a senior analyst at the company. “Content budgets, especially in entertainment, are shifting to the digital window as global online video platforms [like] Netflix, Disney+, Apple TV+, HBO Go and Hulu increase D2C connectivity in Asia Pacific in the upcoming years.

“Rights renewals for sports, in particular, may rationalise with a continued preference for bundled deals that includes TV and digital rights for properties. Top international football leagues and key local IP on an exclusive basis will drive most of the sports spend.”

Growth in sports media-rights values in Asia-Pacific has become much more difficult for many properties, bringing to an end a long era of increases. Even premium properties like the English Premier League have experienced falling values in multiple Asian markets.