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MPA: High cost for Asia's pay-TV growth

Posted: 16 May 2011 ?? ?Print Version ?Bookmark and Share

Keywords:pay-TV? free TV? broadband?

Renewed economic dynamism and multiplatform competition are fueling the consumption of pay-TV and broadband in Asia Pacific. However, this growth depends on investment in content, distribution and new technology, benefiting consumers but coming at a high cost for pay-TV channels and distributors, according to Asia Pacific Pay-TV & Broadband Markets 2011, a new report published by leading industry analysts Media Partners Asia (MPA). The result is margin pressure for pay-TV providers in some key markets, predominantly India, as well as potentially in Japan, Korea and Malaysia.

Vivek Couto, executive director of MPA, says, "These trends will prevail over the medium term due to competitive intensity, well meaning but counter-productive regulation and industry fragmentation. Having said that, we already see operating leverage improving in a number of markets. Future growth also hinges on continued improvement in ground-level execution, talent and regulation, especially in India, China and Southeast Asia. Our research shows that the growth of broadband represents more of an opportunity than a threat for pay-TV companies; the key cross-sector competitive dynamic in most markets remains fierce competition from free TV. There is a bright future for pay-TV in Asia Pacific but it belongs to companies willing to invest and innovate, positioning themselves as consumer businesses."

Pay-TV subscriptions in Asia Pacific grew by 9 percent in 2010 to reach approximately 375 million by the end of the year, according to projections from MPA. With around 8 million households in the region subscribing to multiple pay-TV services, this means 367 million homes were subscribing to pay-TV in Asia Pacific at the end of 2010, almost half (48 percent penetration) of all TV homes. This number is projected to grow to 57 percent of TV homes or 486 million subscribers by 2015, and to 62 percent of TV homes or 570 million subscribers by 2020.

Digitization key to future prosperity

The number of homes subscribing to digital pay-TV services, including multiple subscriptions, reached 148 million in 2010. Digital networks allow pay-TV operators to offer additional programming and high definition (HD) content as well as value- added services such as digital video recorders (DVRs) and video-on-demand (VOD) and interactive TV. As competition increases, these help operators grow revenues and strengthen subscriber loyalty. The number of homes subscribing to digital pay-TV services is expected to reach 362 million by 2015 and 483 million by 2020, driven by digitization of millions of homes in China and India as well as full-scale digital conversion for both free and pay-TV in Japan and Korea. This means that digital penetration of pay-TV homes will grow from 20 percent in 2010 to 42 percent by 2015, and 52 percent by 2020.

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