CASBAA wraps with pay-TV growth

Developing world revenues on the rise

HONG KONG -- Asia's pay-TV companies were cheered by their strong performance through the recent financial crisis and by forecasts of further growth. But a conference heard that the sector faces unprecedented challenges from disruptive technologies, piracy and changing consumer behavior.

Pay-TV platform operators and channel owners were happy to be back in Hong Kong's Grand Hyatt Hotel for the Cable & Satellite Broadcasting Association of Asia's annual convention (November 3-5) – not just because last year's event was held in an overheated and unwelcoming tent – but also because attendance was proof of survival. Indeed, the number of
pay-TV operators in the region has swelled by 18 in the past year and a half.

CASBAA data suggests that subscription TV penetration across the Asia-Pacific region has climbed by 26 million to 326 million in 2009. The figure means pay-TV in the Asia-Pacific region is more than half of the world total, although average revenues per user are well below American or European levels. That is because 90% of growth in 2009 came from developing markets of China and India.

Digital pay-TV subscription households now account for over 115 million homes in the region – with China accounting for 69 million and India 19 million, respectively.

"(Always on) Broadband unifies everything," said futurologist Jeff Cole of the Center for the Digital Future at the University of Southern California. "TV is getting closer to the movie experience and HDTV increasing interest in television." Cole also insisted that social networking is now the "real deal" and that the entertainment industry needs to start developing and tracking the Internet "just like should have happened in TV in the 1940s."

Over the two days numerous presentations showed platforms or devices that claimed to unite broadband and TV, broadband and 3G or simply allow catch-up, video-on-demand services that make paid-for content more portable, more personalized and more available – that may in turn reduce the demand for pirate services.

Speakers hinted at the responses of the North American entertainment conglomerates. Time Warner's "TV Everywhere" service was explained like a Slingbox. It requires PCs to be authorized, but once registered viewers can receive and watch the same cable TV channels that they have paid for at their home base and indeed will receive them with the same advertisements as at home.

Disney's yet to be formally announced "Keychest" technology was described as "a digital lockup" by Rob Gilby, senior vice president and managing director of Disney-ABC Int'l Television (AP). "The question is 'how do you make content available across all platforms?' Keychest is first a file format. Rights are stored in a digital lockup that you can check into and out of on one device and then check in again on the next device."

Disney is understood to have offered the technology – which redefines customers rights as access rights, rather than physical possession – to other studios. Gilby said that the next step would be to hold conversations about it with all the group's business partners including pay-TV platforms.

Other speakers hesitatingly said that they had no problem with portable content "as long as it has been paid for," although clearly such a model undermines the territory-by-territory rights definitions that have dominated the entertainment industry since its origins.

Such a challenge seems to be coming anyway. Conference was told too that the globalization of the BBC's hugely successful iPlayer catch-up service is back on the British public broadcaster's agenda. Such a move was previously mooted and then dropped.

"A fragmented model where everything is on demand is clearly hostile to platforms," said Kim Williams, CEO of Australian pay-TV leader Foxtel. But he said that pay-platforms provide valuable services to subscribers and channel operators. "Customers like a lot of help through EPGs, reference suites, marketing… and many content owners don't have those skills."

The conference's special sections on China and India again demonstrated almost unimaginable rates of growth – Standard Chartered Bank's Tony Worthington forecast that India would have over one billion mobile phone subscribers by 2015 –high levels of competition and regulatory conditions that will change very much more slowly.

That tricky combination means that players with mass market ambitions will have to have lots of patience and very deep pockets. It could in effect rule out some of the foreign conglomerates without Asian firms' appetites for risk or ability to look at the very long term.

NBC Universal recently announced that it intends to sell its 26% stake in India's NDTV to the company's founders, though Time Warner's Turner Entertainment is widely believed to be looking at buying in.

Although this year's conference did not contain the aghast cries of horror at user generated content that freaked out previous events, some things never change. Speakers repeatedly referenced the disasters of the music industry; the way that no company is yet making money from new media (Twitter, YouTube, Hulu were the references this year); and the age-old notion that content is king.
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