Study: China Surpasses Japan to Become Second-Largest Pay TV Market Behind U.S.

A new study released by a U.K.-based industry intelligence firm says pay TV revenues in the Asia-Pacific region will increase by $2.1 billion by the end of 2013 -- and will grow by a whopping $12 billion over the next five years. 

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According to the report, produced by Digital TV Research and released Wednesday, China surpassed Japan to become the world's number two market for pay TV (subscription and on-demand) behind the U.S. in 2012.

In 2011, China generated $7.5 billion in pay TV revenue behind Japan's $7.8 billion. But in 2012, China jumped ahead, earning $8.3 billion over Japan's $7.9 billion. 

Looking ahead, the authors said pay TV revenues will more than double over the next five years in four countries -- Pakistan, the Philippines, Thailand and Vietnam -- and triple in Indonesia. During that same period -- 2012 to 2018 -- revenues are expected to fall in South Korea and Hong Kong.

The Asia-Pacific region is currently undergoing a rapid conversion from analog to digital television. The percentage of households in the region that have digital TV has grown from 16 percent in 2008 to 44 percent in 2012. 

“Despite the rapid conversion, digital TV will still have plenty of room for growth for some time to come," said the report's lead author Simon Murray.

By 2018, Murray and his team predict 90 percent of households in APAC will have converted to digital, amounting to a gain of 420 million homes -- which is more than triple the total number of households in the U.S.

By 2018, China is expected to have 313 million pay-TV households, while India is projected to have 158 million.