Asia Chiefs Positive on Pay-TV

CASBAA Head: "We Must Be Getting Something Right"

HONG KONG – 81% of Pay-TV industry CEOs are more positive about the Asian markets than last year, as pay-TV penetration across Asia reaches 50% in 2010. Availability, affordability and the fight against illegal services are the driving forces behind ongoing pay TV growth in Asia, while the industry focuses on producing “awesome” value-added and localized content that serves consumers as individuals, Cable & Satellite Broadcasting Association of Asia chairman and PricewaterhouseCoopers Global Entertainment and Media leader Marcel Fenez told The Hollywood Reporter.

Pay-TV penetration is reaching the tipping point, with an Asia average of 50% and a total of 363 million households, which makes it the world’s largest Pay-TV region. The rapid growth will be continued through increasing service availability, making sure that the content offerings are affordable, and fighting illegal services, particularly online. 

“We have to be conscious of the fact that it’s a very competitive world, at a time, particularly online. We have to make sure we communicate to the consumer the illegal nature of these types of services,” said Fenez in an interview during the CASBAA Convention, held in Hong Kong until October 28.

Piracy has caused revenue losses of over $2 billion across Asia in 2010, a rise of $145 million from last year. 

“There’s a strange irony here, we must be getting something right, because people only steal what they value. So on the basis of these numbers keep going up, they must be proof that we are producing contents that people value,” Fenez said. “It’s a huge issue because there’s revenue leakage. When we’re being polite, we call it revenue leakage. When we’re being truthful, it’s called stealing,” he added. 

Losses continue to increase despite the industry’s tactics to combat the issue, including consumer education, regulator education, technological solutions, and bilateral agreements between different operators. “At the end of the day there is not one single thing. If there’s that one single thing we’ll be doing that already. There’s no one single attack, there’re multiple attacks.”

China also contributes to the conundrum through online piracy. Certain Chinese websites illegally offer content that is broadcast by networks in Hong Kong or elsewhere. “Online piracy in China is having an impact beyond China’s borders,” noted Fenez. “It’s not just the impact in China but also the impact outside of China, because it destroys businesses locally, where content that could be monetized in Hong Kong or in Malaysia isn’t, since they’re available on these Chinese sites. A lot of our attention in the next several years will be around online piracy.”

The industry is also facing critical issues that constrain growth, namely, keeping up with technology and setting regulations that correspond to the new media landscape. In a survey CASBAA conducted, 71 of 100 senior executives placed the highest priority on both technology upgrade and regulatory issues. “When we have this huge change in the shape of the industry,” said Fenez, “you have to make sure that regulations would be, ideally, one step ahead. But in many, many markets, regulation is, unfortunately, two steps behind.”

Regulatory issues plague pay-TV operators across the region, such as price caps, or issues with enforcing licensing conditions, or stamping out illegal cable operators, said Fenez. “If you look at the convergence of the different offerings, where some operators come under telecom rules, some come under media rules…the consumer doesn’t care,” he lamented. “The consumer just wants to watch top-rated content. So why is there content regulated in different ways on different platforms, that makes no sense.”

However, the good news is that the industry leaders are more upbeat about the market, with 81% of pay-TV industry CEOs and senior executives declaring they are more optimistic towards the next 12 months than last year. They have their eyes on producing what Fenez called “awesome content,” where the emphasis is on localized and value-added, but content also helps fuel growth in markets that are saturated, such as South Korea and Taiwan, which have Pay-TV penetrations of 99% and 94%, respectively. Operators strive to expand market share through increased quality of content, where they serve “consumers as individuals, rather than consumers as numbers.”

3D TV might be one of the answers, but not for the moment. “One thing we’re always talking about is how do we make the viewing experience even better. You’ve got the basic content, how do we make it better? The first thing is HD, now we have 3D. There are certain types of content that work very well in the 3D environment – sports, certain action genres, so there’s no question it’s another value-add,” Fenez said. 

However, the impact of 3D is not felt in TV as yet, due to the high price of 3D TV sets. “I think the impact in the short run is much more focused on the big screen. That doesn’t mean over a period of time, when, inevitably, prices are going to come down for 3D TV technology, and that becomes that tipping point; but we’re not at that point yet. There’s a lot of interest in it, it’s really cool, but it needs the consumer to invest a lot of money in the technology, so it’ll be a while before we see it taking off in a big way. Then there’ll probably be a shortage of 3D content as well. It’s expensive to make 3D content – the way you film and produce it. But it’s really cool.”

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