Total pay-TV industry revenue, comprised of subscription fees and local & regional advertising sales, grew 6 per cent in Asia Pacific in 2019 to reach $57 billion in 2019, according to Asia Pacific Pay-TV Distribution 2020, a report published by analyst firm Media Partners Asia (MPA). Projections from MPA indicate that total pay-TV industry revenues will grow at a CAGR of 3 per cent between 2019-24 to top $66 billion (€59.3bn) by 2024.
Over the 2019-24 period, the utility China market will grow at a CAGR of 3 per cent to reach $27 billion by 2024. In comparison, the more commercial India market will grow at a CAGR of 6 per cent to reach $15 billion by 2024, ensuring India remains the highest growth and most scalable pay-TV market in the region. There remains significant near-term uncertainty in India however due to the impending enforcement of recent regulations by the Telecom Regulatory Authority of India (TRAI). Korea will grow at a CAGR of 3 per cent to reach $8.3 billion in revenue by 2024 while Japan will climb 1 per cent to $7 billion by 2024.
Excluding China & India, total Asia Pacific pay-TV revenue grew only 1.3 per cent in 2019 to reach $23 billion and is projected to climb 1.1 per cent CAGR to reach $25 billion by 2024. Australia, Hong Kong, New Zealand, Malaysia, Singapore, Taiwan and Thailand will register CAGR revenue declines in the range of 1-5 per cent over 2019-24 while growth will moderate in the Philippines and Vietnam.
Asia Pacific, including China & India, added 12.8 million net new subs in 2019 with India contributing 47 per cent and China, 37 per cent. The total Asia Pacific pay-TV subs base grew 2 per cent in 2019 to reach 630 million, representing 62 per cent penetration of total TV homes, adjusted for multiple subscriptions in a home. MPA projections indicate that total Asia Pacific pay-TV subs will grow at a CAGR of 1 per cent between 2019-24 to reach 663 million by 2024, representing 63 per cent penetration, adjusted for multiple subscriptions.
India will contribute almost half of net subscriber additions in Asia Pacific over the next five years. Net additions across Asia Pacific ex-China and India came in at 2 million in 2019 with Korea contributing 42 per cent (driven by telco IPTV) while Australia, Hong Kong, Malaysia, New Zealand, Singapore and Thailand all registered declines. MPA projections indicate that pay-TV subs in Asia Pacific ex-China & India will grow at a CAGR of 1.3 per cent between 2019-24. Subscriber declines will continue though moderate in Australia, Hong Kong, Malaysia, New Zealand, Singapore and Thailand as cord cutting stabilises after 2021. 2019 was a peak year of cord cutting with a net decline of almost 1 million subs across the six markets. As the pace of subscriber erosion moderates in key territories after 2021, there are potential downside risks to the MPA forecast in markets such as Australia and Singapore. In addition, incremental growth markets such as Indonesia are fragile due to funding requirements and the management of currencies and content costs.
“Mushrooming consumer choice and piracy across the digital ecosystem has created cracks in the traditional pay-TV ecosystem,” notes MPA executive director Vivek Couto said. “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 reaggregate 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,” Couto concluded.