The country’s pay TV operators have been seeing declines in their average revenue per unit (ARPU) as fiercer competition has forced them to lower subscription fees.
Media firm Media Partners Asia (MPA) executive director Vivek Couto said on Tuesday that while the country’s pay TV customer base was growing, operators’ ARPU had been experiencing declines for years.
“ARPU declined close to 15 percent a year over the last five years,” he said during the “Indonesia in View 2015” seminar held by the Cable and Satellite Broadcasting Association of Asia (CASBAA).
According to MPA data, Indonesian pay TV operators’ ARPU declined from US$18.2 in 2005 to $8.6 last year.
Two of the country’s largest pay TV operators, Indovision and Aora TV, contended that the government should limit granting new pay TV operator licenses to improve industry growth.
“The fundamental problem in this business is unhealthy competition because of too many [pay TV] licenses,” said Rudy Tanoesoedibjo, president director and CEO of PT MNC Sky Vision, which operates Indovision.
Even in the US, which has a bigger population and stronger purchasing power, there were currently only around five national pay TV operators, he said.
With healthier competition, each operator in the US was capable of reaping high revenues, allowing them to expand overseas, Rudy went on.
Voicing a similar view, Aora TV president director and CEO Guntur Siboro said more players in the industry meant each player would get a smaller “slice of the pie”.
Couto said that the country’s pay TV market size stood at only $460 million with around 17 big pay TV operators.
“There are up to 2.3 million non-paying pay TV subscribers currently in the ecosystem, impacting ARPUs and future growth potential in the sector,” he said, adding that the phenomenon was driven by rotational subscribers who moved from one pay TV platform to another to take advantage of promotional periods.
Communications and Information Minister Rudiantara said he needed to review whether it was necessary to limit the number of pay TV licenses, citing “bad experience” in the telecommunications sector, where fierce competition resulted in bleeding operators.
As of December last year, there were 17 big pay TV operators in operation, with the government having approved 316 pay TV operators’ licenses, according to ministry data.
While the number of players in the sector might pose a threat to a number of operators, relative newcomer Orange TV argued that the ideal number of pay TV operators should be determined by the market.
“I believe in the survival of the fittest. Mergers and consolidations are natural, but it’s too early for the government to intervene […],” he said.
Beatrice Lee, managing director of media rights company MP & Silva for the Asia-Pacific market, said the high number of pay TV operators in the country benefited consumers as pay TV subscription fees had become more affordable, making her optimistic about her firm maintaining a tight grip on its market.
In Indonesia, MP & Silva owns the rights to broadcast popular soccer league matches, including Italy’s Serie A, France’s Ligue 1 and England’s Premier League, through a partnership with beIN Sports channel.
