A firm footing ahead of new product plans for later this year.
Malaysian media dynamo Astro continues to deliver, despite a challenging macro environment.
Strong momentum for Astro’s prepaid platform Njoi, along with rising Arpu, are helping the company hit its targets, offsetting softer growth in pay-TV customers.
Njoi contributed 90% of Astro’s subscriber gains over its recently announced Q2 period, and ~85% over 1H.
“Astro will still reach 80-90% of Malaysian TV households over the next four years, but Njoi’s contribution to the mix is going to be greater than previously expected,” notes Vivek Couto, executive director at industry analysts Media Partners Asia (MPA).
Njoi offers a free suite of 23 TV channels (12 from Astro) and 20 radio stations for a RM228 (US$71) one-off fee, plus RM100 for installation, as well as 22 paid channels offered a la carte on a prepaid basis from 2 to 30 days.
The platform capitalizes on Malaysia’s digital TV transition, which is expected to complete by 2016.
Multiple Platforms
Excluding Njoi, MPA expects Astro’s pay-TV penetration to reach 56% of TV homes by 2018 versus 50% today, largely driven by DTH satellite, with higher Arpu driving earnings.
Operational and execution issues have limited Astro’s IPTV deployment, with IPTV subs reaching just 33,000 at end-July.
“Other platforms, including the mobile-based Astro On-The-Go and newer over-the-top products yet to be launched, will help the company reach more of the population and tap the youth segment effectively, as user interfaces improve and content access eases,” Couto says.
On a September 19 results call, Astro management, led by CEO Rohana Rozhan, reaffirmed the company’s target of 80% household penetration by 2017 (25% from Njoi, 55% from pay-TV).
Management also maintained a 35% Ebtida margin target for FYE Jan. 2014, potentially expanding to ~40% (as a stretch target) over the next three to five years.
Content costs have risen to 38% of TV revenues (versus a recent 31-32% run rate) because of Fifa World Cup rights, but management expects cost exposure to rationalize going forward.
Astro Pay-TV Metrics
Astro’s core pay-TV product will help deliver Arpu growth, through new channels (HD and SD), better windows and stronger on-demand services.
Monthly pay-TV Arpu grew 3.3% Y/Y in 1H, to reach RM98 (US$30).
Two new packs bolstered growth in the Chinese segment in particular.
Njoi, a low operating cost service, contributes a modest RM2 in Arpu each month, but this could grow to RM10 over the medium term.
Astro executives also point to Njoi’s up-selling potential. The company upsold close to 20,000 Njoi subs to pay-TV in 1H this year, adding to 35,000 upgrades from last year.
Critical mass for Njoi will also help Astro boost ad sales.
At the same time, successful launch of the Measat-3b satellite earlier this month will be an important catalyst for Astro’s product expansion.
The company has leased 18 transponders on Measat-3b and plans to lease another six on Measat-3c, scheduled for launch at end-2015.
New Services In November
Astro is looking to roll out eight new HD channels and two more SD channels, plus other services, starting from November this year.
This includes a new HD Malay home shopping service (expanding to Chinese thereafter) in collaboration with Korea’s GS Home Shopping.
In the meantime, Astro’s channel portfolio reached 172 at end-July, including 69 of its own branded offerings.
HD pay-TV subs reached ~1.9 million.
Astro offers 40 HD channels, including a new premium Bollywood offering showcasing Hindi movies three to five months after theatrical release in India.
Astro also kicked off a day-and-date campaign on key US series, working with HBO, Fox, SPE Networks, NBC Universal and AETN as channel partners.
At the same time, the company secured series for its on-demand services and Astro On-The-Go.
Deals with NBC Universal, Disney, Lionsgate and Sony account for 80% of the top 20 titles on VOD service Astro Best, and have helped Astro broaden its product on existing on-demand services.
