Renewed economic dynamism and multi-platform competition are fuelling the consumption of pay-TV and broadband in Asia Pacific, according to a study by Media Partners Asia (MPA). However, this growth depends on investment in content, distribution and new technology, benefitting consumers but coming at a high cost for pay-TV channels and distributors. The result is margin pressure for pay-TV providers in some key markets, predominantly India, as well as in Japan, Korea and Malaysia. Pay-TV subscriptions in Asia Pacific grew by 9 percent in 2010 to reach approximately 375 million by the end of the year, according to projections from MPA. With around 8 million households in the region subscribing to multiple pay-TV services, this means 367 million homes were subscribing to pay-TV in Asia Pacific at the end of 2010, about 48 percent penetration of all TV homes.
This number is projected to grow to 57 percent of TV homes or 486 million subscribers by 2015, and to 62 percent of TV homes or 570 million subscribers by 2020.
The number of homes subscribing to digital pay-TV services, including multiple subscriptions, reached 148 million in 2010. The number of homes subscribing to digital pay-TV services is expected to reach 362 million by 2015 and 483 million by 2020, driven by digitisation of millions of homes in China and India as well as full-scale digital conversion for both free and pay-TV in Japan and Korea. This means that digital penetration of pay-TV homes will grow from 20 percent in 2010 to 42 percent by 2015, and 52 percent by 2020. MPA projections indicate that subscribers with HD pay-TV reached 12.4 million in 2010, and will rise to 45 million by 2015 and 81 million by 2020. Excluding China and India, HD penetration of digital pay-TV subs across the region reached almost 30 percent in 2010 and is likely to grow to approximately 60 percent by 2020, driven by continued growth in Australia, Japan and Korea as well as new growth in Southeast Asia. Revenues for the pay-TV industry in Asia Pacific, representing income from consumer subscriptions as well as advertising, increased by 14 percent in 2010 to reach USD 38 billion. This was driven by growth of ARPU in mature markets and increases in subscriber volume in emerging markets, as well as strong local advertising growth. According to MPA, pay-TV advertising in Asia Pacific rebounded from only 4 percent growth in 2009 to 15 percent growth in 2010 to reach approximately USD 8 billion in net terms. This represents about 25 percent of total TV advertising in the region. Subscription revenues meanwhile grew by 14 percent in 2010 to reach USD 30 billion, with consumer spends on pay-TV growing by 4 percent on average.
MPA predicts pay-TV industry revenues in Asia Pacific will grow at a 10 percent CAGR between 2010 and 2015 and at 8 percent CAGR between 2010 and 2020, to reach USD 60 billion by 2015 and USD 78 billion by 2020 respectively. Boosted by digital growth and continued increases in basic pay-TV subscribers, total subscription revenues will climb from USD 30 billion in 2010 to reach USD 46 billion by 2015, and USD 60 billion by 2020. Subscriber volumes will grow substantially, while ARPUs will remain robust in high-value markets such as Australia though competition, and in certain cases regulation, will depress and limit ARPU growth in India, Japan and much of Southeast Asia. Local advertising will remain buoyant however, driven by economic growth and rising penetration, climbing from USD 8 billion in 2010 to reach USD 13 billion by 2015, and USD 18 billion by 2020. Broadband subscribers in Asia Pacific grew at 26 percent in 2010 to reach 257 million, and are expected to outnumber pay-TV subscribers by 2015, reaching 538 million and thereafter climbing to 681 million by 2020. Regional per capita penetration will climb from 7 percent in 2010 to 15 percent by 2015, and 18 percent by 2020. Fixed networks had an 83 percent share of the market in 2010, though this will decline to 52 percent by 2020 due to the growth of mobile.
MPA analysts also highlight a favourable industry landscape due to competition and investment. This is most notable in India, where the rise of DTH satellite TV is having a major impact; in Indonesia, where DTH platforms are helping boost pay-TV penetration from a very low base; and in Korea, Japan and Singapore, where IPTV platforms have contributed new growth to saturated marketplaces. At the same time, cable digitisation is having a positive impact on industry value chain economics, most notably in North Asia, boosting consumer spend on pay-TV in particular. Significantly, Japan, China and Korea will also complete digital switchover during this decade. Meanwhile, investment in content is at its optimal in markets such as Australia, Japan and Singapore, and growing in markets such as Malaysia and Korea, where pay-TV operators are investing in self-produced content and relevant turnaround channels to retain competitive advantage. However, content investment is poor in the largest markets, China and India. The rise of India is particularly noteworthy as the country will overtake the United States as the world's largest DTH satellite pay-TV market by the end of 2012, and will surpass China as the largest market for pay-TV advertising after 2017. MPA analysis indicates that the top 70 pay-TV distribution platforms in Asia Pacific generated approximately USD 21 billion in sales during 2010, a 14.1 percent year-on-year growth, while EBITDA grew 23 percent to top USD 6 billion, representing a 28.5 percent margin. While operating margins remain solid in North Asia, running between 40-60 percent on average, margins are trending much lower or in negative territory in Southeast Asia and India due to rising costs and investment. MPA research indicates that the top twenty pay-TV broadcast groups in Asia Pacific generated USD 7 billion in sales during 2010 with EBITDA of USD 1.3 billion, a 19 percent margin.
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