January 2009 – In a pay-TV market as vast as the Asia Pacific it would be difficult to draw conclusions about market trends if it weren’t for CASBAA, the Hong Kong-based Cable & Satellite Broadcasting Association of Asia that represents more than 130 channel programmers, pay-TV operators and technology providers.
John Medeiros, CASBAA’s Deputy CEO keeps tabs on the region’s main regulatory issues as well as anti-piracy measures and challenges – with an eye to helping resolve issues facing the market. He also coordinates education, legal and enforcement activities as they relate to intellectual property.
In a region that includes mammoth emerging pay-TV markets like China and India, Medeiros says that “there are substantial challenges that are a result of rapid development in the pay-TV industry. Regulations have not kept up.” He explains that part of CASBAA’s work is to help educate and persuade individuals, operators and regulators in 15 different Asian governments that “the digital entertainment industry is different from the TV industry that they have known and worked with for many years.”
Regulators and regulations
“The problem is that many regulators still envision the ‘one-to-many’ broadcasting communications model,” Medeiros explains. Governments have always paid a lot of attention to the broadcasting industry because of the power and influence involved. “They have messages they either want or don’t want to be communicated to the viewers in their respective countries,” he says.
One of the challenges for CASBAA is to explain to regulators that the digital entertainment industry in the 21st century is changing rapidly because there are different types of digital content competing to reach subscribers. “This is especially true where the digital infrastructure is highly developed,” he says. This includes Australia, Hong Kong, Korea, Japan, Singapore and New Zealand.
“The fact is the regulatory paradigm has to shift. Unfortunately for some of the governments in the region, regulators are still dealing with laws that were passed in a previous generation,” Medeiros explains.
“What CASBAA is trying to do is to get regulators in all countries in the region to understand what’s actually happening on the ground because this reality is obviously connected to the rest of the world.”
Piracy
Fighting TV piracy is another major area of CASBAA activity. “There are a variety of ways piracy of pay-TV signals happens,” he says. “The old system is physically tapping into individual lines, or taking satellite signals without permission and then redistributing this content to hundreds or thousands of homes.”
Piracy has spread to the Internet where entire TV channels are streamed 24 hours a day to millions of viewers. “Obviously this phenomenon is very damaging to the industry – and it’s the reason that content protection is so important,” Medeiros says.
CASBAA also helps educate governments about the importance of having up-to-date laws and enforcement.
Cases in point
Medeiros uses the examples of Malaysia, the Philippines and Thailand to explain how different countries deal with enforcement issues. Of the three countries Malaysia has the most effective anti-piracy enforcement structure. “In both the Philippines and Thailand pirate distributors talk openly and almost without reservation about theft as a business model,” he says. “Enforcement there isn’t really possible.” Bottom line: The pay-TV market in Malaysia is much healthier.
In 2009 Medeiros expects the pay-TV market worldwide to be fairly resilient, but in markets like Taiwan and India, the anticipated weakness in ad spending will really hurt, and as a result, regulatory constraints in both Taiwan and India will have a greater – and more negative – impact in 2009.
“What makes a pay-TV market successful is the ability to keep up with new technologies – and with the measures the industry must use to protect its content. A content protection eco-system has to include both technology and the law.”
“CASBAA urges government regulators and pay-TV operators to keep moving forward because piracy keeps growing and changing. Pay-TV piracy is a multi-billion dollar industry today,” he says.
New technologies
Medeiros explains that new technologies such as IPTV and mobile broadcasting provide new ways for operators to reach consumers. “Innovative technologies are multiplying rapidly as are both the competition within the industry and the ways content generators can reach consumers.” All of these changes are becoming essential features of the pay-TV industry in Asia.
One of the most important new technologies is digitisation. “Asia has reached the tipping point when it comes to digitisation,” Medeiros says. There are an estimated 71 million households with digital connections in Asia. This is out of around 300 million pay-TV subscribers in the region.
New markets – and new types of markets — are developing in China which is going digital in its cable TV systems, and in Korea and Hong Kong where significant numbers of customers are opting for IPTV from telcos.
“Trends all over the region show that there are more options for consumers. CASBAA helps both operators and government regulators understand these developments and plan for the future,” he says.
According to CASBAA’s 2008 survey of the cost of pay-TV piracy in Asia, the Asian pay-TV markets with the lowest level of piracy are generally those with the highest percentages of digital deployment. The survey was conducted in collaboration with the Creative Industries Division of Standard Chartered Bank.
In other words, Australia, Hong Kong, Malaysia, Japan, Singapore and New Zealand which are all almost 100% digital have the lowest piracy levels. “Another important advantage of a well developed digital infrastructure is that it enables pay-TV operators to deliver sophisticated high-value pay-TV packages to consumers, including HDTV and sometimes interactive applications,” Medeiros explains.
“It is also important that India and China – the region’s emerging giants – are demonstrating an increased pickup for digital pay-TV services,” he says. CASBAA estimates that India now has 8.5 million digital pay-TV households, while China has 34 million digital cable connections plus a couple of million IPTV subscriptions.
Between the worldwide recession and a market that includes 15 countries widely ranging in size, technology, infrastructure, regulation and levels of piracy, CASBAA is fulfilling a vital role. “Even markets that are emerging pay-TV giants occasionally need to be coaxed into the 21st century,” Medeiros says.
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What’s happening in Asia: Market by market
Korea: Changes in regulations on IPTV have resulted in new competition from emerging IPTV services. This is causing the cable industry to upgrade its infrastructure and push ahead with digitisation.Taiwan: Suffers from several problems: The pay-TV market is over-regulated and as a result development has stagnated. The pay-TV industry is now trying to convince regulators to ease some of the restraints and accept new business models based on digitisation.
China: Driven by the Beijing Olympics, the country is digitising rapidly because the government has made this a priority. Operators are looking for ways to increase revenues in a market where consumers are used to getting free content. The key priority in China is finding viable business models to enable new premium content to become available on pay-TV systems and to encourage increased ARPU.
Philippines and Thailand: Piracy can be expected to continue to weaken growth in these markets for the next few years unless the governments become involved in seriously boosting enforcement. By the end of 2008 piracy in the Philippines will reach about US$94 million while net industry losses in Thailand will be approximately US$184 million.
Indonesia: Piracy is emerging as a major problem. If the pay-TV industry doesn’t succeed in working together, piracy could become as problematic in Indonesia as it is in the Philippines and Thailand.
Vietnam: Rapidly growing pay-TV industry. Although piracy has been prevalent in the past, the government has exhibited a strong inclination to deal with it effectively. As a result, the legitimate market has more than doubled in the past two years. This growth should be sustained in the next two years. Meanwhile the Vietnamese industry will be able to provide more content for the local market.
Hong Kong and Singapore: Large number of pay-TV providers in both markets. The challenge for CASBAA and for the local industry is to keep the lines of communication open. Both markets have good intellectual property laws and strong, open regulatory systems. Both need to continue updating. Hong Kong is now considering action to regulate peer-to-peer sharing.
Australia: Ferocious competition between the pay-TV and free-TV industries rages with a continuing tussle over “anti-siphoning” rules governing sports content. Crime doesn’t seem to pay in Australia. The police have raided and charged several piracy rings. One was fined AUD 1 million for distributing devices to circumvent CA systems.
New Zealand: The year’s key event will be the announcement (expected in mid-2009) of the results in the government’s ongoing review of competition in the audio-visual broadcasting market.
India: Strong dialogue with regulators for the past several years. There are signs that the regulators are becoming more responsive. Discussions are being held to relax quotas on foreign investment, for example. Nevertheless changing key regulations on matters like price controls is difficult. The short-term challenge is to work with the Indian government after the elections that will be held in April 2009. India’s digital satellite DTH market has registered exceptional growth in the past few years.
Pakistan: CASBAA estimates there may be as many as 8 million pay-TV connections but only a small minority is legitimate. Net industry losses have grown to at least US$126 million. This is the equivalent of 7.2 million subscriptions.
John Medeiros, Deputy CEO, CASBAA
Source: NDS – World Vision Issue 47