New research on the pay-TV channel ecosystem shows India powering revenue and profit growth for regional pay-TV broadcasters in Asia Pacific. Revenue for pay-TV channel groups owned by global media companies expanded by 4 percent in 2017 to reach ~USD 5 billion across the region, while Ebitda grew 9 percent Y/Y to reach ~USD 1 billion, according to leading industry analysts Media Partners Asia (MPA).
India continues to make a massive contribution to this pie, led by large local channel businesses owned and operated by 21st Century Fox, Sony and Viacom. MPA figures show India making up 65 percent of revenue for regional pay-TV channel groups in 2017, followed by Southeast Asia with 15 percent, Japan with 7 percent and Australia with 5 percent. Korea, contributing just 1 percent, remains heavily underweight.
Excluding large local pay channel businesses in India, pay-TV channel revenue for regional broadcasters declined by 1 percent across the region in 2017, inching down to USD 2.2 billion, while Ebitda contracted by 4 percent Y/Y, to USD 560 million. The performance reflects a more challenging wholesale and retail market for pay-TV in Southeast Asia as well as in Australia and New Zealand, Japan and Hong Kong and Taiwan. Nonetheless, Southeast Asia still leads top-line contribution for this revenue segment at 33 percent, followed by India (20 percent), Japan (16 percent), Australasia (11 percent) and Hong Kong & Taiwan (11 percent).
Ex-India, declines have been evenly spread across most genres. The notable exception is sports, where the growth of BeIN Media has helped boost the category. Together, factual, lifestyle, kids, news, music, movie and Asian entertainment channels experienced an aggregate contraction of close to USD 150 million in affiliate and advertising sales ex-India in 2017.
Online platforms and consumer products support sustained growth
Nonetheless, a number of global broadcasters with investments in Asia are still seeing sustained growth in the region on the back of: (1) Licensing deals and strategic partnerships with online video and telecom platforms; (2) The growth of consumer products; (3) Nascent online video advertising. Leading broadcasters will also accelerate development of their own branded online video services in the region, a trend already underway with the launch of key entertainment and sports OTT platforms over 2016-17. Partnerships with streaming and telecom services will also proliferate over 2018. At the same time, the underlying need for local IP and partnerships remains. Key players are slowly responding with investment in premium Asian content as well as local deals in Korea, Japan and parts of Southeast Asia.
In India, macro hurdles as well as competitive and regulatory pressures will impact near-term performance for foreign-owned pay channels. Nonetheless, major players should still outperform the market with strong double-digit growth along with longer-term upside from the growth of branded online video networks. – TV News4U