CASBAA hails "digital cushion"

HONG KONG — The Cable & Satellite Broadcasting Association of Asia (CASBAA) today announced new data for Asia’s pay-TV market, showing 71 million digital pay-TV households out of 300 million pay-TV subscriptions across Asia.

“The increase in digital pay-TV market penetration represents a tipping point for our industry in Asia,” said Marcel Fenez, Chairman of CASBAA.

“This is especially relevant with regards to the control of revenue leakage since digital pay-TV creates far greater transparency – what might be termed a ‘digital cushion’ — which can slow the growth of pay-TV piracy, while accurately tracking pay-TV subscriptions,” said Lee Beasley, Head of Media & Entertainment at Standard Chartered Bank in Hong Kong.

CASBAA noted that the Asian pay-TV markets with the lowest level of revenue leakage (or piracy) are generally those with the highest percentages of digital deployment, according to the findings of the 2008 Pay-TV Piracy Survey, conducted by CASBAA in collaboration with the Creative Industries Division of Standard Chartered Bank.

“For instance, Australia, Hong Kong, Malaysia, Japan, Singapore and New Zealand are almost 100% digital and have the lowest piracy levels,” added Beasley.

CASBAA also highlighted that digital infrastructure provides pay-TV operators and cable channels the greatest opportunity to deliver sophisticated high-value pay-TV packages to consumers, including HDTV and interactive offerings.

Just as importantly, according to CASBAA, the mega-markets of India and China are demonstrating an increased pick-up for digital pay-TV services. India now has 8.5 million digital pay-TV households, while China represents 34 million digital cable connections.

“India’s digital pay-TV market has been driven by the recent exceptional growth in the digital DTH market but, at last, with 1.7 million digital cable subscriptions, India is finally taking off,” said Fenez.

While China’s most recent growth was clearly driven by the Olympics, “the next trick will be to enable new premium content to enter the market to encourage increased ARPU and to stimulate additional demand,” said Fenez.

While the pay-TV market has grown to almost 300 million subscribers across the region, CASBAA also revealed that the net cost of pay-TV piracy in 2008 will top US$1.7 billion this year, up from US$1.5 billion in 2007. “Nevertheless, this is in line with market growth while digital deployment should slow piracy as net subscriptions continue to grow,” said Beasley.

In India, the grey market for cable TV services has grown proportionally to the rapid growth in the overall market, topping US$1.1 billion. This grey market in India largely consists of cable connections that are under reported by cable operators.

Meanwhile, in Thailand and the Philippines the outright commercial theft and unauthorized redistribution of cable programming remains a serious issue. Piracy in Thailand will result in net industry losses of US$184 million by year-end 2008, while the piracy figure for the Philippines will stand at US$94 million.

In emerging pay-TV markets such as Vietnam and Pakistan, industry growth remains strong. In Vietnam, the legitimate market has more than doubled this year. In Pakistan, which is now estimated by CASBAA to have up to eight million connections to pay-TV services, only a small minority of these is legitimate, and the net losses to industry have increased to US$126 million, the equivalent of 7.2 million subscriptions.

In some markets technological advances have impacted the level of revenue leakage. For instance, in urban Indonesia and the Philippines, ongoing conversions of analogue networks to digital have reduced individual household “line-tapping”.

Hong Kong’s increasing reliance on digital TV systems has also made it more difficult for pirates to tap into pay-TV networks with piracy now accounting for US$20 million, down from US$26 million last year.

Overall according to CASBAA, pay-TV piracy in Asia seems set to stabilize in a digital world even as the Asian market remains on track for growth.