MUMBAI: Industry revenues coming from the pay-TV market in Asia are now in excess of US$15 billion annually. However, in other jurisdictions the regulatory framework remains uneven and unfavourable to competition and development, including meeting the demands of technological change and industry investment, as well as creating a level playing field for competitors.
The Cable and Satellite Broadcasting Association of Asia (CASBAA) has reached this assessment after a study on effective regulation of the pay-TV Industry in the Asia-Pacific. The study has identified India and China as the two largest potential markets which are critical to the future of Pay-TV development in Asia.
The study finds that China's industry has been gradually moving from a free-to-air retransmission model to a genuine pay-TV environment. However, regulatory restrictions and uncertainty remain. However, Casbaa feels that China's focus on accelerating the rollout of digital pay-TV infrastructure will facilitate an environment for greater investment and competition in the pay-TV and broadband industries. It is thus foreseeable that its regulatory framework will evolve over time, with the focus on maximizing investment and growth in the pay-TV industry and overall deployment of digital infrastructure.
Casbaa describes the Indian pay-TV industry as vibrant, particularly with regard to investment in programming. Uneven regulation, however, if smoothed, would have a significant impact on the rate of growth and infrastructure investment. The trend, nevertheless, is uncertain, and notable restrictions on distribution, pricing and supply of pay-TV programming have been introduced in recent years, the study finds.
The study shows a clear relationship between regulatory effectiveness and pay-TV industry investment and growth across the Asia region. While macro economic factors have also helped drive investment and revenue generation, the results of the study demonstrate that an effective regulatory framework is a pre-requisite for a high performing sector.
Casbaa study finds that certain Asian markets including Hong Kong and Japan are nearing global benchmarks for effective regulation with a beneficial impact for both consumers and the industry. Malaysia, Singapore and Australia maintain generally favourable regulatory frameworks, although they are limited in terms of competition and do not provide the widest consumer choice.
The study classifies Taiwan and Korea as established markets with complex regulations. Taiwan was previously able to attract considerable investment in pay-TV distribution and programming from strategic media and private equity investors but is now in danger of losing its appeal. Regulations remain characterised by overly complex and restrictive practices, involving multiple levels of government. These have undermined incentives to upgrade technology and invest meaningfully in programming content.
Korea, with a well-developed pay-TV network infrastructure, is a potential high growth market but progress remains curtailed by restrictive retransmission policies, programming quotas and the lack of a level playing field for competition between terrestrial and pay-TV platforms. Regulation is evolving, as most recently indicated by an increased limit on foreign investment in pay-TV distribution platforms.
On the other hand, Philippines and Thailand are perceived as underdeveloped markets hindered by weak regulation. The Philippines and Thailand are both moving to improve their frameworks but progress has been slow, if not non-existent. Casbaa finds that a common problem to both countries is the existence of massive pay-TV signal piracy on a commercial scale. Intellectual Property rights enforcement has been weak.
Over the past three years, annual industry investment, which encompasses of costs relating to distribution, programming and technology, reached US$438 per pay-TV household in Japan and US$393 and US$390 in Hong Kong and Singapore. This compares to only US$89 in Korea and US$162 in Taiwan, markets where the regulatory framework is more rigid. Just US$84 has been invested per year in the Philippines and US$139 in Thailand. Both these markets remain severely depressed by rampant piracy.
"The Casbaa study highlights significant upside in terms of economic growth, investment in infrastructure and content creation that governments can expect from adopting effective regulatory policies," said Casbaa chairman Marcel Fenez. "The rewards are clear in the markets that have improved their regulatory systems in recent years. Rapid increases in investment and industry development are the principal benefits."
The evaluation of pay-TV regulation and the construction of a "Regulatory Regime Index" were undertaken by a Casbaa panel of industry experts and senior executives. The evaluation and its findings were reviewed by the Casbaa Board of Directors and Casbaa Council of Governors. The construction of the "Investment & Sector Value Index" and the relationship between regulation and industry investment and sector value were undertaken by regional research & consulting firm, Media Partners Asia (MPA).
