The Asia Pacific region will have 903 million TV households by 2020, an increase of over 100 million compared with 2014. TV households will have an average 1.21 TV sets per home, leading to more than 1.3 billion sets across the region by 2020.
Of the 903 million total, 48% of the TV households will subscribe to cable (both analog and digital). This puts it well clear of the second-placed pay platform – pay DTH — which will have a 10% share due to its continuing strong growth thanks to DTH operators in India.
China and India account for the top 11 Asia-Pacific operators in terms of subscriptions. China’s CRTN is the undisputed world leader in terms of pay-TV subscriptions, with 231 million subscriptions. China’s IPTV operator, BesTV, is second in the region with 22.5 million subscriptions.
Indian cable and DTH operators occupy the next nine positions, with DEN, Dish, and Hathway leading. The stand-out success story over the past few years has been the growth of pay DTH services in India, which caused the country to overtake Japan.
Indonesia is on a similar trajectory. Within the next decade, Indonesia is expected to become the third-largest digital TV market in Asia Pacific. By the end of the forecast period, Indonesia will have 35 million digital TV subs, with an estimated 6 million net additions in 2020, whereas Japan will be stagnant on 49 million TV households due to its already mature market.
Due to the region’s size, Asia Pacific’s TV market is continuing to experience a mass conversion from analog to digital, having benefitted from the increasingly competitive environment between broadcast platforms in individual markets. This competition continues to intensify and has pushed digital upgrades up the agenda of many operators that want to secure their long-term positions in sustainability and revenue.
Against this background, Ovum is forecasting that the 59% digital TV penetration rate at the end of 2014 will increase to 88% by the end of 2020. By 2020, digital penetration will be 100% in eight markets (Australia, Hong Kong, Japan, Malaysia, New Zealand, Singapore, South Korea, and Taiwan), with India and Thailand over 95%.
Whereas China will have the largest IPTV market by 2020, IPTV penetration in the country will only be at 13%. Only three countries – South Korea, Hong Kong, and Singapore – will have IPTV penetration of 50% or more, in the rest of the Asia Pacific, it will be less than 20% and IPTV will only be accessible in patches.
The difficulty in sourcing – and being able to afford – compelling content, plus the insufficient network capacity and coverage challenges, will hold back IPTV from greater growth. These factors will often restrict it to be marketed as a “free” or “low-cost” add-on service within a multiplay bundle.
The Asia Pacific region, as a relatively late mover towards digital conversion, has benefited from not having had to take risks with untried technologies or business models, allowing nations elsewhere to learn these lessons for it. However, several Asian countries have well-established electronics manufacturers and these companies are keen to develop proprietary hardware and software, not only for their domestic markets, but also for the lucrative export sector, especially in South Korea and Japan, both of which are pioneering advances in 4K UHD television.
China overtook Japan as the region’s digital leader in 2007, followed by India in 2008. By the end of 2014, digital TV households in China and India accounted for 32% and 12%, respectively, of the regional total.
The sheer size of the two markets will see them command a combined share of 76% of the region’s digital TV total. Indonesia will threaten Japan’s third spot after the forecast period. In total, there will be 792 million digital TV homes by 2020.
Ovum forecasts that ARPU will continue to grow throughout the forecast period, rising from $6.40 in 2014 to $8.63 in 2020. The number of services on offer – and the subsequent tiering of channels and introduction of PPV/VOD packages – will contribute to this.
However, the average ARPU for the region does not reflect the reality in individual markets. Australia has the highest ARPU at $67.88; the lowest, Pakistan, has an ARPU of under $4. Only Australia and New Zealand will have ARPU higher than $50 by 2020; Singapore and Malaysia will have ARPUs higher than $25; and six further markets (Hong Kong, Japan, Philippines, South Korea, Taiwan, Thailand) will have ARPUs of between $14 and $17.
Pay-TV operators need to start offering subscriptions that cater to the low-ARPU customers – a combination of TV and a basic online TV proposition (either linear, VOD, or both) through online portals can be the beginnings of monetizing this segment.
The majority of Ovum’s forecasts relate to the primary platform within a TV household. Ovum focuses on the primary set in the home because this is usually the set controlled by a household’s decision maker and so is seen as the key access route to the majority of the spending power within the home.
However, there is a growing interest in secondary set activity and, in recognition of this, Ovum took the opportunity to expand the research focus to look at the wider distribution of TV sets within the home. Of course, second (third and fourth) sets in bedrooms, kitchens, utility rooms, etc. are not a new occurrence, but this information does provide some interesting insights into how platform usage patterns are evolving.
Ovum’s statistics show that, by the end of 2014 there were 412 million cable TV sets, 38% of all TV sets, making cable the most watched platform, followed by analog terrestrial TV with a 26% share. By 2020, cable will still be in the lead, accounting for 35% of all TV sets, followed by DTT at 28%, DTH at 19%, analog terrestrial at 11%, and IPTV at 8%.
Ismail Patel is a research analyst with Ovum specializing in global TV markets