Pictured: Wang Jianer, Wasu Group
These are uncertain times for traditional pay-TV, once the primary source of entertainment for middle class homes.
Fixed broadband penetration is set to eclipse pay-TV penetration in many countries across Asia-Pacific over the next five years, pointed out Aravind Venugopal, VP at Media Partners Asia (MPA), during his opening presentation at APOS | Tech, a new conference hosted by MPA, held in Hangzhou this week.
This trend takes in growth markets such as Indonesia and Thailand, where new entertainment ecosystems are developing around fixed as well as mobile broadband, in addition to more developed economies, where high-end smartphones and high-speed networks are more common.
Over the same time, large-scale M&A will reshape media and telecoms distribution dynamics in many APAC markets, a trend that is likely to play out in India, China and parts of Southeast Asia.
As OTT alternatives, from Netflix to YouTube to piracy, reset consumer expectations around pricing and delivery, scale can help operators ramp up their own expertize to compete, Venugopal explained.
“If you look at Sky for instance, a lot of their new developments are happening – yes, with their technology vendors and their partners – but they have the scale with 21 million subscribers across UK and Europe, to have hundreds of engineers in-house, and build and innovate to compete in the digital ecosystem.”
The media and entertainment industry is moving to a future where tech investments and capabilities will determine key battlegrounds such as analytics and speed to market.
The challenges for incumbents are especially acute in China, where traditional platforms are struggling to keep pace with rising consumer expectations as well as content costs triggered by online video competition between the country’s three biggest internet companies: Baidu, Alibaba and Tencent.
“The market is at a critical stage,” said Wang Jianer, chairman of Hangzhou-based Wasu Group. The company is one of China’s leading pay-TV and internet TV operators, with services spanning traditional cable and digital video, including VOD and various value-added service applications.
“We have to find the right way to navigate this situation, especially for traditional media operators, we need to find the way out,” added Wang, also speaking at APOS | Tech.
Wasu’s strategy is anchored around differentiation and customized services, prompting collaboration with Alibaba (its second largest shareholder) and CCTV on data and analytics, while seeking more tie-ups with international players on content.
“The winners are usually the internet companies,” Wang said. “All media companies face unprecedented challenges.”
Wasu has emerged as China’s largest interactive platform provider with 30 million subscribers, forging partnerships with both technology companies (Sony, LG, Samsung, Haier, TCL) and content providers (Discovery, Disney, Warner, Sony and TVB).
Speakers at APOS | Tech also emphasized how future success hinges on new approaches and skillsets.
“The next three to five years are going to be a big period of change for us, as different customers evolve their usage and content needs,” remarked Loke Kheng Tham, EVP of pay-TV for Hong Kong’s PCCW.
PCCW’s Now TV platform, Hong Kong’s leading pay-TV service, is midway through its latest product overhaul, rolling out a new set-top box – the result of a 10-month design process and built largely in-house – to deliver on evolving subscriber needs.
A revamped multiscreen offering will follow by the end of the year, mirroring the box's interface and functionality.
That’s a base that PCCW needs to keep building on, Tham explained, calling for real-time data and speedier decision-making to address new challenges and opportunities, especially around OTT and individual viewing.
“When we look for partnerships, we look for people who are willing to go through that learning curve with us,” Tham added.
“We all need to figure out how to learn and move on the fly together, and to really respond to the customer together very quickly.”
Telecom companies are also looking at how best to position themselves to benefit from the changes taking place.
Many are focusing their efforts on building out their own networks, while encouraging the growth of OTT players, video in particular, to spur broadband consumption.
“Very clearly, for a telco business, I need to be available all the time, everywhere. That’s extremely challenging for a company like us,” said Farid Mohamed Sani, chief strategy officer for Telekom Malaysia.
“We have multiple networks, we have ADSL, we have fiber and we are primarily fixed line – we are beginning to move into mobility but we are not there yet,” he added.
“The standards and expectations of broadband, in terms of quality and price, are just ever increasing.”
TM’s partner iflix, now in 30% of the telco’s fiber homes, is also adjusting its product to meet the needs of its customers.
Traditional recommendation engines, which rely on data volumes, offer little value in a diverse market such as Malaysia, pointed out Iflix’s head of Asia, David Goldstein.
The SVOD company opted for something simpler instead: curated playlists compiled by local celebrities.
So far, these are proving more effective at driving consumption, Goldstein noted.
“It’s a simplified version of how to get to what you want to see quickly,” he said.
The two-day APOS | Tech conference brought together key players from distribution and technology across the video and broadband industries, addressing key drivers and challenges anchored to technological innovation as well as investment opportunities for operators.