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Despite blackout, execs hope to make pay TV pay

An estimated 1 million satellite dishes were bought by Indonesians before the channels beamed on the Palapa bird were scrambled last year at the behest of the Hollywood majors’ trade body, the Motion Picture Assn.

The problem: Since the black-out, fewer than 10,000 homes in this country of 190 million people have signed on to subscribe to Indovision, the sole DBS licensor.

Despite the slow take-up, feevee execs are convinced that aggressive pricing and a mix of western and local channels customized for Indonesian auds will eventually make pay TV pay.

Choices there

With the country already served by pubcaster TVR1 and five private webs, arguably Indonesians are not starved for program choices.

With an estimated 17 million TV homes in the country plus those 1 million sat dishes, “very clearly there is a sufficient market for pay TV,” asserts Lloyd Lochra, Indovision group managing director and chief operating officer.

“The largest business potential over the next five years in Southeast Asia is here,” says David Dennis, the Jakarta-based exec who’s spearheading Star TV’s launch in Indonesia.

Indovision markets and distributes the “Gang of Five” package comprising CNN Intl., ESPN, HBO Asia, the Discovery Channel and TNT/Cartoon Network, and will distribute Star’s 16-20 channel constellation starting this fall.

Last month Indovision’s parent, PT. Matahari Lintas Cakrawala, part of a conglom headed by Bambang Trihatmodjo, a son of President Suharto, snagged a $50 million investment from the AIG Asian Infrastructure Fund.

Fund raising

The fund, sponsored by U.S.-based insurer American Intl. Group, has raised $1 billion to invest in projects in China and the Asia Pacific.

Lochra attributes the low subscriber count, augmented by deals which feed Indovision’s channels to 18,000 hotel rooms in Indonesia, mostly to the late delivery last December of decoders.

However, Indovision tacitly acknowledges this is a price-sensitive business by offering a special $600 package for decoder and one-year subscription. As another lure, it plans to slash monthly sub fees from $42 to $27, plus 10% value added tax.

Lochra says the international broadcasters are only now localizing their channels for Indonesia, citing HBO Asia, which introduced Bahasa Indonesian subtitles in April.

He projects Indovision will sign 75,000 subscribers in the next 18 months, and more than 500,000 by the turn of the century. Star TV expects to garner 20,000 in the first year and is shooting for 500,000 homes within five years, says Dennis, Star’s regional director for Southeast Asia.

Already Star has sold 3,000 decoders, enabling people to watch Star Movies carried on Palapa at night; during the day Star airs 12 hours of unscrambled programming.

Star will tailor its expanded lineup launching this fall on the Asiasat 2 digital bird. Its menu will include subtitled versions of Star Movies and Star Plus, a Bahasa music channel, Prime Sports with Bahasa commentary, and a Filipino movie channel with subtitles.

On the drawing board are plans for a Bahasa movie channel, which will involve setting up a joint venture production company, in line with Star’s policies in Chinese-speaking, Filipino and Indian markets. Star’s dish and decoder will sell for $750-$l, 000, and sub fees will range from $10 a month for a basic package to $35-$40, according to Dennis.

Indovision plans to launch its own high-powered digital bird Indostar 1 late next year. Its 32 channels will be filled by the current “Gang of Five,” plus Star’s package, and local channels including a Bahasa movie service being developed by Indovision.

Among the free-to-air broad-casters, there’s a general feeling that pay TV upstarts will make an impact – in time.

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