Glitches, snafus give way to growth
SYDNEY — The introduction of direct-to-home satellite broadcasting in Asia has been a textbook study in how to turn viewers off the notion of embracing multichannel television.
DTH launches in markets such as Indonesia, Australia and Malaysia over the past two years were plagued by technological glitches, and in some cases marketing, programming and pricing snafus.
Now, after some expensive lessons, home dishes are sprouting across the region.
While no one is getting rich yet off the infant pay TV business in Asia, a number of channel providers and U.S. majors foresee DTH leap-frogging cable in some markets to become the primary means of distributing multiple channels.
In other markets, sat dishes are hailed as a viable way of reaching rural areas not economical for cable.
Last year, Hollywood studios collectively reaped about $180 million from selling programming to pay channels throughout the Asia/Pacific, stretching from Japan to Australia. That’s peanuts compared to the coin they’re harvesting from free-to-air broadcasters and homevideo and theatrical windows, but it’s a start.
Feevee operators themselves are still swimming in red ink, but they remain committed to the cause.
“There is no shortage of demand or willingness to pay for entertainment if you can provide value and quality, but it takes time, persistence and a lot of money,” said Gary Davey, CEO of Star TV.
The vista of sat dishes mushrooming on Asian rooftops is central to Star’s strategy of striving to be the dominant force in the key programming categories of movies, general entertainment, music and sports — on a local basis.
“We are as confident now about the viability of what we’re doing as we were at the beginning, and I can base that statement on a bit of scar tissue,” asserts Davey, who was hand-picked by Rupert Murdoch to pilot Star in 1993 after News Corp. bought into the satcaster.
“Our goal within five years is to get 50% of our revenues from advertising and 50% from subscriptions through DTH and cable,” Davey said.
Gary Marenzi, president of MGM Telecommunications, believes DTH will prevail over cable in some markets because of the superior quality of digitally transmitted pictures, greater channel capacity, and, eventually, as a vehicle for pay-per-view.
Marenzi sees benefits from sat broadcasters competing with cable systems, reasoning that that will force cablers to “get better at their game,” while driving down dish prices to more affordable levels.
The MGM Gold channel is carried on Indonesia’s Indovision and Malaysia’s Astro platforms, and Marenzi said he’s negotiating with all three sat groups in Japan and with various parties in India.
“Getting DTH right in Asia is a matter of understanding the consumer, assembling a portfolio of programs and pricing it (attractively),” said MTV Networks Asia president Frank Brown.”
There are a number of positive signs of growth in sat-to-home broadcasting and of its pending introduction in India and South Korea:
Astro, Malaysia’s sole 20-channel digital sat operator, is going gangbusters since it switched on last October, several months later than planned due to the delayed launch of the satellite.
Paul Edwards, CEO of parent company Measat Broadcast Network Systems, is formulating plans to offer pay-per-view, Internet access, home shopping and banking early next year.
In Japan, DTH pioneer PerfecTV, which began full-scale operations last October, reported it had 237,000 subscribers at the end of April.
Although that was short of its 300,000 target, it gives PerfecTV a decent lead on DirecTV, which is shooting for a November-December start-up, and on the JSkyB consortium, which intends to blanket Japan with 150 channels next April .
Indonesia’s monopoly DTH service Indovision struggled from its inception in late 1995 to get its act together. Tardy delivery of decoders was one problem, another was prohibitively expensive prices for the equipment and annual subscriber fees. In April 1996, Indovision sought help in the form of a management contract with Star.
Since switching to digital transmission, Indovision has converted to the new format 7,500 of the 23,000 subscribers who had analog set top boxes.Indovision has 450 installation teams operating nationally, each with a target of connecting 2.2 homes a day, and it’s believed that by the end of the year the goal is 60,000-100,000 subs.
Star’s ISkyB intends to be the first DTH service beamed into India pending clarification of some regulatory issues — hopefully “within the next few weeks,” according to Davey.
He does not see the need to wait for the contentious broadcasting bill, now being considered by a parliamentary committee, to become law.
Davey seems unfazed by the bill, which he views as merely a “working document.” But in its present form, it would prevent foreign companies like Star from owning more than 49% of sat-delivered channels.
In Thailand, Intl. Broadcasting Corp., which pioneered cable TV seven years ago and also transmits its channels via satellite, is the market leader against rivals Thai Sky Cable and Universal Cable TV. IBC execs did not respond to questions about the number of subs and profitability.
In South Korea, Samsung Entertainment Group, a unit of one of the country’s biggest and most powerful congloms, has flagged its desire to enter sat broadcasting as soon as regs permit. Samsung already owns two cable services airing movies and docus.
The Hong Kong government recently renewed Star TV’s license until 2002. Technically, the license is held by Star’s original owner, Hutchvision, but the cabinet signaled it’s willing to consider allowing foreign ownership of licenses later this year.
Also, the HK government slashed the cost of licenses: a generous move that analysts say will save Star about $400,000 a year.