China, India, Japan and South Korea will spearhead growth in Asia-Pacific’s Pay TV market in 2018. According to a report by analysts Media Partners Asia revenue in the Asia Pacific region will increase 5% in 2018 and will top $56 USD. The industry is expected to continue to expand with revenues projected at $66 billion by 2023.
MPA's Asia Pacific Pay TV Distribution report, which covers 17 markets across the region, predicts 3% compound annual growth for the next five years, which will see pay TV revenues — including subscription fees, and local and regional advertising sales — exceeding $66 billion by 2023.
China, India, South Korea and Japan will drive future growth in the region, with MPA projecting that the Asia Pacific pay TV subscription base will grow from 645 million subscribers in 2018 to 696 million subscribers by 2023, reflecting a 2% compound annual growth rate.
In 2018, the pay TV subscriber base in the region will grow by 3%, representing 57% of TV homes with at least one pay TV service. India will account for 47% of that growth in 2018.
The report cautions that pay TV penetration will fall to 55% of TV homes by 2023 when adjusted for multiple subscriptions, largely due to an acceleration in cable cord-cutting in China.
Indian pay TV revenues will reflect the highest growth rate over the next five years, with compounded annual growth rate (CAGR) of 8%. India is followed by China and Korea at 3% CAGR, and Japan at 1% CAGR.
Other countries in the region, including Australia, Hong Kong, Malaysia, New Zealand, Singapore and Thailand will see their revenue decline over the next five years, with their CARG’s declining between 1% and 6%.
By 2023, pay TV revenues will total $25 billion in China, $16 billion in India, $7.4 billion in Korea and $7.1 billion in Japan.
Vivek Cuoto, the Executive Director of MPA said that the Asia-Pacific region is shifting to high-speed broadband and online video consumption, which "together with piracy will continue to adversely impact pay TV industry growth."
Cuoto noted that "there will be more fixed broadband subscribers than pay TV subscribers across much of Asia Pacific by 2021, while the gap between the mobile broadband subscribers base, and pay TV and fixed broadband subscribers will further widen as mobile networks emerge as a major means for mass content distribution, accelerating the shift in content consumption from households to individuals."
He also said that; “M&A activity for the Asia Pacific broadcasting and Pay TV sectors for 2017 and the first half of 2018 reached US$10.5 billion in aggregate, with the biggest deals taking place in Australia, India and Korea. More M&A and consolidation is likely in these markets with Southeast Asia likely to join the action over 2019-20.”
In August, the MPA also released a study that showed that Asia Pacific ‘Online Video’ revenues are expected to grow to at an 18% CAGR to $48 Billion USD by 2023, with more than 60% of revenues coming from China. The MPA’s report said:
“Online video monetization is starting to scale, supported by rising investment in premium entertainment and sports as well as the growth of broadband and digital payments. Strong digital ecosystems are emerging, especially in China while telcos are also becoming important aggregators of video services in markets such as Australia, India and Southeast Asia. Advertising is a major revenue stream for online video across the region, while subscription is also key, especially in Australia, China and Japan, and growing from a low base in India, Southeast Asia, Korea and Taiwan. Different payment models are emerging across China, India and Southeast Asia incorporating more flexible options, including TVOD and shorter time commitments, freemium tiers, bundles and loyalty programs tied to a broader mix of digital services.” The report also noted:
• The industry is evolving and requires high levels of investment and strong balance sheets.
• There remain significant barriers to growth, led by high levels of online piracy
• Many local players are struggling to scale in fragmented marketplaces
• By 2023, India will be Asia Pacific’s fourth-largest online video subscription market after China, Australia and Japan.
• Online video advertising in Asia-Pacific will grow from US$13 billion USD in 2018 to $30 billion by 2023. YouTube and to some extent Facebook will remain dominant, with 73% of online video ad spend by 2023, versus 78% in 2018.
• Content costs are a critical component of online video growth, especially original productions, local and Hollywood movies and entertainment, and sports rights. Online video content costs across Asia Pacific grew by 27% in 2017 to reach $13 billion USD with China contributing 85%.
• Advances in broadband will provide a significant boost to online video consumption, reach and monetization. Mobile broadband will continue to grow, including the first flowering of 5G in North Asia and Australia post-2020.
• With China included, mobile broadband penetration in Asia Pacific will grow from 74% to 94% per capita over the 2018 ~ 2023 period.
• Online video has become media’s most active, most disruptive and most talked-about sector and is being fueled in Asia by telco investment in fast and affordable broadband networks.