The Pay-TV Innovation Forum is a new global research programme for senior pay-TV executives, developed by NAGRA and designed to explore and catalyse innovation across the pay-TV industry, at a time of unprecedented change. As part of the programme, we are publishing a series of interviews with leading pay-TV industry executives from around the world to explore their views, perspectives and experiences of innovation in the pay-TV industry.
In 2016, the Pay-TV Innovation Forum identified new types of content offering and content pricing and packaging as the two key areas of innovation for pay-TV operators to focus on over the next five years. 73% and 72% of global industry survey respondents, respectively, identified these two areas as the most attractive areas of innovation opportunity.
In this interview, Shad Hashmi, VP, Digital Development Global Markets & Operations, Asia at BBC Worldwide shares his views on the evolution of the video market in the Asian-Pacific region and talks about future developments in content offerings and next-generation content pricing and packaging models.
How would you describe the pay-TV market in Asia today?
Some people have said that pay-TV is dead, but I disagree with that, particularly in Asia, where pay-TV markets have grown over the last few years. People who have grown up with linear TV still find comfort in a linear experience – they like highly-curated branded TV propositions where they know what they’re going to get. So there is a level of pay-TV loyalty among the older demographics. However, pay-TV companies face a major challenge in relation to millennial audiences – who don’t have a similar relationship with traditional linear pay-TV – and need to find innovative ways to acquire these consumers.
How do developments in pay-TV differ between advanced and emerging Asian territories?
A lot of emerging Asian markets, such as Vietnam, Cambodia, Indonesia, do not have well developed fixed-line infrastructure leading to very different pay-TV market dynamics. Consumers in those markets are going mobile-first – a lot of them are starting to take up 4G services and potentially moving to 5G in the future, without ever needing fixed-line infrastructure. The big question is how consumers in these markets will consume video content: will they prefer TV Everywhere services from pay-TV providers or will they subscribe to multiple SVOD services? The major problem with consumers subscribing to multiple SVOD services is how they discover content and that is something historically linear TV has been great at solving.
Do you see any significant differences in appetite for content between younger and older demographics across Asia?
There are significant differences between millennials and older generations, particularly in terms of consumption of short-form content. However, it certainly does not mean that millennials only want to consume short-form content. Millennials will watch an hour-long documentary, provided it’s a compelling proposition and fits their need state at a particular time. They consume different types and formats of content depending on the situation and setting they are in. I think it is a stretch to say that long-form content is dead or even declining for millennials. They simply demand a more varied content mix but have an appetite for both short and long-form content. Some producers have recognised the growing demand for short-form content from millennials and started to experiment with the way they package TV shows - for example, running five 10-minute episodes instead of one 50-minute episode.
Is local content important in Asia?
If you look at the commissioning strategies of the big SVOD players, they are heavily focused on local and hyper-local content. India is the bellwether when it comes to local content, with a massive local production sector. I expect many Asian markets to follow suit and become increasingly focused on local content. There will still be a lot of interest in foreign productions, but we will see significant growth in high quality local content. There are also interesting trends emerging – some local productions travelling outside their original markets. Take Dangal for example, an Indian feature film that grossed more in China than it did in India, because the story of a strong female lead resonated very well with the Chinese audience. Another example is BBC Worldwide’s acclaimed format Strictly Come Dancing that has been adapted for the Indian market. Jhalak Dikhla Jaa is hugely successful with numerous awards and a cumulative reach of 139 million viewers.
A large proportion of population in Asia does not pay for pay-TV or other video services. Do you expect that to change and why?
There is a growing, and large, middle- and upper-class in Asia willing and able to pay for quality content, but who do not have easy access to convenient payment mechanisms. That is not an issue in countries like Singapore or Hong Kong which have high credit-card penetration, but is definitely a barrier in emerging markets like Indonesia and Philippines. As payment mechanisms in emerging markets become ubiquitous I expect to see more people paying for content, provided the content is priced reasonably. There is also strong evidence that a growing number of people value quality experiences – for example, many more people used to watch illegally ’camcorded’ copies of movies that were available days after a premiere, but cinema revenues are healthier than they have ever been. There is a flight to quality and I expect this trend to continue.
Do you think innovation in payment mechanisms will be key in Asia?
Absolutely – finding a strategy that will enable people to get easy access to content will be key. Content providers will have to become significantly more innovative in terms of payment methods. For example, if I go and open a bank account at a local bank I could also be given the opportunity to subscribe to a pay-TV or SVOD package and have the payment deducted monthly. Similarly, it could be done with mobile subscriptions or even pre-paid mobile services. That would make video services much more accessible by eliminating the payment friction.
In general, we will see more innovation across the pay-TV industry, driven by the need to survive. As traditional players start to see their growth slow down or flatten, they will start to experiment more in terms of how they monetise their propositions while making sure they do not jeopardise their existing partner relationships.
There are international trends that the Asian pay-TV industry should start exploring more closely. For example, some operators in the Nordics have started offering skinny bundles / personalised channel bundles and there are a lot of lessons there. Maybe new-age channel bundles will change, but the concept of a bundle of channels still remains strong and valuable. However, it has to be based on consumer needs and that’s what will drive innovation in the market.
Looking ahead, how will the pay-TV market in Asia develop over the next five years?
I am optimistic that the pay-TV market, broadly defined as paid-for video market rather than just traditional pay-TV, will continue to grow rapidly. This will be driven by innovative offerings, especially in the emerging markets such as Vietnam, Philippines, Cambodia and Indonesia. Looking at the wider content market, premium and niche content will continue to thrive. However, one area of the content market that is potentially at risk of declining is the so-called ‘soft-middle’, which is usually medium-priced and low-demand. By contrast, great high quality content will be at the centre of growth in pay-TV, making us very excited about the future. We are very well positioned for growth, because BBC Worldwide has an amazing content pipeline, probably better than we’ve ever had, great partnerships and we are innovative in the way we distribute content to our partners and consumers.