Pay-TV penetration across APAC set to decline with rise of OTT platforms

Pay-TV penetration in APAC - in particular for developed markets such as Hong Kong and Australia- is set to decline marginally through to 2023 due to cord-cutting and the popularity of over-the-top (OTT) video streaming platforms, according to the latest report by data and analytics company, GlobalData. Further convergence of Pay-TV and OTT platforms is also expected.

GlobalData’s report - “Pay-TV Market Trends and Opportunities in Asia Pacific – 2019” - shows that the APAC pay-TV market remains very diverse, with household penetration levels ranging from 11% in Indonesia to 168% in South Korea as of year-end 2018. 

The report also revealed that China and India are currently the largest pay-TV markets in the region with 415.6 million and 177.2 million subscriptions respectively as of year-end 2018, distantly followed by South Korea with 33.2 million subscriptions.

“Currently, the market is facing growing price pressure. Most OTT players offer their services at a lower price point than traditional pay-TV packages. The effect [of which] is an increasing number of consumers only willing to pay for the content they know they will watch. In response, pay-TV providers are offering more modular packages to better match consumer preferences for content and price,” said Malcolm Rogers, telecom analyst at GlobalData.

“For example, Taiwan’s Chunghwa Telecom offers its Multimedia On Demand (MOD) service in a menu style selection manner with variable pricing per channel from US$0.16 to US$4.98, based on the cost from the content provider. This enables Chunghwa to target price sensitive customers and better compete with lower cost OTT options.”

The report forecasted that cord-cutting in developed Asia-Pacific markets will offset gains in Direct-to-Home (DTH) and Internet Protocol television (IPTV) in emerging APAC (South and Southeast Asia) markets. Also, as a result the overall region is forecast to witness a marginal decline in pay-TV household penetration from 67.4% in 2018 to 67% by the end of 2023. 

During the forecast period, developed markets such as Hong Kong and Australia are set to witness a decline in pay-TV penetration levels primarily due to cord-cutting and the popularity of over-the-top (OTT) video streaming platforms in these markets.

The report stated that an increasing number of video content consumers in the region prefer services that offer “watch-anywhere” capability. While home TV is still an important device, customers also demand the same experience across mobile handsets, laptops, and tablets. This has led to a rising trend of service convergence between traditional OTT and pay-TV. 

“OTT video’s relationship with pay-TV in APAC continues to evolve. Many pay-TV providers in the region have launched or will soon launch their own OTT platforms. Standalone OTT players are also increasingly seeking pay-TV provider partnerships. The pay-TV and OTT platforms are becoming increasingly integrated as customers want a device agnostic viewing experience,” said Rogers.