By land or by air: With access expanding, many opportunities await broadcasters and providers

Deregulation of the cable and satellite channels in 2009 that permitted six minutes of commercials per hour and 120 per day has led to rapid market growth. Fuelled by cheaper satellite and set-top box hardware, satellite broadcasters are starting to tap into the rural market, which has previously been largely left off the grid by cable providers’ “urban-rich” business models.

Digital TV is also expected to see large growth in 2012 following tentative approval of the digital master plan by the National Broadcasting and Telecommunications Commission (NBTC). There are concerns, however, this may result in a crowded market, fractured audiences and rising capital costs. With the ability to target niche audiences, broadcasters see an alternative in cable and satellite. Despite the sector’s infancy, market direction indicates future growth to rival 60 years of terrestrial’s free-to-air (FTA) monopoly.

EXPANDING ACCESS: Cable and satellite’s traditional foothold in urban centres with middle- and upper-class audiences has dictated the sector’s small market penetration. This is being challenged by the launch of new cable stations by Workpoint, GMM Grammy and RS, which are rapidly expanding upcountry, host to 69% of the Thai demographic. “The battleground for cable and satellite is going to be upcountry, not in Bangkok,” said media network Mindshare’s Paul Gibbins.

Satellite dishes and set-top boxes, retailing for less than $100, are now well within the reach of Thailand’s rural household income bracket and demand is growing regionally. Satellite operator Thaicom reported a 40% increase in direct-TV (DTV) dish sales in 2010 across Thailand, Cambodia and Laos, and it looked set to repeat this in 2011 with accumulated DTV sales of 1.14m sets at the end of the third quarter – growth of 34.5%. Within Thailand, satellite dishes have replaced traditional antennas in 50% of Thai households, and with a 33% rise in audience numbers over the last three years satellite TV’s penetration could reach 80% in the years ahead.

ADVERTISING: On the back of rapid audience growth, broadcasters and providers are expecting to see lucrative opportunities beginning in 2012. Advertising rates are priced at 95% less than prime-time terrestrial slots, at approximately BT20,000 ($638) per minute, which should attract advertisers, especially now that ratings are being monitored; AGB Nielsen’s satellite and cable ratings began in April 2012. In the medium to long term, media agencies expect advertising growth in the segment to cause a drop in terrestrial rates.

Whilst advertising will help support the approximately 80 FTA satellite channels that are currently available, cashing in on a sizeable tranche of the market’s non-subscription customers, content will soon define the industry’s leaders. “To stay competitive, the entertainment industry must innovate and capitalise on the convergence of different forms of media,” said Paiboon Damrongchaitam, the chairman of GMM Grammy. “Recutting and re-packaging existing tracks, for example, can continue to squeeze value out of entertainment companies’ intellectual property library.”

ON THE BOX: With 1.6m subscribers at end-2011, cable industry leader TrueVisions has already demonstrated the viability of paid content in the Thai market. Subscribers to its platinum, gold and silver packages provide 50% of its revenue but are just 25% of its customer base. However, TrueVisions, which does not create its own content, is seeing growing competition from production houses eager to sell their work to networks.

The most aggressive of these producers is GMM Grammy, which invested BT3bn ($95.7m) to launch GMM 1SKY in 2011. Renamed GMMZ early in 2012 following a copyright claim by the UK’s Sky One, it is aiming for 350,000 subscribers by the end of 2012. By 2014 it hopes to boost this to 600,000 and earn 60% of its revenue from subscriptions. In February 2012 it launched its seventh channel, GMM Music, for BT100m ($3.19m), and raised its 2012 set-top box sales target to 2m units and BT2bn ($63.8m). GMMZ hopes to achieve this through sales of its boxes at major retail chains Tesco Lotus, Big C, 7-Eleven and Power Buy, in addition to 6000 dealers nationwide, and it has teamed up with telecoms giant Advanced Info Services (AIS) in a mobile money payment system.

Several other local production houses have also expanded into FTA satellite platforms. Workpoint, a content provider of quiz, game, variety and cultural shows alongside soap operas for terrestrial channels 5, 7 and 9, launched its satellite channel, WorkpointTV, in January 2012, and expects to see 33% growth over the same year. RS, with multiple content production capabilities across several mediums, is looking to profit from the emergence of satellite TV as a platform for its own work, and also reported six-fold growth in its satellite television media business due to the popularity of its first two stations, Sabaidee TV and YOU Channel, entertainment and teenage lifestyle channels.

TrueVisions is hoping to defend its market share in the face of this new competition. In an effort to reduce piracy of its network, estimated at 100,000 households in 2012, it has invested BT2bn ($63.8m) in new MPEG4 set-top boxes, from which it expects to yield a 20% subscription increase. Yet it is also facing a critical challenge. TrueVisions’ standard exclusivity contracts are now being challenged by its content providers, and some in the media expect to see many of these channels available through alternative providers. This would substantially level the playing field.

However, TrueVision’s parent company, TrueCorp, also operates TrueMove and TrueOnline, affording it the possibility of offering triple-play packages. It is the only provider on the market with this potential at present; although it has not yet chosen to provide this, it could be a way to defend its position on the market.

INTERNATIONAL FOOTPRINTS: International exports of Thai content are a growing trend. JSL Global Media exports Thai drama series to Hong Kong, Korea and Singapore, GMM Grammy is pushing its music business into other parts of ASEAN and Hong Kong, BEC-Tero is planning a joint venture with Myanmar broadcaster Forever Group and TrueVisions already streams content to Cambodia and Vietnam. With Thai satellite broadcasts airing across South-east Asia, networks are looking at a potential regional footprint.

At the same time, securing international programmes, particularly in sports, is key to success in the domestic market. TrueVisions and GMMZ’s 2012 bidding war for the 2013 English Premier League (EPL) is not over potential advertising revenue, but lucrative pay-to-view revenue and the sale of rebroadcasting rights to terrestrial channels. The demand for pay-to-view was strong enough for TrueVisions to fend off Rupert Murdoch-owned ESPN’s bid in 2010, despite TrueVisions registering just $11m advertising revenue over the last two seasons. Moreover, following licensing disagreements, Thai audiences were reliant on satellite channels South African SuperSports and Malaysia’s Astro for key sporting fixtures in 2011. It is a market opportunity on which GMMZ has sought to capitalise with plans to bring the All Sports Network, Eurosport TV and GMM Sports One on board.

ONLINE TO GO: Previously held back by poor network quality, limited coverage and a lack of quality programming, internet protocol television (IPTV) has now become a viable market making use of both ad-based and revenue-sharing service models. Omnicom Media Group estimates 24.6% of the market accesses TV via the internet, and according to local media reports, 38% of Channel 3’s audience watch online.

The beginning of 2012 saw two new IPTV providers enter the market, Cubic Associates Group and V.R.M. VoizPlus, joining existing market players Advanced Datanetwork Communications and Jasmine International. The local market is expected to double in value to BT3bn ($95.7m) in 2012 and be capable of to providing high-definition content through 2-Mbps networks. “The future of the media industry is tending towards companies positioning themselves on multiple platforms such as TV, satellite, internet and others in order to reach their target audience and increase brand awareness of their content,” Jamnan Siritan Nunbhakdi, chairman of the executive board for JSL Global Media Company and president of the Radio-Television Broadcasting Professional Federation.

MOBILE CONTENT: Even GMM Grammy has eyes on the market, with plans to obtain a mobile virtual network operator licence, allowing subscribers to stream content directly to their mobile devices, and demand is growing across the industry with the proliferation of smartphones and tablets. Projected demand for mobile content also led internet and mobile telecoms provider Samart Corporation to announce a bid earlier in 2012 for the rights to broadcast the EPL to its subscribers through its subsidiary I-Sport.

Both telecoms and satellite are facing capacity shortages, but this may be short lived. Following an 89% year-on-year increase in mobile data usage, AIS is investing BT8bn ($255.2m) to double its 2G and 3G network capacities from 2012, and all major telecoms firms are investing in infrastructure upgrades. For satellite providers, an approaching shortage of C- and Ku-band transponders will be resolved in the middle of 2013, when Thaicom plans to launch Thaicom 6 into orbit.