Rudy Tanoesoedibjo, President Director, MNC Skyvision: Interview

Interview: Rudy Tanoesoedibjo

In terms of growth potential, how do you foresee broadcast performing in the future in comparison to other media segments, such as print or radio?

RUDY TANOESOEDIBJO: In Indonesia the average spectator watches 4-5 hours of TV daily. This is one of the highest rates in the region. Our population (and market) is very young and dynamic. If we compare the average age of Indonesia to that of Japan – 27 against 47– one can easily understand why print is more popular in Japan than in Indonesia. TV is the most consumed medium. In terms of advertisement efficiency, pay-TV is the most effective – ahead of magazines, newspapers, cinema, tabloids and public transportation.

How successful has pay-TV been in Indonesia?

TANOESOEDIBJO: In Indonesia, opposite to what we see in Malaysia, the population values local programming a great deal. At the start we had to deal with a question in the minds of many customers akin to “why do I have to pay to watch TV?” This was a challenge, so we tried to educate them and make them understand that pay-TV means freedom to choose.

In Indonesia, if you have children, the viewing hours are 4pm to 6pm and 8pm to 10pm. If you look at the free-to-air programming in the first time slot, you will notice there are only entertainment programmes and drama series. During the second period there is no educational content at all. That is what pay TV offers – more choices and more options. It is not about paying a lot of money. It is about the freedom to choose what your family can watch. This education process was supported by a strong distribution channel deployed across Indonesia’s vast geography.

What are your expectations for the growth of the pay-TV segment in the future?

TANOESOEDIBJO: Indonesia has the lowest pay-TV penetration rate of TV households in the entire region. South Korea has a penetration rate of 99.8%, India’s is 79.2%, Singapore stands at 66.4%, Malaysia’s is 50.8%, Thailand is at 12.9% and the Philippines is 10.3%. Indonesia’s rate, on the other hand, is only 4.8%.

In terms of projected pay-TV subscribers, however, Indonesia has the highest growth potential, as some reports show that it will reach a penetration of 26.7% by 2016. Our own calculations show that the country has 55m households, of which 20m – those with a combined income of $300-400 – can afford to purchase paid-TV. The current total subscriber base in Indonesia is only approaching 2m, so the potential of this business is huge. According to Media Partners Asia, the pay-TV market in Indonesia added 550,000 net subscribers through the first nine months in 2012.

What trends or changes have you witnessed in the content breakdown for television programming?

TANOESOEDIBJO: In Indonesia, local content is still king, and at the top of ratings you will still find free-to-air programmes. As we grow our subscriber base, we will be able to afford to produce our own local content, thanks to the economies of scale that larger volumes will give us. In this market, if you want to create content, it only begins to be commercially viable when you have at least 2m subscribers. Otherwise your cost per subscription will be too high. As our company approaches the 2m-subscriber threshold, we are in a very good position to work together with producers and creative industries to ask them to help us produce our very own exclusive channels and content.

Overall, consumers love content, but are having their attention more finely fragmented by increasing choices and constantly proliferating channels and platforms. In the past, a consumer had only a few broadcast channels from which to choose. With today’s growing availability of self-programming, search and on-demand options, some users are moving from a niche orientation (targeted content on cable and multi-channel networks) to individualised services. Increasingly, viewers are becoming audiences of one, with the power to determine specifically when, how and what they watch.