Another pay TV forecast adjustment, another win for OTT

Digital TV Research has revised its Asia Pacific pay TV forecast, in the process lauding IPTV as the big winner, while playing down the proliferation of OTT video as a result of pay TV’s demise, particularly in the continent’s heartland of China. It gives us a good opportunity to run the numbers in parallel with those from our research arm Rethink TV.

Our numbers have Asia Pacific at 340 million SVoD subscribers by 2023, of which a majority 245 million are projected to come from China – growth which will be dominated by freemium services. In comparison, Digital TV Research’s latest figures show IPTV adding 83 million subscribers between 2018 and 2024, by which time the IPTV market will represent a total subscriber base of 272 million, so sizably smaller than OTT in some five years’ time.

“Much of this growth will happen in China as cable subscribers convert to OTT or IPTV and in India,” states the report in what is either a very poor choice of wording or an inclination that Digital TV Research’s may have bundled OTT and IPTV numbers together in its latest report. As we can’t access the full version, we’ll give it the benefit of the doubt, as such methodology would be inexplicable even for a research outfit with vested interests in hyping up IPTV over OTT.

We can agree at least that cable TV will suffer in China as a result, as Digital TV Research projects 25 million cable subscriber losses in the country between 2018 and 2024. However, the report believes cable TV uptake elsewhere across the continent will offset China’s decline to the extent that the total cable TV market will be flat by 2024. Satellite TV, meanwhile, will gain approximately 6 million subscribers in the period to reach 89 million, while the satellite TV market of India will shed 3 million subscribers by 2024. Meanwhile analog pay TV subscriptions across the continent will dive by 33 million.

That is hard to digest and we think you will be inclined to agree when referring to Rethink TV figures – showing an uptake of nearly 100 million SVoD subscribers in the same time frame. Many of these will of course be cord nevers and a handful of SVoD subscribers will retain their pay TV subscriptions in tandem with SVoD services, many temporarily. However, we believe a sizable chunk of these new streamers will inevitably be cord cutters and that simply isn’t accounted for in most pay TV forecasts today.

In total, Asia Pacific will account for 681 million pay TV subscribers by 2024, in the process gaining around 68 million subscribers. China and India combined will account for 80% of the total marketplace by 2024, adding two thirds of the projected gains over six years, according to Digital TV Research.

Interestingly though, Digital TV Research reckons Asia Pacific pay TV revenues will rise by $2.35 billion by 2024, while our calculations show SVoD revenues in Asia Pacific rising by $4.5 billion between 2018 and 2023, totaling $15.1 billion.

With its bet on IPTV, Digital TV Research forecasts Indonesia to be second to China in terms of subscriber growth. Yet our numbers show that, despite being highly populated at 264 million people, Indonesia has relatively few pay TV customers with a little over 18% penetration and similarly low numbers of few people online, except on mobile networks.

Japan will remain ahead of Indonesia for SVoD subscribers going by Rethink TV data, despite a population of less than half at 127 million, with 9.9 million SVoD subscriptions in Japan by 2023, up from 5.4 million today, with the great bulk of them coming from Netflix, Amazon and Hulu. NTT is the dominant force with dTV, today continuing to hold about 850,000 subscriptions, while U-Next, which launched in 2009, has grown rapidly and has about 100,000 less SVoD subscribers than dTV. Prime Video is projected to have some 2.6 million regular viewers in Japan, while Hulu and Netflix are neck and neck on 1.4 million each.

Elsewhere, Korea, with a population of 51.5 million people, is expected to have 5.2 million SVoD subscribers by 2023, up from 4.3 million today. Netflix is strong in South Korea with about 2.5 million customers, while Pooq has about 3 million freemium subs, and only an estimated 750,000 take the premium version at $9 a month.

The latest report from Digital TV Research mirrors a similar cause for concern inadvertently issued by research outfits in recent months, most notably the Multiscreen Index from informitv published in January, describing impressive pay TV gains of 1.22 million across Asia Pacific in Q3 2018. Yet even these numbers look concerning when viewed alongside previous reports, such as the Q1 2017 Index, when the region added 2.4 million subs – so the slowdown is plain to see as OTT video becomes more and more comfortable in Asia Pacific regions, gradually spreading into less developed regions.