Regional Deals Simplify the Complexity of Asia’s TV Market

Asia Pay Television is a dynamic regional market with a variety of opportunities for independent titles. However, the complexity and country-specific tastes make this region very difficult to sell to without some local knowledge. Ideally, an on-site representative or office is available to provide insight to the local market and culture. A common strategy for selling to Asia Pay TV is to start by approaching the large, regional Pay TV operators that routinely acquire foreign content. In that regard, Licensors often withhold regional Pay TV rights from an all rights deal in order to conclude a separate deal with a regional Pay TV operator.

The main regional Pay TV networks are owned and operated by Celestial Tiger Entertainment, FOX Networks Group Asia, Rewind Networks, Sony Picture Television Networks Asia and Turner Asia Pacific (including HBO Asia). These networks typically acquire content on a regional basis as their broadcast zone stretches across a number of nations.

Most of the Asia-Pacific territories will be included in a pan-regional Asia Pay TV deal. Typically, the television channel will seek to license as many of those territories as it can through its own standard form license agreement. Licensors are urged to carefully review all agreements, as some of the requested territories (e.g., French Polynesia, Guam, U.S. military bases) already may be included within the territory definitions in other existing agreements, or may affect other licensing opportunities. Larger markets within the Asia-Pacific region may be sold separately, but ultimately the licensor must decide whether individual territory deals or a pan-regional arrangement will be most lucrative.

If a deal with a regional Pay TV channel is not possible, fairly lucrative deals can be made locally in the larger markets, mostly with channels that focus on a specific genre or theme. This secondary strategy is often used by companies which do not make all rights deals in the region. Therefore, they attempt to exploit as many local markets possible when a regional deal is not made.

The Asian Pay TV market is projected to grow in the coming years with forecasts showing a 25% increase to US$40 billion in 2021. IPTV is the fastest growing segment, overtaking satellite growth in 2015. However, pay digital cable remains the area’s largest player. Pay TV penetration averages 59% of households across Asia. Penetration remains low in a number of territories (Indonesia, Thailand, Philippines, Japan) due to strong and varied local terrestrial programming. Smartphones are accelerating Pay TV penetration in markets with poor broadband infrastructure.

Censorship is an important factor when considering titles to sell in Asia. Most territories have tighter regulations on entertainment than Western countries. Territories such as Hong Kong, Japan and South Korea are more tolerant, relying on content ratings rather than full censorship, while Malaysia and Singapore are known for their stringent moral and political content guidelines. Often a title is edited for Singapore and Malaysia standards, knowing it will be accepted elsewhere.

The type of content on Pay TV in Asia has changed in recent years, from being dominated by foreign feature films to majority local programming. Television channels increasingly depend on their own productions as the cost of local production continues to fall. In general, foreign programming is not as well received in Asia as in much of the rest of the world. Popular films and TV shows from outside Asia will not find guaranteed success in this region. Many countries prefer local content that appeals to their interests even against a high-budget U.S. major studio title. For example, Indonesian soap operas may be low budget but continuously outperform any American TV series.

Overall, foreign films are more popular than foreign TV series. Action, thriller and family titles are the highest selling. Physical comedies and martial arts films are also popular. Telenovelas are growing in popularity and any product in the same vein is in demand. There is a very small market for arthouse titles but a window of opportunity is opening with the emergence of OTT services.

The VOD market is starting to take shape in Asia with a combination of foreign services and local platforms available. The SVOD segment (across Asia) hit 76.12 million subscribers by the end of 2016. However, the TVOD sector has yet to truly take off. VOD services available in this region that are the most widely available with the highest revenues are HOOQ, iFilx, Viu, Netflix and Amazon. These services are striking regional VOD deals. Therefore, if a pan-Asian Pay TV deal is not possible, a simple alternative is to sell to a VOD platform.

Piracy remains a hindrance to the entertainment industry across most of Asia. Many in this region are not accustomed to paying for content due to the large variety of free content available, both legal and illegal. A study by the Cable and Satellite Broadcasting Association of Asia (CASBAA) found that the Pay TV industry in Asia loses more than US$1 billion a year to illegal consumption. The growth of affordable legal VOD platforms has helped curb piracy rates and offers a beacon of hope for rights holders. Local VOD services which are cheaper than the foreign owned services are further shattering this reluctance to pay for content.