In the 13 years since Sue Taylor joined NDS in Hong Kong there have been vast changes in pay-TV in the Asia Pacific region. The scale of NDS’ business in Asia Pacific has grown from a small three-person operation to a team of more than 240 employees who together generate an estimated $150 million in revenues across the region. There is also a long-established NDS R&D centre in Bangalore with a staff of 1,100.

Taylor, NDS Senior Vice President and General Manager Asia Pacific, discussed her views on present and future developments in the pay-TV industry in the region.

Commitment to Asia

“NDS has always been committed to the Asia Pacific region,” Sue Taylor says. The region is vast. NDS has sales, marketing and support offices in China, Korea, Singapore, Australia, Hong Kong, India, Malaysia and Japan.

“We have developed these offices to provide a local presence to support our customers,” she says. “It’s important for customers to know that NDS has resources close by. Our commitment to the region is based on having a local presence that develops customised local technology and solutions while offering exceptional support to our customers.”

How does the NDS presence manifest itself in different countries in the region?

Korea: Staying ahead of the competition

“NDS’ commitment to regional standards is the key to our success in Korea,” Taylor says.  “We have developed solutions to support the local market including the cable cards that are required in all STBs in Korea”

“Today we have launched MHP [multimedia home platform for interactive TV applications] with SkyLife, Korea’s largest DTH operator and they are expanding their offering to include high definition broadcasting 24 hours a day including live HD content,” she says. “They continue to trust NDS technology to protect and power the delivery of their high value content,” she says.

“NDS has forged a relationship with Korean industry which has resulted in a mutually beneficial partnership. NDS supports the Korean broadcast industry with a strong local presence including an R&D centre which has been integral to building relationships between Korean STB manufacturers and NDS customers around the world,” Taylor says. As a result, NDS has facilitated an estimated $2 billion in revenue for Korean STB manufacturers.

The Seoul-based staff of 120 helps provide full end-to-end system support and handles STB integration for more than 50 global projects.

India: Dynamic growth, huge opportunities

“Due to the size and the density of its population centres, India is a dynamic growth market for broadcast technologies,” Taylor says, “where NDS anticipates huge opportunities.” According to Media Partners Asia Ltd there are an estimated 229 million households in India of which 136 million are TV homes. Of this total less than 9 million are digital pay-TV subscribers.

“India is an exciting, fast moving market with low ARPU ($2-3 per month). Consumers have a healthy appetite for high-end technology which means we expect to see the entry of DVRs and other new technologies sooner than in other markets. There is also increasing competition between DTH and cable providers for position and market share.”

“This competition ultimately means that the opportunities for both cable and satellite operators are huge,” Taylor says. “We expect that there will be exponential growth for NDS DTH customers like Tata Sky and Bharti Airtel,“ she says. “At the same time the cable market is also rushing into the digital age.” NDS supports both DEN and Hathway, the two largest cable MSOs. “The fact is a market the size of India can easily support multiple platforms,” she says.

The NDS R&D centre in Bangalore, established in 2000, is working to supply the latest digital pay-TV innovations tailored to the local market for NDS customers including:

• Tata Sky(DTH) launched in August 2006 and reached 3 million subscribers in just 27 months. They recently added NDS XTV™ DVR to launch their Tata Sky+ service and are the first to offer an EPG in Hindi, the language spoken by 40% of the country’s population of 1 billion.

“The design and delivery of the Hindi EPG underscores NDS’ widely recognised capabilities and leadership in the market,” Taylor says. “We are committed to providing our pay-TV operators with world-class innovative products and services that help them to grow their businesses,” she says.

• Bharti Airtel, India’s leading integrated telecom services provider has launched its DTH service with end-to-end NDS technology. Recently voted India’s most innovative company, Bharti Airtel’s DTH service also includes a customised multilingual EPG.

DEN (cable) is upgrading its last mile to deliver an enhanced digital entertainment experience to consumers. “Its subscribers are offered highly engaging user functionality including interactive applications and other advanced services,” Taylor says.

• Hathway, India’s leading cable TV services company selected NDS XTV™ Digital Video Recorder (DVR) technology to launch India’s first cable DVR. “This milestone will dramatically enhance the subscriber viewing experience,” Taylor says. “In partnership with NDS, Hathway can now deliver a compelling combination of broadcast and on-demand digital television to Indian cable subscribers.”

“The result of all this amazing diversity is that pay-TV subscribers will have access to a broad selection of high quality services at competitive prices,” Taylor explains. “As DTH and cable operators integrate digital broadcasting technologies we expect to see change, consolidation and moving market share,” she says.

China: Regulation, analogue switch-off

“The most obvious characteristic of the Chinese pay-TV market is the presence of strong regulations,” Taylor says. “Ping-yi is a government mandate to switch off all analogue broadcasting by 2015.” However the investment in digital broadcasting began during the lead up to the Beijing Olympics last summer. Cable companies are now looking at ways to raise ARPU and capitalise on their investment.

“NDS has a good base of installed customers in China and they want to introduce new types of services that will improve the viewer experience. There is a growing middle class in China and when the right services are offered we expect subscribers will be willing to pay for them.”

At present, digital pay-TV in China is a utility. In order for broadcasters to increase revenues they will have to offer new services. “This is where NDS comes into the picture,” Taylor says. “We will work with customers to upgrade offerings to enable this change. We are showing operators what NDS solutions can do for them,” she explains.

“Meanwhile we are continuing to invest in China by expanding operations in Shenzhen, opening more offices to be close to our customers, supporting their businesses and showing operators how to move from a utility marketplace into a higher ARPU market.”

NDS invests in R&D

NDS has always been, and remains, highly committed to R&D activities. “We plan to increase our R&D investment in China, concentrating specifically on set-top box integration by building relationships with STB manufacturers and establishing a centre for software development to support the local Chinese market,” Taylor says.

“Our overall strategy remains unchanged,” she says. “We focus on the development of world leading technologies and we support our customers so that they can become industry leaders.”

“China is an exciting market and we see lots of potential going forward. We are at the very beginning of digitisation in China and, like their Indian counterparts, Chinese viewers are technology savvy and will aggressively adopt new services and technologies as they become available,” she says.

What’s next?

In the Asia Pacific region, India and China are the largest markets. These two territories generate the most headlines and are justifiably the main focal point for business. NDS has also had recent significant success with Astro in Malaysia where an estimated 2.7 million incumbent smart cards were swapped out in favour of NDS technology in about four months. [Read an interview with Astro's CTO Graham Stephens in this issue of World Vision.]

“Both Malaysia and Australia are smaller markets but they are very important in the region,” Taylor says. “And because Korea is the most advanced digital market in Asia, NDS maintains its commitment to support local solutions and industry there,” she says.

“We think the next up-and-coming market in the region is Indonesia. A country with a population of almost 250 million that is spread over more than 17,000 islands is a natural to become our next market.”

Indovision, the local DTH broadcaster, is a veteran NDS customer. “But there could easily be new players in the market,” she says.

What about farther afield? “We’re also thinking about Japan,” she says. “This is a major digital market and it’s a good time to begin exploring opportunities there.”

“We clearly have our work cut out for us in this exciting and dynamic marketplace,” Taylor says. “Working in major emerging markets like India and China, as well as looking for markets that are starting to expand, presents a variety of challenges. When it comes to doing business in Asia Pacific,” she says, “you have to keep your eye on the ball.”

Taking the Malaysian Market by Storm: An Interview with Astro's CTO Graham Stephens

Graham Stephens is Group Chief Technology Officer at Astro All Asia Networks plc in Kuala Lumpur, Malaysia. He has worked with Astro from its beginning, leading the teams that constructed and operated a variety of uplinking and production facilities for Astro.

Stephens is responsible for ensuring the ongoing security of the Astro platform, and for the development of new products and services. In addition, he keeps an eye out for new technology-based business opportunities for the Group. He oversaw the swapout of smart cards when Astro decided to switch to NDS VideoGuard conditional access in 2008. The process involved an estimated 2.7 million smart cards and was completed in less than four months.

He recently shared the latest developments at Astro with World Vision, including the decision to deploy NDS' XTV™ DVR technology this year.

World Vision: Please describe the development and growth of your platform.

Graham Stephens: Astro originally launched in October 1996 with 23 channels. At the time we were one of the first digital broadcasters in the region. We now have around 120 pay-TV channels and another 17 radio channels. 28 of our channels are Astro-branded and include content in Malay, Chinese, Indian and English. We also have a range of interactive content and services. We have access to an estimated 10 million viewers in more than 2 million homes.

Astro is Malaysia’s only DTH satellite pay-TV service. We are operated by Measat Broadcast Network Systems Sdn. Bhd, a wholly owned subsidiary of Astro All Asia Networks plc.

You have been with Astro since its inception. How has the business developed?

We began by targeting the high income end of the market. We had a relatively small number of affluent subscribers who used expensive set-top boxes. One of the advantages of this type of market is high ARPU. Over the years we began targeting less affluent subscribers. As a result our subscriber totals continue to increase even if ARPU doesn’t show much growth. Even in these challenging economic times we still expect strong subscriber growth to continue as the population opts for lower-cost entertainment options.

In addition we have a small base of early technology adopters here in Malaysia. It is important to be able to continue to offer them leading edge pay-TV solutions. Astro originally launched as a high tech company and we want to maintain that position as we look ahead. So HDTV is important for us in future, even if overall penetration of HD-ready screens remains low in comparison to the West.

What about future competition?

It looks like the government will assist Telecom Malaysia in rolling out high speed broadband services which will include fibre to the home in some urban and more affluent areas. This means they are likely to introduce an IPTV service at some point in time.

There are also plans to roll out digital terrestrial broadcasting within the next 12 months. Analogue switchoff is scheduled for 2015. The new digital service is expected to offer pay-TV options for premium services such as HDTV.

Astro has the sole licence for satellite DTH pay-TV services until 2017. At that point our licence will no longer be exclusive but we will be able to continue to supply pay-TV services on any digital distribution platform.

NDS is helping us determine our future services and technology roadmap. We’re scheduled to launch an IPTV trial using NDS technologies in 2009. With a number of possibilities in mind, it’s important to us that NDS is developing solutions that deliver content securely to and from a wide variety of devices on different platforms in different locations. Flexibility is essential.

Why did Astro select NDS as your technology supplier? What NDS solutions did you deploy originally and which have you added?

We’re still a fairly new customer of NDS-developed technologies. We began using MediaHighway® when it was still owned by Canal+. We then chose VideoGuard® conditional access from NDS. In terms of middleware, our services have remained fairly stable. But our entire base of 2.7 million legacy boxes can run MediaHighway. We have always opted for middleware-equipped STBs in order to maintain flexibility and consistency of the user experience. But the migration of these legacy boxes to NDS VideoGuard was quite involved both from the technical and logistics perspectives.

We had been discussing migrating to NDS VideoGuard for several years and announced the agreement to deploy VideoGuard in November 2007. Most recently, we decided to deploy NDS XTV DVR technology this year.

What made you choose VideoGuard?

There were several reasons. First and foremost, of course, is the fact that there have been no commercial hacks for over 10 years. Second, because we were already using NDS as our middleware supplier, NDS conditional access was a logical choice and can improve our speed to market for new products. It also gave us a chance to take advantage of the NDS product development roadmap with services like video-on-demand (VOD). We’re also considering deploying the NDS Dynamic™ audience measurement suite.

Our new DVR, based on XTV from NDS, contains a third tuner and space on the hard drive for push VOD. No single subscriber will receive all the available pushed content. It will be segmented into different language groups. In this way we can choose to push a greater volume of content than the hard drive can actually store, and to increase its relevance to each subscriber.

We also intend to offer our DVR subscribers remote booking of their recordings via the Astro website plus a series link feature.

How complicated was the process to migrate Astro's CA to VideoGuard?

Having selected NDS as our technology partner we then had to contemplate a fast-track smart card migration since we were concerned that our legacy conditional access system was about to be hacked again. We decided to use not only the NDS smart card personalisation facility in the UK but also the automated card enclosing service they offered. This avoided the risks of mistakes due to manual enclosing and bulk card losses during shipment to Malaysia.

We supplied NDS with daily files containing up-to-date programming rights for a proportion of our subscriber base and the corresponding subscribers’ account and address details. We received the new cards flown over in daily batches already enclosed in envelopes that were ready to be mailed out in Malaysia and Brunei. Because the cards were pre-entitled, the subscriber suffered no break in service when the card was swapped and, unlike previous swaps, did not receive excess entitlements either.

One of the difficulties with mailing out smart cards to subscribers via the postal system is that there are bound to be some losses because of incorrect addresses and other difficulties within the postal system.

We mailed about 2.7 million smart cards and only lost around 2%. The lost cards had little value to anyone as their pre-entitlements were set to expire after a few weeks.

We allowed subscribers two weeks to swap their cards after mailing out each batch before they were disconnected from the legacy CA in the same batches. If they had not received their new card they would thus know to call in for a replacement with their legacy service being reconnected in the meantime. This avoided excessive strain on the call centre that a mass disconnection at the end could have potentially caused.

How long did the migration process take?

Technically the process was very smooth which is impressive considering we have 21 different types of hardware and six different types of software in our legacy STBs, all of which had to have their software over-air updated to incorporate the NDS verifier software during the swapout process.

The actual card swap logistics took just under four months. We swapped and disconnected an average of 25,000 subscribers per day. I believe this is one of the largest card swaps NDS has ever undertaken.

We announced our choice of NDS in November 2007 and the entire process was completed by the end of July 2008. Since then NDS has been helping us bring a number of services back online that we postponed during the initial card migration process. For example, we only re-deployed impulse pay-per-view once the card swap was completed because it has such limited popularity in Malaysia.

What effect has this migration had on your business?

It has ended the smart card piracy we had previously and it has also eradicated control word sharing piracy which was becoming a serious issue for us. For the first time we believe our platform is fully secure.

Tell me about your interactive services and the role NDS has had in deploying them.

Actually it’s difficult to convince our subscribers to connect their back channel which is still dial-up via the PSTN. Their reluctance is not because of a fear of technology. It has more to do with the weather. Because it rains a lot in Malaysia there are numerous cases of modems being ruined by short circuits due to lightning strikes on the PSTN.

As a result, most of our successful interactive services are now one-way data-centric and do not rely on a return path. We provide mostly “red button” programme enhancement services plus a stock market data service. However we hope that when our boxes are upgraded to become IP-capable we can then encourage always-on connectivity via the domestic broadband connection that uses a more robust external modem.

What new services are you planning to launch?

We plan to launch our new standard definition XTV™ DVR with push VOD by the middle of the year. By the end of the year we expect to add the NDS progressive download service otherwise known as “pull VOD” on the DVR.

Early in 2010 we plan to offer an HD DVR as a premium product. All our next generation boxes, whether DVRs or zappers, will be IP-enabled, capable of hybrid DTH and IPTV operation and interconnection via a home network.

How effective do you expect NDS solutions to be in helping Astro remain a market leader?

Because NDS is delivering multi-platform/multi-device technology, Astro can be sure of offering secure content on a variety of platforms. This is content that can be moved around the home or from the home to other locations.

This is important because it addresses the market that we can’t always reach on a DTH-only platform.

We expect mobile broadcasting and IPTV to become very popular here. NDS enables us to address these emerging markets knowing that our content will remain secure.

Another solution we’re considering is upgrading the zapper boxes which already contain a USB port, to offer basic DVR functionality. This would be based on a secure USB key that can also extend content consumption beyond the set-top box. What is important to us is that extending content consumption to the office or home PC doesn’t compromise the overall security of our platform with content leaking out to the open Internet. NDS offers a secure USB key solution that can avoid this.

The bottom line is that the NDS technology roadmap is important to Astro -- particularly the XTV DVR and future technologies such as mobile, IPTV and home networking. In a multilingual market like Malaysia, it’s important for us to have a technology partner like NDS that can leverage its experience working with a large, diverse, multilingual customer base while offering us best-in-class security.

For more information:

Astro - http://www.astro.com.my/

New Technologies in 2008 Provide Springboard
for Key Trends in 2009: Interview with NDS' Martin Kaufmann

In his position as NDS Corporate Director for Consumer Devices, Martin Kaufmann works closely with chipset vendors and consumer device manufacturers. This means he is in constant contact with STB manufacturers and pay-TV operators around the world to determine how best to integrate NDS technology solutions such as VideoGuard® conditional access, MediaHighway® middleware and XTV™ DVR.

Because he works with both current and prospective customers, Kaufmann is well versed on technology trends in the pay-TV market both in the Asia Pacific region and around the world.

In his view, there were several major technology developments in 2008 that will serve as a springboard to key trends in 2009.

“One of the trends in 2008 was that the USB interface became a standard feature on set-top boxes. This interface facilitates a variety of functions ranging from connections to external hard drives to using USB sticks like the NDS PC Key™,” he says.

“In many markets the major STB in the home is increasingly also a DVR. It acts as a storage device that can be accessed from STBs in other rooms in the house. As a result, the home with more than one STB benefits from content that can be moved from one box to another. It’s like peer-to-peer content sharing within the home,” Kaufmann says.

Kaufmann explains that there is also a hybrid alternative to this configuration.
Operators are offering an Internet Download feature that is accessed through the subscriber’s remote.

The subscriber can choose to view content directly through the operator’s Internet portal or store content on their hard disk for viewing whenever they want.” NDS developed its Progressive Download technology to enable operators to deliver IP content without the buffering that is often seen with PC video systems.

NDS has recently enabled operators to launch a hybrid box that offers this option.

“By far, the most dynamic pay-TV market in the world in 2008 was India. While operators in Europe and the US may be very successful, there are operators in India that are adding more than a million subscribers in less than a year. The growth rate of pay-TV subscribers in India is unprecedented.”

Rollout of MPEG-4

This success is leading to MPEG-4 offerings outstripping those of MPEG-2. “The Indian operators that launched their services several years ago use MPEG-2 while the newer operators have all launched on MPEG-4.” Why the preference for MPEG-4? “It enables more channels to be broadcast from one satellite transponder,” Kaufmann says, “and this is extremely important in a market like India where there are a huge number of operators and a huge number of channels.”

“In this type of market, MPEG-4 is the de facto technology choice for new operators,” he says. “Operators in other emerging TV markets including Ukraine, Turkey and Poland are adopting the Indian technology model.”

The deployment of MPEG-4 has led to another development: “Last year there were only two chipset vendors selling to the Indian market but I expect there will be more competition very soon,” Kaufmann says. The result of this increased competition will be lower STB prices.

High Definition          

Just as 2008 saw tremendous advances in digital broadcasting because of the Summer Olympics in Beijing, so 2009 should be the year of advances in high definition broadcasting. Sport is a major catalyst and motivator here. “The shift to HD is looking ahead to all the major sports events in 2010,” he says. This includes Soccer World Cup in South Africa, the Winter Olympics in Vancouver, British Columbia, the Asian Games and a plethora of other major events in baseball, football, golf and rugby.

“All of these sporting events will be broadcast in HD and there are more and more flat screens on the market. Unfortunately, at present the picture quality isn’t great without HD. While subscribers are buying big 52-inch screens, the onus is on broadcasters to catch up and offer HD services that complement these screens.”

Trends for 2009: Watch out for low-cost DVRs

“A hot topic in the industry is the entry-level DVR,” Kaufmann says. “It supplies basic functionality and is very cost effective.” This box enables subscribers to decide on the kind of storage device they want to add and how much memory it will have. “They can add anything from flash memory USB sticks to a hard disk,” he says. “In effect, the investment in storage is moving from the operator to the subscriber,” he says. This model is being seen in several other markets around the world.

Hybrid offerings will continue to develop this year, Kaufmann says. “For subscribers without a DVR, more download services, via websites, will continue to appear. The main competition is from telco operators using IPTV.”

“We’re seeing that this type of download service, generally known as ‘Catch Up TV’ is becoming increasingly popular with broadcasters. Their subscribers’ set-top boxes just need an IP port,” Kaufmann says. “While it’s true that subscribers can already download movies or other content from the Internet onto PCs and laptops, there are two major problems: picture quality and screen size.” Because “Catch Up TV” is provided by broadcasters, the quality is perfect and subscribers can watch the content on their regular TV screen – regardless of size – rather than on their small PC monitor.

Targeted advertising is one of the features that is going to become more important in 2009, Kaufmann predicts. At present, broadcasts have ad breaks that viewers can skip. NDS has recently launched NDS Dynamic™, a suite of advanced TV advertising solutions that enable TV operators to use the latest audience measurement systems to offer advertisers access to targeted groups. At the same time subscribers see ads that are more relevant to them.

What overall trends will be most important in 2009? Kaufmann expects the Indian pay-TV market to maintain its massive growth momentum while digitisation continues worldwide. “Home connectivity will become more advanced as viewers have greater expectations for the services they receive,” he says. “In addition the price of hardware technology can be expected to drop due to better economies of scale and increased competition.”

“All of these developments in the pay-TV market suggest that 2009 will be even more dynamic than the last few years,” he says.

For more information:

VideoGuard® - http://www.nds.com/solutions/videoguard.php

MediaHighway® - http://www.nds.com/solutions/mediahighway.php

XTV™ DVR - http://www.nds.com/solutions/xtv.php

NDS Dynamic™ - http://www.nds.com/solutions/dynamic_advertising.php

In a pay-TV market as vast as the Asia Pacific it would be difficult to draw conclusions about market trends if it weren’t for CASBAA, the Hong Kong-based Cable & Satellite Broadcasting Association of Asia that represents more than 130 channel programmers, pay-TV operators and technology providers.

John Medeiros, CASBAA’s Deputy CEO keeps tabs on the region’s main regulatory issues as well as anti-piracy measures and challenges – with an eye to helping resolve issues facing the market. He also coordinates education, legal and enforcement activities as they relate to intellectual property.

In a region that includes mammoth emerging pay-TV markets like China and India, Medeiros says that “there are substantial challenges that are a result of rapid development in the pay-TV industry. Regulations have not kept up.” He explains that part of CASBAA’s work is to help educate and persuade individuals, operators and regulators in 15 different Asian governments that “the digital entertainment industry is different from the TV industry that they have known and worked with for many years.”

Regulators and regulations

“The problem is that many regulators still envision the ‘one-to-many’ broadcasting communications model,” Medeiros explains. Governments have always paid a lot of attention to the broadcasting industry because of the power and influence involved. “They have messages they either want or don’t want to be communicated to the viewers in their respective countries,” he says.

One of the challenges for CASBAA is to explain to regulators that the digital entertainment industry in the 21st century is changing rapidly because there are different types of digital content competing to reach subscribers. “This is especially true where the digital infrastructure is highly developed,” he says. This includes Australia, Hong Kong, Korea, Japan, Singapore and New Zealand.  

“The fact is the regulatory paradigm has to shift. Unfortunately for some of the governments in the region, regulators are still dealing with laws that were passed in a previous generation,” Medeiros explains.

“What CASBAA is trying to do is to get regulators in all countries in the region to understand what’s actually happening on the ground because this reality is obviously connected to the rest of the world.”

Piracy

Fighting TV piracy is another major area of CASBAA activity. “There are a variety of ways piracy of pay-TV signals happens,” he says. “The old system is physically tapping into individual lines, or taking satellite signals without permission and then redistributing this content to hundreds or thousands of homes.”  

Piracy has spread to the Internet where entire TV channels are streamed 24 hours a day to millions of viewers. “Obviously this phenomenon is very damaging to the industry – and it’s the reason that content protection is so important,” Medeiros says.

CASBAA also helps educate governments about the importance of having up-to-date laws and enforcement.

Cases in point

Medeiros uses the examples of Malaysia, the Philippines and Thailand to explain how different countries deal with enforcement issues. Of the three countries Malaysia has the most effective anti-piracy enforcement structure. “In both the Philippines and Thailand pirate distributors talk openly and almost without reservation about theft as a business model,” he says. “Enforcement there isn’t really possible.” Bottom line: The pay-TV market in Malaysia is much healthier.

In 2009 Medeiros expects the pay-TV market worldwide to be fairly resilient, but in markets like Taiwan and India, the anticipated weakness in ad spending will really hurt, and as a result, regulatory constraints in both Taiwan and India will have a greater – and more negative – impact in 2009.

“What makes a pay-TV market successful is the ability to keep up with new technologies – and with the measures the industry must use to protect its content. A content protection eco-system has to include both technology and the law.”

“CASBAA urges government regulators and pay-TV operators to keep moving forward because piracy keeps growing and changing. Pay-TV piracy is a multi-billion dollar industry today,” he says.

New technologies

Medeiros explains that new technologies such as IPTV and mobile broadcasting provide new ways for operators to reach consumers. “Innovative technologies are multiplying rapidly as are both the competition within the industry and the ways content generators can reach consumers.” All of these changes are becoming essential features of the pay-TV industry in Asia.

One of the most important new technologies is digitisation. “Asia has reached the tipping point when it comes to digitisation,” Medeiros says. There are an estimated 71 million households with digital connections in Asia. This is out of around 300 million pay-TV subscribers in the region.

New markets – and new types of markets -- are developing in China which is going digital in its cable TV systems, and in Korea and Hong Kong where significant numbers of customers are opting for IPTV from telcos.

“Trends all over the region show that there are more options for consumers. CASBAA helps both operators and government regulators understand these developments and plan for the future,” he says.

According to CASBAA’s 2008 survey of the cost of pay-TV piracy in Asia, the Asian pay-TV markets with the lowest level of piracy are generally those with the highest percentages of digital deployment. The survey was conducted in collaboration with the Creative Industries Division of Standard Chartered Bank.

In other words, Australia, Hong Kong, Malaysia, Japan, Singapore and New Zealand which are all almost 100% digital have the lowest piracy levels. “Another important advantage of a well developed digital infrastructure is that it enables pay-TV operators to deliver sophisticated high-value pay-TV packages to consumers, including HDTV and sometimes interactive applications,” Medeiros explains.

“It is also important that India and China – the region’s emerging giants – are demonstrating an increased pickup for digital pay-TV services,” he says. CASBAA estimates that India now has 8.5 million digital pay-TV households, while China has 34 million digital cable connections plus a couple of million IPTV subscriptions.

Between the worldwide recession and a market that includes 15 countries widely ranging in size, technology, infrastructure, regulation and levels of piracy, CASBAA is fulfilling a vital role. “Even markets that are emerging pay-TV giants occasionally need to be coaxed into the 21st century,” Medeiros says.

____________________

What’s happening in Asia: Market by market

Korea: Changes in regulations on IPTV have resulted in new competition from emerging IPTV services. This is causing the cable industry to upgrade its infrastructure and push ahead with digitisation.

Taiwan: Suffers from several problems: The pay-TV market is over-regulated and as a result development has stagnated.  The pay-TV industry is now trying to convince regulators to ease some of the restraints and accept new business models based on digitisation.

China: Driven by the Beijing Olympics, the country is digitising rapidly because the government has made this a priority. Operators are looking for ways to increase revenues in a market where consumers are used to getting free content. The key priority in China is finding viable business models to enable new premium content to become available on pay-TV systems and to encourage increased ARPU.

Philippines and Thailand: Piracy can be expected to continue to weaken growth in these markets for the next few years unless the governments become involved in seriously boosting enforcement. By the end of 2008 piracy in the Philippines will reach about US$94 million while net industry losses in Thailand will be approximately US$184 million.

Indonesia: Piracy is emerging as a major problem. If the pay-TV industry doesn’t succeed in working together, piracy could become as problematic in Indonesia as it is in the Philippines and Thailand.

Vietnam: Rapidly growing pay-TV industry. Although piracy has been prevalent in the past, the government has exhibited a strong inclination to deal with it effectively. As a result, the legitimate market has more than doubled in the past two years. This growth should be sustained in the next two years. Meanwhile the Vietnamese industry will be able to provide more content for the local market.

Hong Kong and Singapore: Large number of pay-TV providers in both markets. The challenge for CASBAA and for the local industry is to keep the lines of communication open. Both markets have good intellectual property laws and strong, open regulatory systems.  Both need to continue updating. Hong Kong is now considering action to regulate peer-to-peer sharing.

Australia: Ferocious competition between the pay-TV and free-TV industries rages with a continuing tussle over “anti-siphoning” rules governing sports content. Crime doesn’t seem to pay in Australia. The police have raided and charged several piracy rings. One was fined AUD 1 million for distributing devices to circumvent CA systems. 

New Zealand: The year’s key event will be the announcement (expected in mid-2009) of the results in the government’s ongoing review of competition in the audio-visual broadcasting market. 

India: Strong dialogue with regulators for the past several years. There are signs that the regulators are becoming more responsive.  Discussions are being held to relax quotas on foreign investment, for example.  Nevertheless changing key regulations on matters like price controls is difficult.  The short-term challenge is to work with the Indian government after the elections that will be held in April 2009.  India’s digital satellite DTH market has registered exceptional growth in the past few years.

Pakistan: CASBAA estimates there may be as many as 8 million pay-TV connections but only a small minority is legitimate. Net industry losses have grown to at least US$126 million. This is the equivalent of 7.2 million subscriptions.

For more information:

CASBAA

High definition television is set to become a mass-market item rather than just a high-end item, although it is still many years away from replacing standard definition television as the dominant format for television viewing.

In many countries HDTV is being used by pay-television operators to gain market share and enhance revenues by differentiating their services from those of their rivals.

In particular, satellite and cable operators are best positioned to exploit the format which requires up to four times the bandwidth of standard definition channels. This will likely increase the competitive advantage over digital-terrestrial television which lacks the capacity needed to provide extensive HDTV offerings.

HDTV’s emergence as a serious consumer proposition – initially in the USA and Japan and now in Europe – has been a long time coming. The first HDTV services were launched back in the early 1990s in analogue format. The amount of bandwidth needed to deliver high definition images meant that it was not until the advent of digital broadcasting and video compression that HDTV really became viable. Even so, it has taken time to start being popular. For instance, the UK’s BSkyB has around 600,000 HD subscribers (about six per cent of its customer base) more than 10 years after launching digital satellite television. Across the Channel, the long-established established Canal+ has a comparable number, representing about 10 percent of its subscribers.

According to estimates from researchers Informa Telecoms & Media, only four percent of global television homes were watching programmes in HD at the end of 2008, a proportion which it reckons will rise to 16 per cent by 2012 (although many more homes will have equipment capable of displaying high definition images).

Only in North America is the 2012 proportion expected to be above 50 percent. All in all, researchers suggest that there will be just under 180 million active HDTV homes around the world by the end of 2012.

Business models

As might be expected with an emerging product, different business models are being tested. The most popular so far appears to be that of selling a package of HD channels as a premium service on top of conventional, standard definition subscriptions.

Often HD is offered together with an operator’s latest generation of digital video recorder (DVR) as a product sitting above existing premium packages. This approach has been adopted by BSkyB and Spain’s Digital Plus among others. In the former case, take-up has been stimulated partly by subsidising the cost of set-top boxes. Another approach is to bundle HD channels with existing packages. This strategy is adopted by pay-TV operators keen to build early market share for the HD offering and to establish a clear lead over rivals.

HDTV is not the sole preserve of the pay-television groups. In the UK, the BBC and ITV are using HDTV to drive Freesat, their new free-to-air satellite service, while France launched five channels – simulcasts of the main national broadcasters – in HD on its DTT platform at the end of October 2008.

On DTT, the UK has come up with a radical approach. It is using MPEG-4 compression with the new DVB-T2 transmission standard to maximise the number of HD channels. Even so, the total is unlikely to exceed four which seems minute compared to what can be offered via cable or satellite. BSkyB, for instance, already has 28 high definition channels.

Global acceptance

In global terms, European take-up of HDTV lags behind the USA and is on more or less level-pegging with the Asia-Pacific region where Japan leads the field. This is not particularly surprising given its citizens’ love of new consumer electronics and its wealth of consumer-electronics manufacturers.

For most European countries the advantage that HDTV delivers in terms of picture quality over standard definition is significant and this is the main stimulus to encourage purchasing. In the USA, however, the quality differences between the old and the new are much greater.

As Informa comments: “HD take-up has been highest in North America, partly due to falling equipment prices and greater content availability but also because the picture and audio quality of standard definition (SD) programming is poor.”

Given the old joke that the US television standard NTSC stood for “never twice the same color,” one can understand the impetus behind an early transition to high definition television.

Production costs

The cost of producing television programmes in HDTV has been falling rapidly over the last few years and is now only marginally more expensive than producing shows in standard definition format. But because of the additional bandwidth required, transmitting HD programmes remains around three times as expensive as the comparable costs for standard definition channels.

Three genres of programming stand out as benefitting most from being shown in HDTV – the sports and film channels that are the staple of premium pay-television operations and the kind of natural history programmes made by the BBC, Discovery and National Geographic. In contrast, HDTV adds little value to news, chat shows and other studio-based content.

Sport had been used by broadcasters and platform operators as a way to attract viewers to HDTV and kick-start high definition services. The Olympic Games in Beijing in Summer 2008 provided such a stimulus in a number of markets.

Consumer confusion

While millions of television sets might be able to display HDTV signals the vast majority are still used only to show standard definition TV.

The use of terms such as “HD Ready” has confused some consumers who wrongly believe that they already have HD. While about 40 percent of the world’s digital-TV homes now have television sets able to display HDTV, only about 15 per cent in fact have high definition television.

As HDTV becomes a mass-market proposition and gradually replaces standard definition television as the norm – a process likely to take well into the next decade, if not beyond – the next generation of products are already appearing on the horizon.

Three-dimensional television (3D TV), in which the illusion of a three-dimensional image is created, might sound radically different from television as we know it, but can be seen as an incremental advance on HDTV.

In December 2008 BSkyB staged a demonstration of a·3D TV product, where two HDTV cameras mounted close to each other are used to create the 3D effect, with different pictures sent to viewers’ right and left eyes. While BSkyB is still working out when to launch a service, French telco France Télécom has announced plans to offer football in 3D over its ADSL network during 2009. Both operators will use a format that requires viewers to don special glasses in order to see the pictures in three dimensions.

The BSkyB demonstration used a 3D television set from Hyundai which went on sale in Japan in April 2008. How serious this service turns out to be remains to be seen.

Beyond that is the prospect of “Ultra HD” which is now being developed by NHK, the Japanese broadcasting pioneer which was developing HDTV back in the 1960s. Ultra TV will offer picture quality with four times the resolution of today’s HD signals.

But there’s no need to rush out to buy this product which is still in the R&D phase. NHK reckons it will be ready to hit the shelves in … 2025.

For more information:

Informa - http://www.informatm.com/itmgcontent/icoms/index.html