Boob tube's for rubes as pay-TV loses its lustre
Annabeth Leow
PAY-TELEVISION is struggling to reinvent itself for the new millennium.
And the challenge, as Singapore's triple-play telcos realise, is not just one for pay-TV alone. The days of the boob tube have come and gone; video streaming is now the true contender.
It's not just about adapting to changing habits. There is a practical, bottom-line reason for telcos to ramp up their streaming offerings: selling mobile wireless data. It is no different from why they offered pay-TV in the first place, which was to hawk cable (now fibre) broadband lines.
Yet the pace of change may look a little laggardly from the outside.
StarHub, which frequently flags "challenges from piracy and alternative viewing options" in its results, recently launched a StarHub Go Streaming Box on Android TV. Both Singtel and StarHub also offer Netflix access straight from set-top boxes.
But home streaming is old hat, especially in a market where Singapore consumers expect fast, unlimited wireless data at home by default.
Of course, there are other ways to keep customers at the pay-TV table.
Singtel, which nabbed rights to Premier League matches until 2022, will not hike end-user prices next year. When asked whether this could involve absorbing the cost of possibly higher carriage fees, a spokesperson declined to comment, citing a policy of not disclosing commercial details.
But it's not like Singtel would pare margins for no good reason. It saw overall revenue growth of 11.5 per cent for pay-TV in the three months to Sept 30, on contributions from World Cup broadcasts - although earnings before interest and tax (Ebit) in the consumer home services segment still saw a double-digit decline.
Still, there's a seasonality to the numbers. The quarter to March 31, before the mid-year World Cup frenzy, saw a 9.7 per cent slide in domestic pay-TV turnover, to S$51 million.
And a lift from match-viewing parties may be the exception to the rule.
In fact, dwindling viewership - StarHub's pay-TV subscribers were down by 9.4 per cent on the previous year, with 423,000 households at Sept 30 - could have given even a telco with a core lifestyle brand the confidence to walk away from contract renewal with Discovery this year, on a carriage-fee disagreement.
Variable cost model
StarHub CEO Peter Kaliaropoulos has emerged as a vocal crusader of a variable-cost model - where content providers are paid based on the number of actual viewers - but this is a finger in the dyke. As OCBC analyst Joseph Ng noted in a report this week, "there does not seem to be sufficient consensus across the sector to bring content providers to the table".
So telcos can, and must, embrace consumers' new watch-on-the-train-or-bus mobile viewing habits - and its happy effect on their data revenues.
But have they capitalised on this?
To their credit, they have been unveiling over-the-top app packages - whether with in-house products, such as Singtel's "on-the-go" Cast OTT and Singtel TV Go services, which had 114,000 users as at end-September; or tie-ups with providers like Netflix or Hong Kong's TVB. This has been a boon to smaller players such as M1 and MyRepublic, which had no true pay-TV set-ups of their own.
Yet plans and bundles remain generally unfocused and uninspiring, with the model for what media is on offer eerily similar to the "throw it all at the wall and see what sticks" channel suites from the broadband era.
A 2015 study by the former Media Development Authority found that only one-tenth of adult viewers were paying for their over-the-top content.
But even if they were willing to do so, consumer behaviour in the digital age has leaned heavily towards the death of the salesman or the middleman - the role that telcos occupied in the days of broadband TV.
Consultancy AlphaBeta, in a report commissioned by Netflix in October, suggested that Asian markets invest in producing original content for the video-on-demand industry. Given the state of the market, even a proposed fix like that might be a long way off.
