The legacy pay-TV market in APAC has been showing signs of Millennial flu, with symptoms including a decline in pay-TV usage and household penetration, a rise in streaming adoption, and a massive shift to video consumption on mobile devices.
The migration of subscribers from pay-TV platforms to streaming platforms has been the plague of the traditional pay-TV ecosystem in North America for nearly a decade. Parts of Europe are in the early stages of the shift as well. Now, research in the Asia-Pacific region says the migration will land there in the next five years.
The reality for operators there – if the market follows the course of other regions – is that the spread of Millennial flu and the evolution of operators from pay-TV providers to connectivity providers has already begun. And, that change will accelerate. The push won’t come from Millennials who already are comfortable with mobile viewing and actively tracking down content, but from older generations who will gradually adopt the technology as well. That surge of users will have a deeper impact on the ecosystem, than anticipated.
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Millennial flu: Declining household penetration is just the start
The new projected household pay-TV penetration decline is forecast at an unremarkable rate, falling to 67% of HH in 2023 from 67.4% last year, according to GlobalData’s Trends and Opportunities in Asia Pacific – 2019. The decline, it posits, will come in developed markets like Hong Kong and Australia, offsetting growth in the emerging markets of South and Southeast Asia.
GlobalData says the two largest markets – China (415.6 million subscribers) and India (177.2 million subscribers) – will see modest CAGR of 0.6% and 2.4% in the 2018-2013 period but expects modest declines in Hong Kong (-1.1%) and Australia (-0.3%).
Operators in the region are scrambling to put together affordable content packages that can slow the migration away from their platforms and – predictably – are launching streaming solutions of their own.
But, it notes, an increasing number of consumers are looking to only pay for the content they know they’ll watch, intensifying pricing sensitivity, something streaming providers have found it easier to respond to since they’re not carrying the weight of legacy infrastructure.
5G Mobile is the real threat – and opportunity – for operators
Operators in developed markets in North America and Europe are already beginning to transition from pay-TV providers to connectivity providers, something that the US pay-TV industry providers made clear during Q2 earnings calls this week.
From cable companies like Comcast (NASDAQ: CMCSA) and Charter (NASDAQ: CHTR) to telcos like AT&T (NYSE: T) and satellite operator Dish Network (NASDAQ: DISH), broadband and/or mobile figured in nearly every answer to any analyst queries about the future of the business. Dish Network, which is in the process of acquiring mobile assets from Sprint (NYSE: SPRINT) and T-Mobile (NASDAQ: TMUS), spent virtually its entire earnings call discussing its plans for a standalone 5G network that was different than traditional legacy networks being evolved to 5G networks by AT&T, Verizon and T-Mobile/Sprint.
That 5G evolution also will have a massive impact on the APAC region. China, for example, is building its own standalone 5G network, Singapore is expected to see its 5G network go live in 2020. India is seeing a massive increase in the amount of mobile video consumed as date prices collapse and 5G plans begin to materialize. And, according to industry group GSMA, APAC is expected to be the world’s largest 5G market with more than 675 million connections by 2025.
That 5G evolution will be the catalyst that drives the acceleration of streaming platforms into the true mainstream, and it will hasten the demise of traditional pay-TV players, too.
The bottom line
Millennial flu can’t be eradicated, but it can be controlled.
For providers of entertainment services, the next few years will be even more unsettling than the previous decade as users more fully adopt mobile as their primary connectivity device for communications and entertainment.
While Millennials are fully versed in mobile devices and their ease of use to access content, other generations are just beginning to understand their flexibility. As seen in the US, adoption of mobile video viewing options will see a rapid increase across all demographics.
If you’re not already paddling to catch that mobile wave, you will be left behind. The erosion of pay-TV household penetration in APAC already is beginning and it will accelerate far beyond current forecasts – especially as 5G becomes a reality.