Up until last year, Malaysia’s only pay-TV company was certain no one could ever break its monopoly. Some players with big ambitions had come and gone in the past, but none could shake Astro from its pole position.
For nearly two decades Astro has entertained Malaysians with a variety of content offerings via its direct-to-home satellite technology, growing from fewer than two dozen channels to more than 160 now.
It is now in 3.5 million of the country’s 6.7 million TV households. By 2017, the industry research group Frost & Sullivan predicts there will be 7.6 million households in the country.
It is earning premium average revenue per user despite competition from internet protocol TV (IPTV) players, the biggest being Telekom Malaysia Bhd.
Somehow, Telekom has not been able to capture a large market share because it does not have enough compelling content.
The content is there for Telekom, but not the popular sports channels, CNN or Star Movies. Astro long ago locked in all that content. The other IPTV players are too small and their content is nothing near to what Astro has.
However, the giant incumbent’s weakness is “rain fade” and thunderstorms that can disrupt signals and ruin a family’s viewing. Some Malaysians are fed up with the rain fade issue but they feel they have no other choice and continue to stick with Astro.
Its weakest link has become a contentious issue because an uninterrupted signal is what its newest rival, Asian Broadcasting Network (ABN) is using to win over subscribers.
ABN is telling the market that its service is thunderstorm-free and congestion-free, luring users away from the TV services of Telekom, which at times suffers from network congestion issues.
ABN is the new kid on the block with big dreams of dislodging Astro, though it also knows that that cannot be done in a day because Astro has brand loyalty.
But the expansion of choice is very much welcomed in a marketplace where consumers are now using different platforms to view their favourite shows.
ABN received a licence to operate a digital cable pay-TV service in 2011. It was supposed to launch services in mid-2102 but faced delays in lining up content and wiring up the country to ensure that it could deliver on its promises. Getting contractors to use electricity poles to wire up parts of Malaysia has taken more time than ABN had anticipated.
ABN also needed time to run trials to ensure the service was tip-top before it started selling packages to viewers. It also needed to fix its high-speed internet offering because that is an important component of its overall package.
After extensive trials in more than 1,000 TV households in the Klang Valley and Johor Baru, the service finally came alive commercially early this month, with a giant carnival attended by dignitaries including Premier Najib Razak.
Its strategy — fight with low prices, offer a lot of content, and promise no disruptions, even during thunderstorms.
It is dangling up to 50 megabits per second of fast internet access, something not many players are able to offer, more than 100 TV channels, six free-to-air channels and several radio stations.
Subscriber totals are not known so far but the company wants to sign up at least 600,000 homes within a year.
ABN is eyeing the remaining TV households that do not have Astro, and also Astro users who want something different. It is suggesting, for example, that Astro consumers could scale back the packages they have with Astro and try some ABN services to see how they like them. It’s a clever and appealing offer to let people enjoy two networks for a little bit more than the price of one.
As well, ABN is clearly saying that Telekom is not its rival but Astro is.
Telekom built the country’s widest high-speed broadband network to offer internet access to more than 1.3 million premises. It also offers IPTV as a side attraction in a bid to get more people on its network. In fact telecom companies are monetising their “dumb” pipes to mitigate the loss of voice revenues, which are on a steady downhill slide.
Though Astro has 3.5 million users, its services are not aimed at low-income consumers, but now that ABN is in the game, the market leader is rushing to get content on as many platforms as it can. Its low-end service, Njoi, now has 209,000 users.
Experts believe the TV set and the personal computer will merge into a single consumer appliance with the rapid growth of the internet, so the internet has become very important for broadcasters as a new delivery mechanism for all forms of services.
Astro has also teamed up with two players — sister company Maxis Bhd and also the fibre player Time dotCom to offer IPTV and high-speed broadband. Maxis is riding on Telekom’s network to offer high-speed broadband. All this is to ensure that its services are available on multiple platforms and it is on fibre because it is up against another fibre player with ABN in the picture.
ABN uses a hybrid fibre coaxial network that can carry signals to homes at a much lower cost than fibre-to-home.
Still the company needed 2.5 billion ringgit in startup investment, and though it has 500 million ringgit to jumpstart its operations, it would need more money if it wants to fight Astro.
ABN is sure it will succeed where others have failed, though analysts are skeptical that it could ever overtake Astro.
ABN’s biggest problem is content, an area where it believes Astro is competing unfairly in a regulatory environment where its monopoly has been condoned for years. It believes Astro should not be signing up content exclusively when there are so many different delivery channels now. ABN is likely to lobby the government, and if it teams up in this effort with Telekom it could find a sympathetic ear in Putrajaya.
It’s still not clear whether ABN can indeed gain traction and secure a sizeable bite of Malaysia’s broadcasting market, because Astro is not about to concede any room to manoeuvre. This has definitely become a fight worth watching.