In the latest survey of revenue leakage over the last 12 months to the regional pay-TV industry, conducted by the Cable & Satellite Broadcasting Association of Asia (CASBAA) and Standard Chartered Bank, the losses are conservatively estimated to stand at US$1.54 billion, as compared to US$1.13 billion in 2006.
While the China market remains uncharted territory for the annual estimates, this year the newly developing pay-TV market in Pakistan has been added to the calculations, with losses that stand at US$110 million. Estimates for Pakistan’s unauthorised market show 4.6 million pirated cable-TV subscriptions in a market with some 345,000 legitimate subscriptions to pay-TV services.
Excluding Pakistan, the regional figure stands at US$1.43 billion, up US$300million, representing a 26% increase in lost revenues compared to 2006.
The cost of pay-TV piracy in Hong Kong for 2007 has decreased by 15% to US$27.4 million (HK$213.72 million), although the number of hacked connections remained unchanged. “The fall in the ‘lost revenue’ number is attributed to the reduced cost of a pay-TV subscription in Hong Kong thanks to increased competition in the market,” said Simon Twiston Davies, the CEO of CASBAA.
Meanwhile, a large part of the rise in total revenue losses for 2007 can be attributed to a 20% US dollar re-alignment against the Indian rupee. “Nevertheless, the India pay-TV market is the most distorted in Asia thanks to what can only be characterised as structurally-based revenue leakage,” said Twiston Davies.
According to CASBAA, India is a market with 73 million pay-TV connections, yet it suffers from heavy-handed government regulation which, in turn, has created a debilitating lack of investment in infrastructure. India’s pay-TV revenue leakage reached a massive US$985 million in net losses in 2007, an increase of 44% over 2006.
While the rest of the world is benefiting from digital roll-outs, Indian consumers have no opportunity to enjoy these fruits. “The systemic shortfall in analogue revenues from local cable operators is a major part of the problem,” said Twiston Davies.
The most positive news in the survey, conducted by CASBAA in collaboration with the Creative Industries Division of Standard Chartered bank, is a dramatic fall in the number of illegal connections to pay-TV channels in Vietnam, where the value of industry losses has fallen from US$38 million in 2006 to US$10 million this year.
“The improvement is almost exclusively thanks to the removal of pirated international channels from the line-up offered by Vietnamese operator VTC,” said Lee Beasley, Head of Media and Entertainment of Standard Chartered Bank. “The Government of Vietnam is clearly moving to fulfill its international trade commitments and listening to its own legitimate industry. This is great news, and we hope attention to this issue continues.”
The 2007 survey of pay-TV piracy in Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Vietnam, Australia, Macau and this year’s addition, Pakistan highlights the impact of pay-TV signal theft and unlicensed pay-TV operators on regional economies amid new and challenging technological developments.
“The pay-TV piracy situation in most of the big markets in the region needs to be seriously addressed, not just by the industry but also by government,” said Beasley. “Nonetheless, the fact that legitimate paid subscriptions are seeing an average 10% growth is a positive sign of the vast potential for the Asia Pacific pay-TV industry.”
The report also highlights that at least US$213 million is being lost in unpaid tax revenues across the region this year.
Meanwhile, in 2007, CASBAA has continued to lobby governments and has extended legal actions against commercial distributors of unauthorised signals in public venues in Hong Kong and against pirate operators in the Philippines. The Hong Kong actions have been successfully concluded while the issues in the Philippines remain in court.
With 1.32 million unauthorised connections, Thailand continues to suffer annual piracy losses in the range of US$180 million, the second largest dollar loss in the region.
CASBAA notes that, despite a slight improvement in the approach to intellectual property rights by some cable operators in the Thai provinces, there has been a disturbing growth of an emerging and important phenomenon, that of illegal Internet-based card-sharing (via remote servers) for Direct to Home (DTH) services.
“This is a relatively new and sophisticated technical hack that boosts the vulnerability of DTH services to piracy. This needs to be watched carefully and highlights the need for industry vigilance and continued investment in technical protection supported by stringent legal sanctions,” said Twiston Davies.