Market Insight

Malaysian DTH pay TV monopoly to end

September 11, 2017  | Subscribers Only


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Malaysia’s direct-to-home (DTH) satellite pay TV monopoly is set to end. Ansa Broadcast plans to launch a new DTH pay TV service in Malaysia, ending a two decade monopoly held by Astro Malaysia Holdings (Astro).   

Ansa Broadcast, formerly known as U Television and a subsidiary of Malaysian conglomerate Berjaya Group, launched a cable pay TV service in 2005, called MiTV. However, MiTV struggled to gain traction and following a workforce retrenchment in 2006 ceased shortly thereafter. The rebranded Ansa Broadcast satellite service will strive for much more success. Its launch date is still to be announced.

Founded in 1996, Astro obtained an exclusive 20-year DTH satellite pay TV broadcast licence in 1997. The licence officially ended in February 2017. Astro reported revenues of MYR5.48 billion ($1.3 billion) and 3.47 million subscribers in the financial year ending 31 January. 

Our analysis

The entry of Ansa Broadcast into the Malaysian pay TV market will disrupt but not threaten Astro’s dominance in the short to medium term. Astro increased its shares of Malaysian TV advertising expenditure, from 31% in 2014 to 35% in 2016. IHS Markit estimate its calendar year (January to December) advertising revenues grew 11 percent from MYR335 million ($79.8 million) in 2015 to MYR372 million ($88.6 million) in 2016.  

Although Astro is expected to maintain its dominance in the coming years, the company will face a much more competitive landscape than it has encountered so far. Over the past 20 years, Astro has seen several pay TV operators try and fail to capture a significant share of the Malaysian pay TV market, namely Mega TV, MiTV and ABNXcess.

However, the entry of Ansa Broadcast comes at a more trying time for Astro. Malaysia’s pay TV landscape is much more competitive than in the past two decades given the advent of online streaming services. The impact of such services on Astro’s performance is already evident.  Astro’s subscription and advertising revenues declined 2% and 5% respectively in the quarter ending 30 April, compared with the corresponding period a year earlier. Astro’s major pay TV competitor is the Telekom Malaysia operated IPTV service HyppTV, whilst its major counterparts in the streaming service space are iFlix, Netflix and Viu.

In Q1 2017, Astro relaunched Astro Go, its over-the-top (OTT) streaming service, to allow customers to watch content on a mobile device. The value-add service aims to provide a better user experience which ultimately serves to attract new and retain existing customers. However, the jewel in Astro’s pay TV crown is its compelling content, most notably its rights to the world’s most watched sports content. Astro’s sports broadcast rights include UEFA football matches, Olympic Games, and the most popular sports broadcasts in the country, English Premier League matches. Astro renewed its EPL broadcast rights agreement in 2016 for the 2016/17 and 2018/19 seasons.

IHS Markit expects Astro will continue to be a strong bidder of future sports broadcast rights to stay competitive. Although sports content is a key part to its content strategy, Astro will need to ensure a compelling mix of licensed content and content produced in-house across several genres and tailored to local tastes to ensure its future success. 

Geography
Malaysia
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