S'pore pay TV operators must bundle content

Government mandate for Singapore pay TV providers to cross-carry content plays in favor of larger player StarHub, according to analyst.
Written by Victoria Ho, Contributor

SINGAPORE--Following the government's mandate for Singapore's pay TV providers to cross-carry content, local players should now focus on bundling deals to reel customers in, advises an industry analyst.

The Media Development Authority (MDA) announced on Friday that the two pay TV operators in the country would have to carry each other's content. The new regulation follows much public outcry over the bidding rights to the English Premier League (EPL), which SingTel secured late last year for its IPTV service, mio TV. Incumbent pay TV operator StarHub, had long held the rights to broadcast the popular football league.

SingTel's win mean current customers of StarHub cable TV who want to catch the next season of EPL matches will have to switch over to mio TV or maintain both set top boxes.

SingTel mio TV, which debut in July 2007, had 155,000 customers at the end of 2009. StarHub had 539,000 customers during the same period.

The MDA had said then it would monitor the situation and asked SingTel to "provide clarity on the pricing of their sports package".

The content regulator said competing on exclusive content has "negatively impacted" the industry and consumers, leading to higher prices transferred to consumers as a result of higher bidding costs for content on providers' parts.

The new legislation is effective immediately, but will not apply to existing content agreements and contracts, including SingTel's EPL rights.

Kenneth Liew, senior market analyst at IDC's Financial Insights, told ZDNet Asia in a phone interview the government's decision will benefit customers, who will see more content with their pay TV provider of choice.

Furthermore, customers will likely pay less for TV shows because the providers would submit bids that are more "rational" now that content is non-exclusive, said Liew.

He added that the decision is likely to play well in StarHub's favor.

The operator's ability to get content shown on SingTel's mio will likely help StarHub retain its current larger customer base.

"Consumers will only switch if they're dissatisfied with service. StarHub has a wider range of content, so in the next bid [for other sports content] it will be able to get a full range to keep most customers happy," Liew noted.

Mio, on the other hand, saw a lot of new sign-ups because of the EPL rights, he said, adding that SingTel will have to make a larger effort to grow its comparatively smaller base beyond sports fans, and procure more content.

SingTel will have to first ramp up its customer base in order to get economies of scale to justify some of the more popular, premium content on StarHub, the analyst added.

Both providers run quadruple-play businesses, which they should leverage to offer service bundles in a variety of appealing ways, Liew noted. Both StarHub and SingTel provide mobile phone, land line phone and Internet services, in addition to pay TV.

In a media statement, StarHub said the MDA's ruling would not be applied retroactively to the provider's existing deals with its channel partners, thus, having "little impact [on StarHub] for the foreseeable future".

In a previous report, Adeel Najam, industry analyst at Frost & Sullivan, said exclusive content--when permitted by local regulators--help give operators "a leg up in the game". On SingTel winning the rights to broadcast EPL, the analyst had said: "The exclusivity deal may not be able to topple Singapore's dominant cable TV operator, StarHub, anytime soon, but it clearly gives SingTel a skin in the game and is likely to earn the telco a respectable number of IPTV subscribers."

A SingTel spokesperson sent an e-mail saying the company would not be able to share its plans, but that it would be "actively engaging the MDA through the industry consultation process".

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