– Indonesia offers pay-television distributors lucrative business, with millions of television owners and low penetration of paid programs, giving viewers alternatives to monotonous, limited programs on the country’s free-to-air television

Pay-television competition gets tougher with new players 

The Jakarta Post | Business | Mon, March 17 2014, 12:25 PM

Indonesia offers pay-television distributors lucrative business, with millions of television owners and low penetration of paid programs, giving viewers alternatives to monotonous, limited programs on the country’s free-to-air television.
Although the market is entrenched by old players, media firms are still keen on joining the battle by starting up their own pay-television firms, each trying to provide their own interesting features — from content to price — to hook customers.
The Kompas Gramedia Group and politically wired tycoon Aburizal Bakrie’s media empire, PT Visi Media Asia (VIVA), are among those planning to enter the industry this year, both tapping the huge potential offered by quadrennial soccer tournament FIFA World Cup 2014 to help pool their initial subscribers.
The Kompas Gramedia Group’s television wing, Kompas TV, would officially introduce its pay-television carrier K-Vision on Wednesday, looking to secure 500,000 subscribers in its first year of operating, the company’s president director Bimo Setiawan said over the weekend.
“Our strategy in facing competition is to reach areas where there are only a few pay-television distributors operating, such as in Riau,” he said.
He said that this year would be the perfect start for the company’s new business now that it had secured the rights to air World Cup matches and that of local soccer league Liga Super Indonesia, aiming to lure sports enthusiasts before tapping more general, sustainable consumers.
Winning the hearts of sport aficionados was also VIVA’s strategy to net new subscribers, VIVA President Director Erick Thohir earlier said.
Previously, he reportedly said that VIVA Sky would first focus on the live broadcast of soccer tournaments and expected to garner 300,000 consumers during the first half of 2014.
Research firm Media Partner Asia has forecast in its study that the number of net new pay-television subscribers in Indonesia — home to about 50 million television owners and 11 pay-television operators — will average one million per year during the 2013-2015 period.
Indonesian pay-television subscribers will climb from 2.4 million in 2012 to 8.7 million by 2020, with penetration scaling up from 7 percent to 21 percent.
Key drivers of market growth, the study says, include macro trends built around higher disposable income and a rising middle class, with leading players continuing to invest significantly in sales, distribution and content. New entrants, in the meantime, will boost overall prospects.
Content will be the key to take on new competitors, older players say.
MNC Sky Vision marketing sales and programming director Dhini W. Prayogo said that the firm was optimistic that it would maintain its domination in the industry, given the big gap between the firm and its strongest competitors.
MNC Sky operates the country’s oldest and biggest pay-television carrier by subscriptions, Indovision, which makes up 38 percent of Indonesia’s pay-television market.
The firm’s domination in the pay-television industry stretches up to 73 percent of the market, boosted by its lower middle-class products, TopTV and Okevision.
“Nevertheless, we won’t be caught off guard and will keep expanding and improving our content. We participate in a price war as it will only lead to fray and might degrade the quality of this industry,” Dhini said.
“What is important to us is to net loyal viewers who are looking for quality. We currently have about 30 exclusive channels and 18 MNC channels, and will add more soon.”
Currently, according to Dhini, Indovision has 2.15 million subscribers nationwide.
First Media, which is affiliated with the Lippo Group, is also counting on its content to face tightening competition.
“We are quite confident with our own local content, like Berita Satu [news channel]. That’s what we are going to improve and offer our customers,” First Media corporate secretary Harianda Noerlan said.
First Media has also prepared US$100 million to set up infrastructure and to finance its expansion in Bandung, West Java, to support its target of 1 million subscribers, a boost from 600,000 existing subscribers.
Nexmedia, operated by PT Elang Mahkota Teknologi, which runs free-to-air SCTV, did not respond to the The Jakarta Post’s inquiries.
It was previously reported that Nexmedia estimated that it had reached 100,000 subscribers last year and had set a target of 30 percent to 50 percent subscription growth this year with the help of English league Barclays Premiere League after securing the rights to air its soccer matches.