2021 Issue Two

MESSAGE FROM THE PRESIDENT

Satellite Video Market: Is OTT the Only Reason for the Recent Decline?

Dimitri Buchs, Senior Consultant, Euroconsult

A rapid acceleration in the non-linear video market since the start of the COVID-19 crisis

In recent years, the video market landscape has changed significantly, with the current COVID-19 pandemic accelerating pre-existing industry trends. In the age of video-on-demand/OTT and mobile media consumption, consumer expectations and usage habits are changing rapidly. The number of OTT services available globally has skyrocketed in the past couple of years, leading to growing competition for linear TV providers as well as a much wider variety of options for consumers.

Not only has competition increased for linear TV but a growing share of investments of broadcasters and media groups have moved from linear TV towards OTT services. A good example is Disney, one of the world’s largest media groups. With the ongoing international rollout of Disney+, the company has been making big changes to its linear television networks, as it moves its content over to its OTT service Disney+. In 2020, multiple Disney channels were closed around the world, including in Australia and in the United Kingdom with an additional 100 TV channels expected to close in 2021 including 18 in Southeast Asia, with the great majority of content moving to Disney+.

While streaming services have seen tremendous growth accelerated by the pandemic, the cord-cutting movement has also been boosted, with satellite TV not spared by the trend. At the start of the shutdowns linked to Covid-19, consumers tightened their budgets, live sports and events were cancelled, and linear providers cancelled some of their promotional offers. What could be even more worrisome for the linear TV industry is the fact that while OTT/mobile media usage is beginning to normalize, media habits adopted during the pandemic are here to stay, and as smartphones and connected devices become more and more accessible, one can only expect to see this trend accelerate in coming years, not only in the most mature digital markets but also increasingly in emerging markets.

Satellite TV on a downward trend in 2020

The rapid growth of the global OTT market has been a key contributor to the current downward trend in the satellite TV industry that started two years ago. In 2019, capacity usage for video distribution services and TV channels distributed by satellite decreased for the first time since the introduction of satellite TV services, confirming the lack of dynamism of the market already observed in the previous couple of years. This trend was confirmed in 2020, with the number of TV channels distributed globally down by 1% at 42,600 channels and capacity usage down by 1.5%. Unfortunately for the satellite industry, the downward trend, that was initially present in mature markets only, is now also visible in several emerging markets as well. In 2020, Sub-Saharan Africa was one of the main bright spots for the satellite TV industry, with the latter being the only region to see an increase in both TV channels distributed and capacity usage. Sub-Saharan Africa is currently less impacted than other regions as its terrestrial infrastructure is less advanced than in other areas of the world, with in parallel a more limited number of OTT services and users than elsewhere. In Sub-Saharan Africa, growth was largely favored by the development of digital terrestrial television (DTT) with the digital switchover process still ongoing in the region. Satellite is used to either distribute content to DTT emitters or as gap filler for remote areas when terrestrial networks are not available across a territory.

Factors contributing to the decreasing trend around the world in 2020 include:

• With pay-TV penetration increasing in most countries, and with the rise of OTT/video-on-demand, investments in linear video services were reduced;
• Growing competition from terrestrial networks, with both fiber and wireless networks continuing to gain ground. In a growing number of cases, terrestrial networks have fully replaced satellite or relegated it to a backup role;
• The end of some SD/HD simulcasts led to decreasing capacity needs in some countries (e.g. United States, United Kingdom);
• The HD market slowed down, with total TV channels up 5% in 2020 vs. an 8% growth in 2019. The COVID-19 crisis did not help in 2020, with broadcasters likely postponing some of their investments in new formats. This was also likely true for UHD, with the number of UHD channels distributed by satellite remaining stable at 130 in 2020. The limited development of the market is likely linked to the time and significant capital investments required for the entire value chain to upgrade to UHD. This has led to a considerably slower introduction of UHD channels, compared to HD in the early 2000s when the latter format was rolled out. Most of the leading international broadcasters and service providers remain cautious about leaping into UHD, with the current health crisis not helping. Therefore, OTT services have taken the lead in terms of UHD rollouts;
• Apart from its impact on new rollouts of services, the COVID-19 crisis also had an impact on the advertising market. Advertising spend for linear TV decreased in 2020, forcing a significant number of channels, mainly small free-to-air channels, to stop operating.

Also, worth mentioning is the fact that the launch of new TV operations has slowed down in emerging digital markets in recent years, leading to more limited opportunities for satellite operators to sign new customers. Growth potential remains for channel additions in some regions such as parts of Asia and in Sub-Saharan Africa. Important to note is the fact that some of the countries with the strongest growth potential have regulatory barriers that could limit market development (e.g., China, Pakistan).

Satellite TV in Asia in 2020

In Asia, the trend observed in 2020 was largely in line with other regional markets. Overall, the number of satellite TV channels distributed in Asia decreased by 3% to 9,500 channels, with capacity usage down 2.5% compared to 2019. Apart from Oceania where the number of TV channels distributed remained largely stable, all other sub-regions of Asia observed a decrease in channels distributed by satellite. South Asia, led by India, observed the strongest decrease, ahead of Southeast Asia. Most Indian pay-DTH platforms reduced the size of their channel line-ups with in parallel the end of service for Dish TV in Sri Lanka.

Reasons for the downward trend in Asia are overall the same as the ones observed on a global basis. More particularly, the OTT market that has progressed rapidly since the start of the COVID-19 pandemic has put growing pressure on satellite TV services across the region. OTT has become mainstream across most countries, with more than 400 million viewers estimated to be using OTT services at a regional level according to SpotX. Southeast Asia, where satellite TV has lacked dynamism in the past 2-3 years, has been one of the fastest-growing OTT markets in the past few months.

Source: Satellite Connectivity and Video Market, 2021

OTT: Positioning of satellite TV players

Lately, a growing number of satellite pay-TV platforms, broadcasters/media groups and telcos have entered the OTT market by launching their own services to better compete against pure players. In 2020, close to 2/3 of satellite pay-DTH platforms had OTT offerings. The OTT strategy of pay-DTH platforms to offer diversified services around premium content is notably aimed at minimizing churn. Most DTH platforms have rolled out services targeting their linear subscribers, but a growing number of them are offering standalone OTT services (e.g., Astro Malaysia, Sky UK).

In several countries, led by mature markets, platforms have largely shifted their investments in OTT services, with lower investments in new linear channels and, in a growing number of cases, decreases in the linear content offered. In these markets, this is one of the main reasons why capacity usage by platforms has not increased lately. The ability of pay-DTH platforms to remain key content suppliers will be important for the satellite capacity market, as they represent a premium customer segment for satellite operators. A growing number of channels distributed outside of platforms are also launching OTT services. In some specific cases, broadcasters are privileging OTT offerings over satellite distribution. This situation is recent and could become more common, notably for cable channels and free-to-air channels with limited audiences. Despite recent changes, satellite should remain the primary delivery network for digital TV/video services in some quickly growing digital markets (e.g. Africa).

2020 Active pay-DTH platforms with an OTT service

Source: Satellite Connectivity and Video Market, 2021

An unavoidable continued downward trend for satellite TV by 2030

The downward trend observed in the satellite TV market in the past couple of years is expected to continue by the end of the decade. The number of signals carried by satellite should decrease from 42,600 today to just over 36,000 in 2030.

In Asia, the number of TV channels is expected to decrease in most sub-regions, South Asia being the exception. In the latter, the rapid development of the HDTV market which remains limited to date, as well as the potential launch of pay-DTH in Pakistan could lead to the expansion of TV channels by 2030. Elsewhere, the impact of OTT is expected to be too strong for the satellite TV market to renew with growth.

Competition from terrestrial networks and OTT services is expected to increase and should continue to be the main inhibitor for satellite TV both in advanced and emerging digital markets. Apart from the existing threats for satellite, the development of 5G during the 2020s is expected to further increase competition for satellite TV and more particularly for the occasional use market that has recently suffered from the postponement and cancellation of live sports events. In recent years, terrestrial occasional use services have rapidly gained ground versus satellite due among other reasons to the lower price of services. With the development of 5G occasional use services such as the one recently announced by LiveU that will use the AT&T 5G network for mobile video production, the satellite occasional use market should further decrease in size by 2030.

Forecasts: Satellite TV channels by region

Source: Satellite Connectivity and Video Market, 2021

Uncertainty remains regarding the pace of adoption for new quality standards (mainly UHD) and the effects of new compression standards (HEVC). HD should be the main driver with more than 11,000 channels expected to be added by 2030. The situation looks less promising for UHD. Limited channel additions in the past 18 months raise concerns regarding adoption and future rollouts across all regions, with Euroconsult forecasting less than 1,000 channels by 2030.

For satellite operators, maintaining and developing premium orbital positions for TV broadcasting will remain even more important given the market context. Competition between operators should be strong, notably to attract new platforms, given the limited expected number of new services to be launched. Despite what seems like an inevitable trend for satellite TV in coming years, the market segment should remain large enough to continue to be a key part of the satellite industry throughout the current decade.

Video’s Great Convergence: Entering a World of Megabits

Alan Crisp, Senior Analyst, NSR

Since the beginning of the satellite communications industry, demand has broadly been segmented into linear video, fixed data, and mobile data, with video being the industry’s bread and butter. Long leases, sticky hotspots, and customers that are themselves many times larger than satellite operators (Sky UK’s 2020 top-line revenues of GBP 13.4B were roughly as much as the revenues of all satellite operators combined) contributed to a healthy and stable business from the early days of satellite until fairly recently.

That being said, the past decade or so has seen initial stagnation, and more recently, slow decline, in the market for linear broadcast via satellite. NSR’s recently released Global Satellite Capacity Supply and Demand, 18th Edition report, has demonstrated this decline, with leased transponders dropping from 2,794 TPEs in 2020 to 2,434 TPEs in 2030.

Source: NSR

This has been coming at a time when DTH platforms and cable operators are increasingly diversifying their service offerings to include, in addition to linear television, internet services. In the short-term, the impact on satellite operators will be small. But in the longer-term, this trend will likely lead to a convergence, whereby DTH platforms and cable operators offer all services via bandwidth. Put another way, if your local DTH platform can also install a 1Gbps fiber link in your house, eventually, they will be able to transmit most of their video content more effectively over the internet than over a satellite. This trend is in different stages in different markets, but is likely to continue pressing forward as we move further into a world of connectivity everywhere, ultra high-speed bandwidth all the time, and a plethora of video options to choose from. How will satellite operators navigate this new paradigm, and what will it mean for their bottom lines?

Broadcast markets in Asia – changing rapidly and with new competitors on the way

Asia is home to some of the world’s largest and most successful DTH platforms. India alone has multiple platforms with >10M subscribers each, while developed markets such as Japan and South Korea are home to platforms with less subscribers, but with wealthier subscribers who pay considerably more per month on average.

Whether a $3 per month or $30 per month ARPU market, the impact of high-speed internet everywhere is being felt, and if anything, it has been accelerated by Covid-19, as governments have invested more money into internet networks, and put more emphasis on universal broadband connectivity.

To take India as an example, the country’s DTH industry has historically been one of the world’s largest. Starting in 2016, the DTH industry started to experience unprecedented competition from an unexpected place – Reliance Jio providing the average Indian with what was at the time free mobile data. Overnight, customers who previously were happily paying $3-4 per month for the DTH service now had another option – lots of content over the internet, for free.

More recently, we have seen Netflix take advantage of this phenomenon of cheap and ubiquitous mobile internet in India. Netflix operates in over 100 countries, and in general tries to maintain a stable price globally of around US$10 per month. But in India, the company has begun offering a mobile-only plan, which allows users to watch Netflix content on their phones for a couple of dollars per month – basically the same as DTH services. When taking into account the amount of local content on Netflix, it is a compelling value proposition. In short, we have seen a convergence of internet access and television, and at a price point that beats DTH in many instances.

Moving forward, Netflix is unlikely to stand still in this regard, as the company has recently begun creating more content for places such as Francophone Africa. With such markets being some of the last holdouts for traditional DTH (it’s still not so easy to find a broadband connection in Côte d’Ivoire), the impending competition from Netflix could well stunt the growth of DTH in the region.

Is there a bright spot for satellite?

Despite the changing environment, these developments will also create opportunities for satellite operators. As DTH platforms in these markets start to offer broadband packages, they will need bandwidth. In certain countries, terrestrial options are still very limited, and will be for the foreseeable future.

Take the example of Nepal. The country is home to one dominant DTH platform (DishHome) – a company that has recently acquired a local cable company, and also begun rolling out fiber in the capital, Kathmandu, in an attempt to offer more attractive double-play services of DTH + broadband. However, Nepal is a very mountainous country, and it is highly unlikely that DishHome will be able to connect all ~1.5M subscribers to fiber. For instance, the company announced last year plans to invest into a satellite internet service, following the awarding of an ISP license by the Nepal Telecommunication Authority. Moving forward, as DishHome puts more emphasis on its ISP business, it will create an opportunity for satellite operators to fill a gap. If even 10% of DishHome’s subscribers can never be connected to fiber, this represents a significant market for satellite internet.

Another example of new technology is seen outside Asia – Tricolor TV in Russia is using a hybrid network technology to reach new customers with its Territoria service. This will allow hotels, airports, rail stations and other public venues to obtain free access to TV channels on mobile devices. NSR is aware of multiple other tests taking place as well, with prospects for other operators to launch such services in 2023. NSR’s Wireless Backhaul via Satellite, 15th Edition report, found that by 2030 there will be over 300,000 installs. However, the market is taking time to develop, and it is hard to go beyond tests. COVID-19 did have a negative impact in this sense as several tests were halted and making the sales process even more challenging moving forward.

Global In-Service Units

Source: NSR

Another market that has seen this great convergence as both a blessing and a curse is Malaysia. Malaysia is home to a dominant DTH platform, Astro Malaysia, and a national satellite operator, Measat, with these two companies having the good fortune of sharing an owner (Astro Malaysia Holdings). As the DTH business has flatlined, and as the government has put more resources into universal connectivity (including a truly massive USO program by the Government of Sarawak), satellite operator Measat has diversified into offering internet services via its ConnectME. The service is likely to see a boost from the arrival of Ka-band HTS capacity on Measat-3D in 2022, but in the meantime, Measat has done well to position themselves as being potential winners in a world where more content goes online (via being an ISP), and also potential winners in a world where linear broadcast still has room to run (as a carrier of DTH content for Astro). It’s a changing market for sure, and there have been growing pains for Measat with their ConnectME initiative, but it is nonetheless a good case study in how a satellite operator can hedge their bets in a world moving increasingly towards megabits per second.

Finally, we have seen satellite operators and DTH platforms collaborate directly to distribute broadband in addition to TV signals. In mid-2020, Tricolor TV and Eutelsat announced collaboration to bring satellite internet services to Siberia. The agreement will allow Tricolor to offer internet services in Siberia of up to 40 Mbps, while also allowing subscribers to access Tricolor’s online OTT platform via the free Tricolor Cinema and TV app. As users become used to higher-quality, more bandwidth-intensive content, we are likely to see an increase in demand for satellite capacity by the DTH platform, even if it coincides with fewer linear TV channels being broadcast via satellite. In short, we might see a decrease in the number of channels being broadcast using MHz, but it might be more than cancelled out by an increase in bandwidth consumption by consumers that have historically shown literally unlimited demand for bandwidth.

Bottom Line

The satellite video markets are undergoing many of the same changes as the broader satellite industry. Networks that are increasingly complex and bandwidth-intensive, being built in a world where demand for digital services is converging to a common denominator – high-speed internet and 5G networks.

While linear TV channels are likely to be broadcast for a very long time to come, the satellite operators that are best-positioned in this new world are likely to be the ones with diversified demand profiles, solid partners that want to expand their business offerings via satellite, and perhaps most importantly, a large amount of bandwidth in the sky through which to transmit video content, whether one-to-many a la traditional DTH model, one-to-one a la traditional satellite broadband model, or something in-between.

Interview with Yau Chyong Lim,
Chief Operating Officer, MEASAT

What are your thoughts on the Broadcast industry’s gradual movement from satellite to IP?

Over the last 25 years that MEASAT has served broadcasting needs across Malaysia and the Asia-Pacific region, we have seen the industry go through many transitions, from analog (PAL / NTSC) to digital compression technologies (MPEG-2 / MPEG-4 / HEVC); from Standard Definition to High Definition; and now 4K / Ultra High Definition (“UHD”). We believe that the only way to respond to such trends is to embrace them and make the most of it. Even before the COVID-19 pandemic began, broadcasters with a concentrated affiliate base were moving to fiber and internet-based delivery. The last couple of years have accelerated this process and as a company, we have ensured that we provide our customers with all the tools they need. Content delivery could be over the Internet, fibre or satellite either directly or via our strategic partners. MEASAT as well, leverages fiber and internet-based delivery to reduce the cost of content contribution to the teleport for satellite distribution, which gives us an edge over traditional means of fibre delivery or on-site playout. However, fiber and / or internet-based delivery for content distribution is not suited for markets where the last-mile Internet infrastructure is yet to mature. Therefore, satellite distribution is still vital for most emerging markets. Customers may choose to deploy different technical solutions, but they still value our end-to-end services when delivering content across Asia Pacific.

CONNECTme NOW site in Sarawak (photo: MEASAT)

Why has the 4K/UHD ecosystem taken so long to develop, and when will it become mainstream?

4K/UHD is already mainstream, and our customers are delivering HDR on top of it, so the answer to the question of when is now! Today, MEASAT has one of the largest 4K/UHD video neighbourhoods in the region. We continue to be one of the hotslots for anyone looking to foray into the Asian market with a 4K/UHD offering. Many broadcasters prefer their channel to be played out directly at affiliate locations. As the market matures and this number increases, delivering 4K/UHD via satellite becomes increasingly attractive.

Yes, the ecosystem has taken longer than expected to develop as there are many factors, including the global chip shortage, availability of receivers and consumers upgrading their television sets and set-top-boxes to 4K/UHD. However, our Direct-to-Home (“DTH”) partners have already deployed the necessary infrastructure for the delivery of 4K/UHD content. As live sports revive post Covid pandemic, we foresee every major event will be broadcasting in 4K/UHD. Over-the-top (OTT) technologies have also accelerated consumer TV upgrades. Soon the sports genre will have a spillover effect on upgrading workflows across the board.

MEASAT Teleport & Broadcast Centre (photo: MEASAT)

Who do you think will win the battle between OTT and Linear TV?

Firstly, I would not term the growth in customer choice of OTT and Linear TV as a battle. The comparison is not apple-to-apple. Linear TV has always been a household purchase with individual preferences. In contrast, OTT relies on personal preferences, and household features are add-ons. Hence, millions of subscribers to an OTT platform cannot be compared to DTH households. While most OTT content was developed with a “mobile-first” philosophy, Linear TV content is driven by the living room television. Therefore, what works for a niche OTT web series may not scale to a TV channel broadcast across multiple countries. From a connected (SMART) TV point of view where” Linear and OTT content is consumed; the industry is evolving towards co-existence. PayTV providers have skinnier and cost-effective a-la-carte subscription bundles where customers can kick back and flip channels without committing to heavy viewing. Whereas OTT leans more towards popular binge-worthy series and telco bundles. Lastly, most viewers see OTT as an app on their mobile to complement their viewing experience. It does not replace watching a live football match on their 65″ 4K SMART TV. Mature markets may be witnessing some cord-cutting, however, Asian audience demographics suggest that Linear TV will continue to thrive with older viewers. Linear offers better group viewing, even if young individuals’ binge on OTT.

MEASAT-3d (photo courtesy of Airbus)

What do broadcast customers continue to look for from satellite operators like yourself?

Broadcast customers always demand high availability. While unforeseen events may occur, they expect that restoration is prompt, and resiliency is built into the systems. MEASAT’s 91.5° East neighbourhood hosts major broadcasters, both Asian and global. This requires redundancy across the entire chain and ensuring quality-of-service even in the most challenging scenarios. Apart from the unique high degree redundancy of multiple co-located satellites at the 91.5°E orbital slot, we have also invested heavily on ground systems which includes automatic Antenna Back-up Systems (ABUS) at our Teleport in Cyberjaya; well-established site diversity uplink infrastructure in Malaysia; as well as, with our partners in Singapore to ensure we provide the highest service levels to our broadcast customers.

In addition, our country-focused high-powered Ku-band transponders enables our DTH customer in South Asia and South East Asia to provide excellent service level despite high rainfall.

Ultimately, broadcasters demand a satellite operator who can stand behind them through the ups and downs of technological influences, economic trends and changing subscriber needs. MEASAT has provided this stability for more than quarter of a century and that reaffirms MEASAT as the preferred satellite platform, be it in Malaysia or across Asia-Pacific.

Network Management Centre (photo: MEASAT)

How are satellite operators like yourself planning for the future of broadcast over satellite?

MEASAT’s upcoming launch MEASAT-3d, is a hybrid satellite scheduled to launch in H1 2022. We have combined C-, Ku- and Ka-band payloads to serve a variety of customers. MEASAT-3d will both replace old capacity and build resiliency at our 91.5° East hotspot. The satellite will complement MEASAT-3a and MEASAT-3b satellites co-located at the same orbital slot and boost our broadcast infrastructure while enhancing broadband capabilities. It will carry C-band transponders for distribution across Asia, Australia, India, Middle East Africa and Southern Europe. This will complement MEASAT-3a satellite at the same orbital slot and boost our broadcast infrastructure. The Ku-band payload is for local DTH services to ensure growth and continuity. The Ka-band capacity will be the largest High Throughput payload exclusively for Malaysia, with more than 30 Gbps of capacity for broadband connectivity and services. We have pioneered satellite broadband in Malaysia with our B2C brand CONNECTme. MEASAT-3d will cement our position as the satellite broadband provider of choice for the country. In addition to video streaming, we have a suite of services in the works for our satellite broadband platform, including Internet-of-Things (IoT), cellular backhaul, telemedicine, etc. For us, the future of broadcast over satellite goes hand-in-hand with broadband, and MEASAT-3d will be the anchor of that vision.

An Era of Disruption for the Video Industry

John Huddle, Director, Market Development, Asia, SES Video

The last few years have seen a huge shift in TV consumption, with the growing popularity of streaming platforms such as Netflix, Amazon Prime, Apple TV and Hulu. Consumers have grown to expect a multi-device video experience where they can enjoy content wherever they are. In order to stay up to date and relevant, operators need to provide viewers with a wide choice of content on any screen – creating loyalty and preventing cord-cutting.

Revenues from over-the-top (OTT) TV episodes and films for 22 countries in the Asia Pacific (APAC) region will reach $54bn by the end of 2026, up by 90% from the $29bn recorded in 2020, according to a report from Digital TV Research.

Two things are clear – while linear TV consumption remains prevalent, there is a growing appetite for video-on-demand (VoD) consumption models, and the video industry is in for an era of disruption.

The democratisation of video

The freedom to choose – when, where, and how we watch content – is transforming the relationship between broadcasters and viewers.

The growth of niche channels offers new opportunities, starting with increased demand for fresh, relevant content by customers. It is also changing how broadcasters operate and deliver value to customers, with some looking at marrying traditional linear distribution with OTT distribution to create compelling new offerings.

In a hybrid video landscape, content is still king. But so is the viewer. Today, a viewing experience can mean binge watching a series over a few hours, consuming content during our daily commute, or browsing user-generated videos on social media apps. We can settle down in front of our smart TVs, and switch between linear programming, a streaming service, and on-demand content – all within the span of an hour. We may hit pause to watch a viral video on our mobile phones, or continue what we’re watching on a different device – whether a laptop or a tablet.

The first step to delivering personalised viewing experiences is understanding the audience. Leveraging data and analytics can create a detailed picture of who viewers are – including information about what kind of content they enjoy, how their preferences change throughout the day, and what devices they’re using to watch content. Analytical tools facilitate a valuable exchange between viewers and broadcasters – information about what viewers are watching today helps broadcasters improve the viewing experience in the future.

Successfully harnessing these new opportunities call for a deeper understanding of viewing habits and the ability to launch new channels cost-efficiently. Against a backdrop of change and fluid content preferences, broadcasters must not only deliver a cohesive experience across multiple channels but to do so quickly.

Operators are rethinking their playout strategies (Source: Getty Images)

The evolution of playout

For broadcasters, going beyond mass appeal to deliver a customised viewing experience for each viewer is the key to building customer loyalty as the industry transforms.

While there are a number of critical steps in the video value chain between content generation and distribution through to final end user consumption, playout remains a pivotal step. Playout is the process of managing linear TV channels and broadcasters’ respective content assets, combining linear content and live clips, adding subtitles or graphics, and then distributing that over satellite or OTT platforms to viewers.

Historically, broadcasters used a series of equipment deployments on-premise for playout, including separate hardware for encoding, subtitles, graphics and more. When broadcasters want to launch a new channel, they want to move quickly. But the on-premise hardware model required procuring the hardware, having it shipped on-site, and then installing and configuring it before playout can actually happen. This process could take weeks or months.

The broadcast and media industries are progressively seeking more flexible contracts to meet customer needs for any business model, whether that’s on day one or over the span of many years. With a cloud-based playout solution, broadcasters can simply spin up an instance in the cloud, configure it, and start streaming content once the assets are loaded – a process that can take as little as a few minutes. The move to cloud-based playout solutions is going to be a critical step for broadcasters to meet the needs of their viewers in the years to come.

Combining linear TV with Video On-Demand is fast becoming a standard in many households (Source: Getty Images)

A Hybrid Viewing World

Analysts expect the online video market, including advertising and subscription revenue, to double in size from USD 26 billion in 2019 to USD 52 billion in 2024 with a CAGR of 15% during this period. GlobalWebIndex found that, compared to linear TV, only social media has more time devoted to it each day; however, the amount of time spent watching linear TV is declining. This presents a valuable opportunity for broadcasters to maintain a competitive edge and attract new audiences by adopting hybrid distribution models that improve image and sound quality and providing non-linear video options including Over-the-Top (OTT) and Video On-Demand (VOD) for customers.

When the goal is to enable multi-platform and multi-device viewing experiences, a previously straightforward content management and distribution workflow transforms into a more complex system. Before content can reach viewers’ TV screens, laptops, tablets, and mobile devices, there are multiple processes that need to be carried out. The success of your strategy is defined by the decisions made at every step of the content management, channel playout, content distribution, and content monetisation processes.

Operators need to provide innovative solutions with the widest choice of content and digital options to keep subscribers engaged and ensure viewer satisfaction. This includes combining premium entertainment channels that can be watched on any device with on-demand content, live news and sports content, and local programming.

To boost content accessibility, broadcasters and media companies may retain their traditional workflows and build separate platforms to enable different forms of content consumption. However, isolated systems for broadcasting and over-the-top (OTT) distribution lead to decreased operational efficiency while increasing the costs involved.

Viewers are expecting the highest quality viewing experiences for sporting events (Source: Getty Images)

What does this mean in Asia-Pacific?

The Asia-Pacific region has the highest proportion of users watching TV online in the world at 44%. OTT and VOD consumption in the region has surged due to the young, diverse and broadly mobile-first traits of the market. With more companies expanding into content production to ride the digital wave, broadcasters must diversify to maintain their customer base. One way is being able to offer unique local and regional content to meet the tastes of the market’s viewers.

Partnerships in the region between OTT platforms and telcos and multichannel operators have accelerated since 2018, with 31 new deals signed. For example, Netflix has expanded aggressively in Asia-Pacific since 2018, signing deals with Sri Lankan direct-to-home (DTH) provider Dialog and telco Atria Convergence Technologies Ltd. A key aspect of these deals enables the linear TV providers to offer direct carrier billing to its customers, which allows users to pay OTT subscription fees as part of their monthly telephone or data bills.

This access to multiple services to watch content wherever, and whenever viewers want is making effective content distribution a more complex task for broadcasters, compared to a decade ago. As a result, more pay-TV operators in developed countries such as Australia and Japan are beginning to offer high-definition (HD) and ultra-high definition (UHD) programming, while developing countries continue the transition to HD. Sporting events such as the 2018 Winter Olympics and 2018 World Cup were the first sporting events to get complete 4K and HDR support. However, despite a 24% growth in online video advertising and subscription revenue between 2018 and 2019, pay-TV will remain important in developing Asian markets over the next few years for sports content.

Even with top-notch content, broadcasters need to establish solid revenue models, considering creative subscription plans, pay-per-view models, and targeted advertising that illustrate an understanding of the intended audience, especially in a region as diverse as Asia. These efforts will help to increase their foothold in a changing industry.

Increased online video consumption means more viewers are tuning in on their mobiles (Source: Getty Images)

The pandemic effect

As the world instituted large-scale lockdowns and stay-at-home orders in response to the COVID-19 pandemic, people began to watch television and online video content en masse. Research has shown that overall TV viewership, including linear TV and online video streaming, increased during the lockdown period by 56% in Sri Lanka, 26% in the Philippines, and 23% in India.

This extended period at home, and the resulting need for in-home entertainment for large portions of populations across the region, has created an opportunity for broadcasters and content platform operators to expand the distribution and reach of their content. However, this situation has added pressure to traditional business models and revenues, and the strain on transactional, advertising, and subscription revenues will continue into 2021, affecting overall market value. As a result, in the effort to reach more customers and increase revenue in the future, broadcasters and content platform operators need to stay nimble to address short-term changes, such as allowing customers to substitute sports channels for other content, and long-term shifts to a more nomadic use of TV and video services.

Traditional pay-TV platforms, and new mobile and virtual operators, will need to provide more robust aggregator offerings to maintain this surge in viewers. What’s clear is that the successful delivery and distribution of live and on-demand streaming video is expected to be critical as consumer spending between online video and pay-TV returns to normal.

How Satellite Can Respond to APAC’s Video Streaming Boom

Hans Massart, Head of Media and Broadcast, ST Engineering iDirect

The Asian-Pacific’s (APAC) appetite for Over-The-Top (OTT) content is hard to match. Home to 60 percent of the global population, the region includes the world’s most populated countries including China, India, and Indonesia which consume internet-provided video content at a rapidly growing rate, creating a ripe market for streaming services and connectivity providers. Beyond the entertainment market are the educational and humanitarian sectors, for which live and streamed video are critically important, especially in countries with lesser developed terrestrial connectivity infrastructures.

With fibre deployment in much of APAC tilted towards a small collective of countries – China, for example, accounts for around 81 percent of all FTTH/B (Fiber-to-the-Home/Building) subscribers in the region –the economic and topographical barriers in front of terrestrial internet means that more easily deployable and affordable connectivity better suits service providers serving the growing OTT market.

An option that every connectivity provider should consider for delivering the OTT content both being streamed now (and in predicted greater quantities) in the future, is satellite. Reliable, scalable and with omnipresent coverage, satellite may well be the answer to fulfil APAC’s hunger for OTT content.

A content-hungry market

The estimated reach of active OTT viewers in the APAC markets surveyed is 392 million people, larger than the total population of the United States. Over two-thirds (69%) of video viewers in the region watch streaming video at least once a week, confirming that both the audience size and consistency of OTT viewing has solidified itself as a mainstream medium.

Experts predict that the number of users of streaming services in Asia will reach 693 million by 2024. Revenue from OTT TV episodes and movies for 22 countries in the Asia Pacific region will reach $54 billion in 2026; up by 90% from the $29 billion recorded in 2020. So how do service providers get their share?

Although the fibre take up rate in the region is 77%, the majority is consolidated in East Asia and for some of the largest consumers of OTT content – Philippines, Indonesia, Thailand – penetration is below 10 percent. Residents of the Philippines – the heaviest viewers of OTT in the region – also lead the world in terms of mobile internet usage.

Fibre and other terrestrial forms of connectivity are often prohibitively expensive in areas lacking existing telecommunications infrastructure, and the unforgiving terrains and archipelago make-up of countries in South East Asia, for example, make the task harder. Sub-sea fibre cables have also been laid in the region, but they’re expensive to maintain and present other challenges. In terms of mobile networks, GSMA estimates that about 300 million people in South Asia, East Asia, and the Pacific live beyond the reach of one.

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Entertainment to education

Much has been said of the digital divide in recent months – the last year and a half has shone a spotlight on the criticality of internet access, and the widespread lack of it. About 1.88 billion people in Asia-Pacific – half of the population – lack access to the internet. These unconnected masses were affected especially hard in the case of education. School closures in early April impacted over 68 million students in Indonesia and over 320 million students in India alone, according to UNESCO data.

In instances like this, streamed video is – and has proved – vital for online classes and e-learning. Pre-recorded lessons and videoconferencing platforms like Zoom have proved invaluable as distance learning became a temporary norm for millions of students worldwide.

Video has also been vital for telemedicine – patients can have remote consultations with their doctor who might be located many kilometres away, especially during a time when hospitals have been overran and stay at home measures have been implemented. In humanitarian situations, responding to emergency situations or planning effective mission strategies requires many players for whom video conferencing can virtually connect. Yet delivering video in these critical conditions – and to the many millions of entertainment streamers – in sometimes remote locations and without existing telecoms infrastructure is not without its challenges.

New trends bring new challenges

As Internet Protocol (IP) video is increasingly becoming the new normal for entertainment seekers, factors such as website demand, internet traffic and latency can affect service delivery. In addition to being able to stream their content on a range of devices, consumers expect to receive their content on-demand: at any time, at any location and with uninterrupted playback. As OTT is a unicast service, meaning each device used in a household for streaming is considered a separate stream, all streams need to be delivered with unique requirements.

Providing the connectivity for streaming services, including live content such as sports and news coverage, has many challenges. For instance, ensuring the required amount of bandwidth must be done efficiently and, equally, sound traffic management and minimalization is crucial to ensuring unblemished streaming.

Latency issues and congestion can also be caused by the provider’s authentication system, which puts even more pressure on the overall network. This can cause frustration for the viewer. With an average customer tolerance duration of 90 seconds when subjected to low-quality streaming, the effect can be detrimental.

Adding to that pressure on the network has been the unprecedented demand for OTT services during the pandemic, strain on many networks and streaming platforms. Delivering such an amount of individual streams presents a challenge, not just to the last mile, but to the backbone too. Network overload can cause huge issues like service blackouts, and bandwidth strains are likely to rise with hungry applications like 4K.

To keep pace with this rising demand for content, it’s crucial that service providers are able to deliver it both seamlessly and cost-effectively.

Answering the buffering problem

At peak times especially, terrestrial networks can experience severe congestion: we’re all familiar with the frustration of buffering that interrupts our viewing and perhaps causes us to give up watching altogether.

Satellite utilizes the Content Distribution Network (CDN) which sends multiple copies of the same content as close as necessary to the consumer. This significantly reduces distribution backbone traffic and ensures efficient use of bandwidth.

By distributing content spatially relative to end-users, the CDN achieves high performance and availability – such as minimized start latency and buffering – providing the customer with optimal viewing means and better QoE.

Satellite is also scalable. Satellite can address scalability in terms of receivers, as a network of receivers it can increase rapidly and dramatically, yet satellite will not struggle to reach each receiver due to its ability to multicast. When an operator decides to increase both its footprint into more isolated regions and with additional receivers, satellite can support this new coverage with ease.

The wide footprint of satellite means that it can also scale quickly and economically and reach users in remote locations who don’t have access to terrestrial connectivity. The ability of satellite to reach to even the most remote places on the planet, means that no child needs to forego their education and can even enjoy interactive classes through bi-directional satellite links.

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Netflix goes nautical

The mobility market is another important area, with entertainment and employee welfare key use cases for OTT in the maritime and aerospace sectors. The superyacht community, for example, is a prime user of services like Netflix as passengers relax on board. Wisconsin-based satellite service provider Isotropic Networks noticed that the demand from its superyacht customers was putting extreme pressure on available bandwidth and passengers were experiencing a degraded experience.

To address the pressure on bandwidth, Isotropic Networks developed a Digital Subscriber Management System which greatly reduces the bandwidth required on the upstream side. Isotropic broadcasts a constant downstream feed of Netflix content, either by subscriber request or when there is additional bandwidth available, and the top 10 trending features are broadcast. Use of a caching server allows unlimited access and unlimited users permissions to view the content.

The system is run over the iDirect Evolution® platform which increases the performance and efficiency of the satellite link, reduces latency and enables multicasting. The most popular content is multicasted through caches, directly to the user automatically, resulting in a fast and efficient service. The use of satellite extends the geographical reach of the service into areas without a strong terrestrial broadband link, ensuring QoE for Isotropic customers in the U.S. and Europe.

Speed is everything when it comes to user experience, and the Evolution platform enabled Isotropic to provide the speeds needed for high-demand networks and for bandwidth-heavy applications and streaming. The ability to introduce different sized multicast streams into the standard downstream carrier makes for very efficient use of the Evolution platform. Due to the platform’s innovative technology and multicasting capabilities, Isotropic was able to reduce latency, congestion and buffering times for its customers. In addition, it also significantly alleviated pressure from its service.

Satellite – fit for the OTT future

The global impact of COVID-19 has seen many facets of life slow down. The global demand for streamed video content, however, has been accelerated and its already upward trajectory catapulted to unexpected heights, especially in APAC.

Streamed video will continue playing a huge role across the entertainment industry, but also for the education and humanitarian sectors. Given the stringent user requirements, a facilitator of video services that can meet the unique requirements of video services – low buffering, remote access, multicasting – makes satellite the right partner.

And although not traditionally thought of as the answer to OTT, the reasons justifying satellite’s suitability for this type of content are plentiful and should be at the forefront of content deliverers’ minds.

Satellite Broadcast Markets

Terry Bleakley, Asia Pacific Regional Vice President, Intelsat

Photo courtesy of Intelsat

Across an ever-evolving media landscape, programmers are looking for ways to further engage their viewers while also finding innovative ways to capture new audiences. In Asia-Pacific, there is significant market opportunity. The question is: What’s the best way to reach that potential? While it can be tempting to focus on new technologies, it is growth, reach, and revenue that ultimately matter most. Satellite continues to hold its ground in this competitive market, offering programmers the freedom to innovate thanks to its reliability and revenue-generating opportunities.

Though competition for audiences across distributors is fierce, linear distribution is the preferred delivery method of video in Asia Pacific. Traditional Pay TV services lead the way in revenue generation and content accessibility, making up 63% of market penetration and accounting for 655 million subscribers. These subscribers come from seventeen key Pay TV markets with the majority from China, India, Japan, Vietnam, and Indonesia.

Even in the face of new technology, the data shows that more consumers are looking to add to their existing services, rather than cut the cord completely. Cable services alone still make up over half of the market, reaching 57% of households and making up 56% of the revenue. IPTV has seen growth over the years and now accounts for 28% of revenue and 21% of total market share. In the next 10 years cable, IPTV, and direct-to-home services are all expected grow. Cable subscriptions are expected to grow 3.3% to a value of $26 billion and DTH subscriptions are projected to grow 22% to a value of over $10 billion. With these forecasts, cable is expected to maintain its lead in the market both in subscribers and revenue.

Photo courtesy of Intelsat

Much of this growth will come from emerging markets in Southeast Asia. This is due in part to the affordability of traditional Pay TV, as well as the availability in both urban and rural areas. Additionally, there is one demographic that plays a key role in creating a strong Pay TV market, and that’s age. Countries in Asia Pacific maintain more traditional, multi-generational family structures resulting in an older median age. The older the age, the more likely the viewer will lean towards traditional forms of media. For example, Japan and Vietnam, two of the top five Pay TV markets in Asia Pacific have median ages of 48 and 32.

In smaller markets, digitization is driving the cable market due to the migration of analog connections. Emerging markets like India will lead the charge as cable connections make the move to digital. To put that in perspective, 71% of cable households in the Asia-Pacific market had a digital connection in 2018. Those connections are projected to grow to about 97% by 2029. More viewers are also moving towards digital cable subscriptions. At the end of 2019, there were 342 million subscribers. By 2029, 374 million subscribers are projected to have digital cable subscriptions. In addition to, and also driven by the digital migration, the number of HD households in Asia Pacific are also rapidly increasing. By 2029, the number of HD households is expected to increase to 306 million, which is a 78% increase from the reported number in 2020.

Photo courtesy of Intelsat

The emergence of new distribution models like Over-The-Top (OTT) have put some pressure on the linear distribution market due to perks like mobile-first viewing and a seemingly endless variety of content. The hope from providers is that the low cost of streaming platforms will help reach more viewers. For largely urbanized places like Australia and Singapore, OTT sees success due to strong broadband penetration. However, in more rural areas, uptake has been slow due to infrastructure restrictions principally driven by geography and landscape. While OTT has driven some pressure on traditional distribution options, the average OTT consumption in 2020 was 102 minutes per day whereas linear TV still stood as the leader at 140 minutes per day. Taking a specific country as an example, in India, OTT averaged 70 billion viewing minutes a week in 2020 whereas traditional linear tv averaged one trillion viewing minutes weekly.

OTT has seen the most success as a supplement to Pay TV distribution with many mainstream broadcasters adding OTT services to augment their traditional cable and satellite packages. There are an abundant of OTT options with even more slated to come, which are starting to oversaturate the market. With so many platform options programmers are moving their content around for maximum exposure. This causes churn, resulting in inconsistent OTT platform experiences for viewers. All of this, coupled with OTT being unreliable for certain content such as live sporting events is why more and more viewers are looking to bundle and augment their traditional Pay TV with the OTT platforms they desire.

Photo courtesy of Intelsat

Satellite continues to be the most reliable and affordable option for distributing media in Asia-Pacific, giving programmers access to more revenue to drive more innovative content than ever before. When utilizing satellite, programmers have access to more:

• Content
• Coverage
• Flexibility
• Revenue

Photo courtesy of Intelsat

Monetization of content is a key driver for programmers and one of the biggest opportunities in addition to subscriptions is advertising. By 2024, broadcast TV advertising revenue is expected to be $44 billion whereas non-broadcast TV will be only $2 billion. To capture this advertising revenue, programmers need to provide and be a part of quality, attractive channel lineups that attract viewers. The large, unrestrictive coverage of satellite provides opportunity for programmers to capture this revenue by enabling them to go where the demand is. For example, Philippines is a market with tons of growth potential. Its TV advertising revenue was $5 billion in 2018. The number is projected to grow to $9 billion by 2024, and 80% increase in just six years.

The ability to reach viewers and provide the high-quality, sought after programming is what maintains the sustainable business model programmers require. Satellite will continue to lead the way for regional and international distributors as content and bandwidth needs rise because of its reliability, large coverage area, and accessibility to global content.

Innovation in content distribution can’t just be measured by how technology is evolving, but how programming can evolve to meet audience expectations today and in the future. That’s why through its expansive reach, reliability, quality, and revenue potential, satellite remains the truest enabler of innovation and monetization for distributors in Asia-Pacific.