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Sunday 14 March 2010
Pay-TV operators lose ‘exclusive content’ card
Cut-throat bidding wars may be a thing of the past as govt tells operators to share content with each other; M1 may enter pay-TV market but content providers could lose out
Cut-throat bidding wars may be a thing of the past as govt tells operators to share content with each other; M1 may enter pay-TV market but content providers could lose out
By WINSTON CHAI AND TEH SHI NING 13 March 2010
Exclusive programmes will cease to be a competitive differentiator for StarHub and Singapore Telecommunications as the government finally stepped in, following the recent Barclays Premier League (BPL) bidding frenzy.
In a far-reaching move yesterday, the Media Development Authority of Singapore (MDA) ruled that exclusive programmes obtained by one operator will have to be made available to others as well.
‘For example, if SingTel acquires a new channel exclusively, it will have to make this channel available to StarHub subscribers on StarHub’s set-top box and vice versa,’ Lui Tuck Yew, Acting Minister for Information, Communications and the Arts, explained in Parliament yesterday.
‘This measure will allow consumers to watch an exclusive channel through their preferred pay-TV retailer, regardless of which retailer acquired the rights to that channel, and access available content from a single set-top box,’ he added.
The move could alter the broadcasting landscape and pave the way for operators like M1, which welcomed the development, to enter the pay-TV market. At the same time, it could hurt the content providers that have been profiting from the bidding wars between StarHub and SingTel.
In the past, MDA has left commercial decisions such as the nuances of content agreements to the discretion of operators. However, it decided to step in after a recent study on competitive issues in the local pay-TV sector.
The review, which ended last year, showed that both industry and consumers have been ‘negatively impacted’ by exclusive carriage agreements, Mr Lui said.
‘For example, SCV’s (StarHub Cable Vision) content costs-to- revenue ratio has risen from 40 per cent prior to 2007 to close to 70 per cent today. This is much higher than the average 40 per cent for pay-TV operators in most other countries including the US, UK and Hong Kong,’ he added. The battle for exclusive rights has driven bids to 20 or 30 times the amount paid a few years back, head of ESPN Star Sports Manu Sawhney told BT in an earlier interview.
The MDA study also found that out of the 179 pay-TV channels offered by StarHub and SingTel today, only seven are offered on both platforms. A comparison with other countries using a cluster of 16 popular channels further showed that Singapore is the only country with exclusive pacts for all these offerings.
For consumers, playing the trump card of exclusivity has also led to escalating pay-TV prices. The cost of watching football to fans here, for example, would be about $74 by this August - more than double the $33 in 2000.
In particular, the BPL has consistently been a moot point and SingTel’s victory over StarHub in the battle for its 2010-2013 broadcast rights last October further stoked the flame.
Consumers flooded newspaper and online forums with complaints of having to pay two separate pay-TV subscriptions due to the fragmentation of content. In addition, they bemoaned the technical hassle of having to contend with two different set-top boxes.
StarHub subsequently floated the idea of cross-carriage for BPL but it was turned down by SingTel. MDA also refused to intervene at that time despite the consumer outcry.
The failure of a joint SingTel-StarHub bid for the World Cup 2010 broadcast due to Fifa’s exorbitant asking price piled on the heat for operators and Singapore’s media regulator.
‘MDA’s review has concluded that this situation is unlikely to self-correct in the near future and steps need to be taken to address this market failure,’ Mr Lui stressed.
Alternative remedies to the cross-carriage one MDA has adopted could have included the banning of exclusive content pacts altogether. However, these were perhaps seen as being too interventionist or too onerous on the pay-TV operators.
Following the policy change, MDA said that it will work out implementation details such as billing arrangements and technical complexities in consultation with the various industry players.
‘For consumers, cross-carriage is good news as they can stick with the pay-TV platform they prefer,’ said Kenneth Liew, a senior market analyst with technology research firm IDC.
‘For operators, they will not bid as aggressively for content as before as they can be shown on other platforms. This means the costs of acquiring content will be lower.’ MobileOne, the only telco without a pay-TV foothold, welcomed the news.
‘We welcome this positive development. It opens up the opportunity for M1 to enter the pay-TV market to offer a full range of services to our customers. Consumers will ultimately benefit from more choices and a greater variety of content at competitive prices,’ an M1 spokesman said.
Content providers such as HBO Asia and ESPN Star Sports were caught off guard and said they needed time to digest the change.
SPE Networks, however, felt that the decision was a step in the wrong direction. The company has exclusive content agreements with StarHub for three channels - AXN, AXN Beyond and Animax. It has a similar arrangement with SingTel for Sony Pictures Entertainment (SPE).
‘Singapore has always believed in free trade, but this move seems to go against the principle of free trade. Some form of control may be needed for essential goods and services that impact Singaporeans’ daily lives but pay-TV does not fall into that category,’ Ricky Ow, senior vice- president and general manager of SPE Networks, told BT.
‘They (the government) should let market forces decide, otherwise they are just sending mixed signals to the market,’ he added.
As for the two main pay-TV players, StarHub’s head of corporate communications and investor relations Jeannie Ong said the new regime would have ‘little impact on us in the foreseeable future’, adding that StarHub ‘fully supports the government’s efforts to ensure fair and reasonable content costs’.
SingTel, too, noting that its current rights to BPL (which it has exclusively tied up for three years) and ESPN Star Sports would not be affected, said it would ‘carefully review the details and actively engage the MDA through the industry consultation process’.
3 comments:
Pay-TV operators lose ‘exclusive content’ card
Cut-throat bidding wars may be a thing of the past as govt tells operators to share content with each other; M1 may enter pay-TV market but content providers could lose out
By WINSTON CHAI AND TEH SHI NING
13 March 2010
Exclusive programmes will cease to be a competitive differentiator for StarHub and Singapore Telecommunications as the government finally stepped in, following the recent Barclays Premier League (BPL) bidding frenzy.
In a far-reaching move yesterday, the Media Development Authority of Singapore (MDA) ruled that exclusive programmes obtained by one operator will have to be made available to others as well.
‘For example, if SingTel acquires a new channel exclusively, it will have to make this channel available to StarHub subscribers on StarHub’s set-top box and vice versa,’ Lui Tuck Yew, Acting Minister for Information, Communications and the Arts, explained in Parliament yesterday.
‘This measure will allow consumers to watch an exclusive channel through their preferred pay-TV retailer, regardless of which retailer acquired the rights to that channel, and access available content from a single set-top box,’ he added.
The move could alter the broadcasting landscape and pave the way for operators like M1, which welcomed the development, to enter the pay-TV market. At the same time, it could hurt the content providers that have been profiting from the bidding wars between StarHub and SingTel.
In the past, MDA has left commercial decisions such as the nuances of content agreements to the discretion of operators. However, it decided to step in after a recent study on competitive issues in the local pay-TV sector.
The review, which ended last year, showed that both industry and consumers have been ‘negatively impacted’ by exclusive carriage agreements, Mr Lui said.
‘For example, SCV’s (StarHub Cable Vision) content costs-to- revenue ratio has risen from 40 per cent prior to 2007 to close to 70 per cent today. This is much higher than the average 40 per cent for pay-TV operators in most other countries including the US, UK and Hong Kong,’ he added. The battle for exclusive rights has driven bids to 20 or 30 times the amount paid a few years back, head of ESPN Star Sports Manu Sawhney told BT in an earlier interview.
The MDA study also found that out of the 179 pay-TV channels offered by StarHub and SingTel today, only seven are offered on both platforms. A comparison with other countries using a cluster of 16 popular channels further showed that Singapore is the only country with exclusive pacts for all these offerings.
For consumers, playing the trump card of exclusivity has also led to escalating pay-TV prices. The cost of watching football to fans here, for example, would be about $74 by this August - more than double the $33 in 2000.
In particular, the BPL has consistently been a moot point and SingTel’s victory over StarHub in the battle for its 2010-2013 broadcast rights last October further stoked the flame.
Consumers flooded newspaper and online forums with complaints of having to pay two separate pay-TV subscriptions due to the fragmentation of content. In addition, they bemoaned the technical hassle of having to contend with two different set-top boxes.
StarHub subsequently floated the idea of cross-carriage for BPL but it was turned down by SingTel. MDA also refused to intervene at that time despite the consumer outcry.
The failure of a joint SingTel-StarHub bid for the World Cup 2010 broadcast due to Fifa’s exorbitant asking price piled on the heat for operators and Singapore’s media regulator.
‘MDA’s review has concluded that this situation is unlikely to self-correct in the near future and steps need to be taken to address this market failure,’ Mr Lui stressed.
Too interventionist or too onerous
Alternative remedies to the cross-carriage one MDA has adopted could have included the banning of exclusive content pacts altogether. However, these were perhaps seen as being too interventionist or too onerous on the pay-TV operators.
Following the policy change, MDA said that it will work out implementation details such as billing arrangements and technical complexities in consultation with the various industry players.
‘For consumers, cross-carriage is good news as they can stick with the pay-TV platform they prefer,’ said Kenneth Liew, a senior market analyst with technology research firm IDC.
‘For operators, they will not bid as aggressively for content as before as they can be shown on other platforms. This means the costs of acquiring content will be lower.’ MobileOne, the only telco without a pay-TV foothold, welcomed the news.
‘We welcome this positive development. It opens up the opportunity for M1 to enter the pay-TV market to offer a full range of services to our customers. Consumers will ultimately benefit from more choices and a greater variety of content at competitive prices,’ an M1 spokesman said.
Content providers such as HBO Asia and ESPN Star Sports were caught off guard and said they needed time to digest the change.
SPE Networks, however, felt that the decision was a step in the wrong direction. The company has exclusive content agreements with StarHub for three channels - AXN, AXN Beyond and Animax. It has a similar arrangement with SingTel for Sony Pictures Entertainment (SPE).
‘Singapore has always believed in free trade, but this move seems to go against the principle of free trade. Some form of control may be needed for essential goods and services that impact Singaporeans’ daily lives but pay-TV does not fall into that category,’ Ricky Ow, senior vice- president and general manager of SPE Networks, told BT.
‘They (the government) should let market forces decide, otherwise they are just sending mixed signals to the market,’ he added.
As for the two main pay-TV players, StarHub’s head of corporate communications and investor relations Jeannie Ong said the new regime would have ‘little impact on us in the foreseeable future’, adding that StarHub ‘fully supports the government’s efforts to ensure fair and reasonable content costs’.
SingTel, too, noting that its current rights to BPL (which it has exclusively tied up for three years) and ESPN Star Sports would not be affected, said it would ‘carefully review the details and actively engage the MDA through the industry consultation process’.
Interesting insight on this subject!
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