Astro to focus on tackling web-based TV boxes

By NG MIN SHEN & LYDIA NATHAN

Astro Malaysia Holdings Bhd, the nation’s first pay-TV operator, is formulating a strategy to mitigate the erosion of its market share as more consumers opt for web- based TV boxes, which it views as “a form of piracy”.

Group CEO Datuk Rohana Rozhan said the satellite TV provider has planned short-to- medium and long-term measures to deal with the increasing popularity of web-based TV boxes and their effects on Astro’s viewership.

“Piracy is a reality and has been for us since we started operations. Back then it was pirated video compact discs (VCDs) and digital versatile discs (DVDs).

“Now, it’s online piracy and these ‘magic boxes’ and stolen signals,” she told reporters after the company’s AGM in Kuala Lumpur yesterday.

Web-based TV boxes allow for various types of content including TV programmes to be streamed via Internet connection to one’s TV set instead of via broadcast signals, such as through an Astro satellite dish.

“It’s a reality that players like us, especially Astro, who are investing a significant amount of monies in content intellectual property and have every intention to differentiate our products by expanding content investment.

“So, it is a focus and priority for us to deal with this,” Rohana said.

In the immediate term, the group will be working with regulators, lawyers and the police to find the root cause of this “new-age piracy problem”.

Astro’s team is also expected to conduct raids, as well as find methods that could interrupt consumers’ viewing of the pirated goods.

In the longer term, the group will work with other content players to conduct campaigns to educate people that piracy of content is theft punishable by law.

“As piracy is a global phenomenon, Malaysia has to learn global best-in-class practices about law enforcement.

“For instance, Internet service providers should take down pirate sites as they are illegal. So, that kind of legislation will sooner or later come into place,” Rohana said.

The “magic box” does have an impact on Astro’s performance as Astro’s net profit for the first-quarter ended April 30, 2017 (1Q18), slipped 3.1% to RM195.82 million from RM202.17 million last year.

Its revenue also dropped 2.2% to RM1.33 billion in 1Q18 compared to RM1.36 billion a year ago, due to lower contribution from licensing income, advertising revenue and subscription.

Advertising expenditure (adex) for 1Q18 fell 5% year-on-year to RM143 million, although Astro COO Henry Tan said the company is already seeing an uptick in adex for its current 2Q18 — due partly to the festive season.

“On a blended 1Q and 2Q basis, we should be in a very decent position. If 2Q18 is an indication of things to come, we should end the year quite positively,” he said.

The company is looking to further strengthen its position in the digital adex segment, which currently comprises about 5% of its total adex.

Tan said the domestic digital adex space is presently dominated by global players, who hold 80% of all digital adex.

“We are in fourth place behind Google, Facebook and Yahoo in terms of digital adex, but we are looking to ramp it up and become the leading digital network nationwide,” he said.

The group aims to achieve a 75% household penetration rate by year-end. As at end-1Q18, its penetration rate stood at 72%, according to Rohana.

“Going forward, we expect pay-TV subscriber growth to be either flat or marginally lower. We are banking on our NJOI Now customer base to boost penetration to 75%,” she said.

NJOI Now is Astro’s recently launched streaming service which provides free access to on-demand entertainment.

Rohana said the company plans to digitalise 75% of its operations by year-end, which will allow for a reduction in capital expenditure (capex).

The company’s current annual capex is budgeted at RM500 million, but is expected to decline to RM460 million next year as digitalisation will be more cost-effective.