by LYDIA NATHAN / pic by TMR FILE

THE Walt Disney Co’s move to shut down the majority of its TV channels across South-East Asia and Hong Kong has caused some concern for local players in the industry, as it shifts its focus to a direct-to-customer business model.

The company is consolidating its Media Networks business primarily in South-East Asia and Hong Kong as part of its global effort to pivot towards a direct-to-consumer-first model and further grow its streaming services.

Effective Oct 1, 2021, Disney will operate a streamlined TV portfolio that covers Chinese language channels, including Star Chinese Channel and Star Chinese Movies, as well as National Geographic Channel and Nat Geo WILD.

A media analyst, who requested anonymity, however, said this could actually be a good deal for Astro Malaysia Holdings Bhd and provide an overall win for the group, Disney and Astro’s subscribers.

The analyst expects the shutting down of 18 of Disney’s cable channels will lead to a reduction in Astro’s content cost, which will then be passed to subscribers.

“This could mean lower monthly bills for subscribers which is a good thing. Additionally, Astro is potentially partnering Disney to bring Disney+ Hotstar to Malaysia. If this agreement is similar to the current one Astro has with HBO GO, then Astro is bound to get a cut of Disney+ Hotstar’s subscription revenue, in return for doing the marketing for it in Malaysia,” the analyst told The Malaysian Reserve (TMR) recently.

According to the analyst, the subscription for Disney+ Hotstar is anticipated to be very affordable, citing the price example in Indonesia, which is at RM3 per month for six accounts.

“It’s better to subscribe to legal services and have the peace of mind with no concerns over long buffering or poor user interface. Besides, when it’s so affordable and you get 100 years’ worth of video library, this is a good deal,” the analyst said.

Previously, Astro group CEO Henry Tan Poh Hock told regional trade journal ContentAsia that Astro is looking at bringing 15 streaming services under its belt by the first quarter of 2023 (1Q23).

Astro is looking to aggregate five or six subscription-based video-on-demand (SVOD) services by the end of 1Q22, and another five or six in 1Q23.

CGS-CIMB Securities Sdn Bhd (CGS-CIMB Research), in a recent note, stated that should the target be met, Astro would have 15 SVOD services in its ecosystem of distribution. “It currently has only two onboard, namely Warner Media LLC’s HBO GO Asia, and China-based iQYIYI Inc’s content,” the report noted.

CGS-CIMB Research analyst Kamarul Anwar said he was positively surprised by the sheer amount of services that Astro is looking to aggregate.

“Astro would be able to rejuvenate its content and distribution propositions by having an on-demand content library that could rival those from illegal streaming platforms, and potentially win back lapsed subscribers who have long grown out of linear broadcasting,” he said.

Public Investment Bank Bhd (PublicInvest Research) analyst Eltricia Foong said the immediate loss of Disney channels without any immediate replacement could affect Astro’s average revenue per user (ARPU) and, hence, earnings for the financial year.

It said based on its estimate, every 1% reduction in its ARPU will lead to a 1.5% decline in earnings. However, she said with Astro looking to introduce new over-the-top streaming service partnerships in the near term, it will help mitigate the impact.

“This may help mitigate the impact of the change in Disney’s business model. In addition, we opine that the home-shopping segment will be one of the main drivers going forward, as the group is looking to leverage the enlarged customer base via better product offerings,” Foong said.

Astro’s shares closed three sen or 2.94% lower last Friday at 99 sen, valuing the company at RM5.16 billion.