Vietnam in View. A CASBAA market report

Transcription

1 Vietnam in View A CASBAA market report Executive Summary March 2010

2 1 Executive Summary 1.1 Exponential growth Source: Directorate of Broadcasting and Electronic Information, MIC *data not available for , Dynamic Growth Vietnam s pay TV industry enjoys spectacular growth, driven largely by the country s impressive economic expansion. (Despite the global recession, the economy was expected to grow by 5% in 2009.) Even during the slowdown, many major domestic players were still rolling out big investments in the sector, hoping to be ready for the next economic bounce. Indeed, with the global economy moving out of recession, Vietnam is expected to be among the first countries to return to rapid growth, which could truly unleash the potential of pay TV. New Subscribers, New Operators, New Offerings Cable Pay TV in Vietnam has been growing astronomically, led by cable operators. Cable subscriptions doubled to roughly 1 million between 2006 and 2008 and more than doubled, to over 2 million, in Satellite Other pay TV platforms are also beginning to take off. The 2008 launch of Vinasat 1, Vietnam s first wholly owned satellite, was a big boost for the domestic satellite television business. In January 2009, national digital TV operator VTC launched its DTH service, bringing the first HD channels to Vietnam. Today, VTC says subscriptions are growing 150% a month. In December 2009 VTC announced a contract with Hong Kong satellite operator AsiaSat, which will dramatically increase VTC s transponder capacity. In June 2009, VCTV, the pay TV affiliate of national FTA broadcaster VTV, announced a US$54 million joint venture with French broadcaster Canal+ to provide premium DTH packages. That project launched in January 2010 under the K+ brand; VCTV s once slow growing DTH service is expected to grow its modest subscription base of 130,000 exponentially. A number of other pay TV operators, including HTV (Ho Chi Minh City TV), have also obtained licenses to broadcast via Vinasat 1. 2

3 Pay TV market share, September 2009: Total 4.2m subscribers DTH 130,000 IPTV, 10,000 Digital Terrestrial 2,000,000 Cable 2,100,000 Source: Directorate of Broadcasting and Electronic Information, MIC Digital Terrestrial Digital terrestrial (DTT) is also an attractive platform for new and old operators alike. Official data puts the number of DTT subscribers just north of 2 million. VTC dominates the market, trailed in the distance by HTV and BTV (Binh Duong Television). Despite apparently slowing sales of VTC s DVB T set topboxes, some players still have high hopes for the technology and are moving ahead with plans to invest heavily in digital terrestrial platforms. They see opportunity in Vietnam s fast urbanizing landscape where more and more highrises and towers threaten to disrupt satellite signals aimed at Vinasat dishes. Vietnam s urban centres will be up for grabs in ways once unforeseen, and with the advantages offered by next generation digital terrestrial technology (DVB T2), investors believe they can compete effectively against cable. IPTV IPTV has also raised hopes for Vietnam s telcos. With Vietnam s broadband subscribers numbering roughly 3 million, and growing 150% annually, all major telcos eye IPTV as an important revenue stream. After FPT Telecom concluded an IPTV trial with 10,000 users, the telco officially launched its itv service in major urban centres in April Subscriptions, now 20,000, are expected to reach 1 million in 2011, according to the company. National carrier VNPT officially launched its MyTV IPTV service in September With 60% broadband market share, the state owned telco believes it can quickly become Vietnam s biggest IPTV operator. Viettel and VTC have also announced plans to launch IPTV services. Mobile 3G has renewed hopes for mobile TV which Vietnam has struggled with since early Both S Phone s CDMA based service and VTC s DVB H based service failed to attract a substantial subscriber base. S Phone s core mobile phone service today claims 8.5% of the mobile telephony market, leaving Viettel, Vinaphone and MobiFone to serve larger market segments. VTC s mobile broadcasting operation was (and is) independent of the company s mobile phone service and relied heavily on propagation of expensive and relatively scarce DVB H handheld devices. However, 3G may present new opportunities to deploy more robust business models. And as major mobile service carriers roll out their 3G plans (Vinaphone in October 2009, Viettel and MobiFone in December 2009, EVN in April 2010), VTC has been eyeing a new business: providing content for other players in addition to its own mobile TV operation. VTC s MiTV service delivers content to handheld devices with broadband connections (Wi Fi or 3G internet). Roughly 50 million Vietnamese are now regular mobile users, giving 3G operators hope that each of them will be able to sign up several million TV subscribers in a few short years. Strategic pricing should help: launching Vietnam s first 3G service in October 2009, Vinaphone said it would introduce favorable pricing schemes, and predicted most of its 2 million GPRS users would upgrade to 3G. 3

4 1.2 Rising affluence 2008 media ad spending = US$ 542, 693, 846 Newspapers 16% TV 75% Magazines 8% Radio 0.6% Internet (est.) 0.4% Source: TNS Media With 22 million households and a population of 86 million, 75% born after 1975, Vietnam is the third most populous country in Southeast Asia after Indonesia and the Philippines (and ranks 13th in the world). Nearly 30% live in urban areas largely concentrated in a few cities. In HCMC and surrounding provinces, 57% live in urban areas, in Hanoi, over 40% is classified as urban. Vietnam s economy has been enjoying steady high growth for 15 years, with annual GDP growing at around 8%; global recession was projected to lower 2009 GDP growth to around 5%. Vietnam s yearly per capita GDP passed the US$1,000 mark in 2008, two years ahead of the government s original target. While average incomes are still not high, consumers will spend on services they value. The mobile telephony market is a case in point, reaching US$4 billion after years of record growth. With a predominantly young population and only 4 million pay TV households in 2009, Vietnam offers the pay TV industry huge growth potential. Pay TV households tend to be more affluent and more willing to spend on more and better quality content; despite the recession these consumers still purchased more than half a million flat panel TVs in 2009, 55% more than in Vietnam has no shortage of promising indicators: PricewaterhouseCoopers sees it as the world s fastest growing entertainment and media market, projecting it will exceed US$2 billion by PwC also projects Vietnam s TV subscription and license fee market to grow by 25% annually, reaching US$333 million in The signs have been evident for a while: TV advertising beat even the most optimistic projections, exceeding US$400 million in 2008, according to TNS Media. Despite the global slowdown, WPP still projected 16.6% growth in media advertising spend for Vietnam in 2009 (topping US$681 million). The total advertising market (media, plus outdoor and miscellaneous spend) now surpasses US$1 billion Challenges Vietnam s pay TV potential has triggered a second tech gold rush (the first being into mobile service). Starting in mid 2008, there has been an unprecedented influx of new pay TV entrants, including state owned Radio Voice of Vietnam (VOVTV), Vietnam News Agency (VNATV) and numerous private sector operators who have partnered with incumbent licensed pay TV operators (now totalling 47) to produce new channels. This has resulted in astronomical growth of channels and air time. Major operators such as VCTV, SCTV, HTV and VTC offer between 60 and 100 channels each, more than doubling those available two years ago. However, domestic production capacity (both in terms of capital and talent) has not kept pace. Of the 100 channels available today, over 70% are foreign owned and a large proportion of the locallyproduced channels use blocks of foreign content. Quality local fare is hard to find, leaving viewers frustrated by decreasing programming quality on 4

5 new locally produced channels, and complaining of being inundated with game shows and ads. Quality content (both local and international) also faces competitive pressure from pirated signals used to a greater or lesser degree by local TV platforms. A few operators, both big and small, have even broadcast whole bouquets of unlicensed foreign channels until ordered to stop. In the provinces, there is still no effective means to control signal theft by dozens of smaller operators. Another challenge in the cable TV segment is poor signal quality, especially in high economic growth areas such as Ho Chi Minh City and its surrounding provinces. Cable is the most affordable pay TV platform and should be growing at a much faster pace than it is. Poor quality programming hasn t helped either. Should these twin problems continue for long, viewership may flatten or even drop denting ad revenues and hurting both operators and content providers even if subscriptions continue to increase. 600, , ,000 0 Flat Panel TV Sale Growth in Vietnam 555,000 5,000 40,000122, Regulatory reforms 358, Source: GFK Asia According to many analysts, broadcasters will need a facilitative environment if they are to reach their full potential. The job of establishing a regulatory framework that matches the needs of the new competitive market has lagged industry growth; the situation has subjected policymakers already overloaded and under resourced to increased pressure to speed up the process of drafting and issuing new regulations. The risk is that hastily written rules could end up doing more damage than good to growth prospects. Thus, as in other fast changing industries, Vietnam s pay TV sector has left market players scrambling to keep up, and regulators trailing behind. In practice, Vietnam has enjoyed a substantially liberalized business environment; while officially restrictive television policies have remained largely unchanged (with huge legal and bureaucratic burdens for new entrants), their de facto interpretation and/or nonenforcement have meant fewer restrictions than the official picture might suggest. On the ground, Vietnam has swung from one of the most restrictive markets to one of the more liberal in Asia in the past couple of years. However, a reaction seems likely. The influx of foreign channels and their availability to a growing viewership, combined with aggressive involvement by the private sector in programming production has many policymakers worried that television may escape control of the state breaking a Communist Party principle that views the media as first and foremost an instrument of the state. As Vietnam prepares for its 11th National Congress in January 2011 when the course of development over the next 10 years will be set there are already calls to restore order in the media, including pay TV. Against this backdrop, the Directorate of Broadcasting and Electronic Information (DBEI) was quickly formed in 2008 within the Ministry of Information and Communications (MIC) to oversee all radio, television and internet information platforms. Given its multiple tasks and limited resources, the directorate produced an impressive number of regulations in In September 2009, MIC/DBEI began a public consultation on its draft Regulation on pay TV which proposed drastic changes for the sector. The new rules would replace ones dating back to 2002 when Vietnam set out regulations on downlinking foreign content. The proposed framework sets out separate licensing requirements for network system operators, pay TV service providers, program distributors, and foreign/domestic program providers. It also imposes obligations on the bureaucracy to improve transparency and efficiency. However, early drafts also included provisions which could distort normal market functioning: One provision called for a single state owned buyer for all programming mandated to supply all programming to all platforms, apparently at a uniform price. Many pay TV industry players, both foreign and domestic, expressed concerns over this, fearful that interference in market mechanisms will stymie industry growth instead of enhancing it as many other MIC/DBEI proposals seem designed to do. The draft has already been revised, and there are reports that the provisions have been softened. MIC plans to seek approval of the revised regulations early in

6 Appendix Glossary A 25 = Department of Culture of Ideology Protection CPV = Communist Party of Vietnam CCEP = Central Commission for Education and Popularization COV = Copyright Office of Vietnam BTV = Binh Duong Television (regional broadcaster in a province near Ho Chi Minh City) DBEI = Directorate of Broadcasting and Electronic Information Unit of the Ministry of Information and Communications assigned to regulate content and last mile technical aspects of the pay TV industry) DIC = Department of Information and Communications FPT = FPT Telecom (an offshoot of the Corporation for Financing and Promoting Technology) Operator of an IPTV/triple play platform in urban areas of northern and southern Vietnam GDT = General Department of Taxation HTV = Ho Chi Minh Television Major TV broadcaster (FTA, cable and DTH) owned by the Ho Chi Minh City People s Committee (government) MCST = Ministry of Culture, Sports and Tourism MIC = Ministry of Information and Communications MOF = Ministry of Finance MOIT = Ministry of Industry and Trade MPS = Ministry of Public Security Mobifone = One of Vietnam s big three mobile network operators (controlled by VNPT) RFD = Radio Frequency Directorate SCTV = Saigontourist Cable TV Major cable TV network operator in southern Vietnam, a joint venture between state owned Saigontourist Holding Co. and Vietnam Television (VTV) TNS = Global market research company whose name originated as Taylor Nelson Sofres VCA = Vietnam Competition Authority VCTV = Vietnam Cable Television Major cable TV network operator in northern Vietnam; subsidiary of state broadcaster Vietnam Television; operator of a national DTH platform. Viettel = One of Vietnam s big three mobile network operators Vinaphone = One of Vietnam s big three mobile network operators (controlled by VNPT) VNATV = Vietnam News Agency TV Future news oriented TV channel planned by Vietnam s stateowned news agency to be operational in 2010 VNPT = Vietnam National Posts and Telecommunications State owned enterprise controlling many aspects of Vietnam s telecom industry, including satellite, fiber links, terrestrial and mobile telephony etc. Operator of an IPTV platform which began operations in September VOVTV = TV channel operated by the Voice of Vietnam (state broadcaster). Operational since early VSTV = Vietnam Satellite Digital Television New DTH platform jointly owned by Vietnam Television and the Canal Overseas group (France), and branded as K+. VTC = Vietnam Multimedia Corporation (also known as Vietnam Television Corporation) Major DTT and DTH broadcaster VTV = Vietnam Television Major state broadcasting agency. Through subsidiary VCTV, operates cable and DTH systems. WPP = Global marketing and communications group. (Origin of name: Wire and Plastic Products). Subsidiaries include Group M, Grey Global, Ogilvy & Mather, Young & Rubicam, and JWT/J. Walter Thompson.

7 Vietnam in View 2010 ABOUT CASBAA The Cable & Satellite Broadcasting Association of Asia (CASBAA) is an industry based advocacy group dedicated to the promotion of multi channel television via cable, satellite, broadband and wireless video networks across the Asia Pacific. CASBAA represents some 130 Asia based corporations, which in turn serve more than 325 million pay TV households. Among CASBAA s highest priorities are the promotion of free and fair markets and the protection of intellectual property rights, and the development of thriving and competitive domestic communications industries. The Association is also dedicated to the development of regulatory best practices which assist the interests of both domestic and international participants within the multi channel and communication communities. CASBAA regularly undertakes a number of initiatives including the pursuit of copyright enforcement, promotion of cable and satellite as a key advertising medium, lobbying activities, the promotion of regional technical standards, regulatory roundtables and educational seminars. ABOUT US ASEAN Business Council The US ASEAN Business Council and affiliates are dedicated to strengthening bilateral and US ASEAN relations and building strong economic and commercial ties. Members of the Council include Fortune 1000 companies in support of promoting trade, investment, and technology cooperation, advancing US ASEAN relations through strong participation in public private partnerships, and committing to development and corporate social responsibility. The Council's members are represented in diverse industries, including aerospace, agribusiness, automobiles, computers and information technology, consumer goods, energy exploration and development, express delivery services, financial services, health care and pharmaceuticals, media & entertainment, mining, software, and telecommunications. CASBAA Executive Office 802 Wilson House, Wyndham Street, Central,Hong Kong Tel: Fax: casbaa@casbaa.com US ASEAN Business Council th St, NW Suite 411, Washington, DC United States Tel: Fax: mail@usasean.org Supported By 2010 The Cable & Satellite Broadcasting Association of Asia holds all copyrights to this report unless otherwise stated, and no part thereof may be reproduced or replicated without prior explicit and written permission. 7