SINGAPORE: Disney’s move to shut down several of its sports and movie channels in Southeast Asia represents another blow for pay-television operators in Singapore, analysts said.
The move means pay-TV subscriptions for StarHub and Singtel are likely to continue declining, as more and more content moves to over-the-top (OTT) streaming services like Netflix and Disney+, they explained.
But this does not mean the death of pay-TV in Singapore, the analysts noted, pointing out that telcos can tweak their business models to compete with streaming services, albeit with difficulty.
The Walt Disney Company told CNA on Tuesday (Apr 27) that it is consolidating its media networks business as part of a global effort to “pivot towards a direct-to-consumer-first model and further grow” its streaming services.
The channels reportedly set to be shut down include Fox, Fox Crime, Fox Life and FX; movie channels Fox Action Movies, Fox Family Movies, Fox Movies and Star Movies China. Sports channels Fox Sports, Fox Sports 2, Fox Sports 3, Star Sports 1 and Star Sports 2 will also be shut down.
As of Oct 1, Disney will operate a “streamlined television portfolio” that covers the Chinese language channels – Star Chinese Channel and Star Chinese Movies – and Factual Entertainment – National Geographic Channel and Nat Geo Wild.
READ: Disney to shut down most of its TV channels in Southeast Asia, eyes growth in streaming services
Mr Kenny Liew, who is telecommunications, media and technology senior analyst at Fitch Solutions, told CNA that Disney’s announcement will accelerate the decline of pay-TV subscriptions in Singapore.
“With more and more content moving away from linear programming to online platforms, pay-TV will continue to lose its appeal,” he said.
“Customers increasingly want to watch the content how and when they want to, and streaming services offer the convenience that linear TV services cannot, in this respect.”
Mr Samuel Tan, Asia-Pacific telecoms analyst at GlobalData, said that at the end of last year, StarHub and Singtel had about 698,000 pay-TV subscribers, a decrease from the peak of around 962,000 subscribers in 2014.
“The trend is likely to continue to cord-cutting from OTT competition,” he said, using a term that refers to ditching tethered pay-TV set-top boxes for Internet platforms.
WHY ARE PEOPLE DITCHING PAY-TV?
Consumers are switching to streaming services because of their on-demand nature, cheaper price and extra variety, analysts said.
“In most circumstance, subscription video-on-demand services are cheaper than pay-TV. Without the need to build infrastructure, media companies and broadcasters can now cut out the middleman and go directly to (the) consumer,” Mr Tan explained.
“A category of video-on-demand providers known as Internet aggregators, which includes Netflix and Hulu, often have a wider selection of content by sourcing globally for distribution rights from various production houses and sometimes even producing their own content.”
READ: More TV programmes, support for telcos among initiatives to help Singapore residents during ‘circuit breaker’ period
Video editor Muhd Adzmin, 34, cancelled his StarHub pay-TV subscription – comprising sports, kids and entertainment channels – about five years ago as he felt it was expensive and “wasn’t worth it”.
By switching to streaming services, he said he is saving around S$45 each month.
“I didn’t have much time to watch TV, and with Netflix, Disney+ and YouTube, I can watch whenever I want at a lower cost,” he told CNA.
“I can finish a season of a drama in a week, as compared to having to watch the whole season over two, three months on StarHub.”
The football fan said it was not difficult to give up the sports channels as he could find online live streams of matches, watch them at a friend’s house or catch the highlights on YouTube afterwards.
HOW CAN PAY-TV KEEP UP?
Pay-TV operators can use sports channels as an advantage over streaming services, Mr Liew of Fitch Solutions said, although he warned that this will not last.
“Using sports is still a useful way for pay-TV operators to ensure subscriber stickiness through bundling, and for them to upsell and cross-sell other content packs within their own pay-TV ecosystems,” he said.
“However, with talk of popular sporting events and leagues possibly moving to streaming platforms, telcos need to prepare themselves for this eventuality.”
Mr Liew suggests that telcos can cooperate with streaming players to distribute their services as a “viable way forward”.
“We believe that telcos need to move beyond their current operating models and increase flexibility by adopting a network- and device-agnostic model in order to cater to a broader range of subscribers,” he added.
Mr Tan said pay-TV operators in Singapore have already taken some steps to hold on to subscribers, including by bundling subscriptions with other services like broadband and mobile.
However, he said Singapore’s telcos can go further by emulating their counterparts in countries like China and South Korea, where competition from OTT services is “even more intense”.
Telcos there have integrated the pay-TV service into a smart home set-up, he said, with the set-top box acting like a smart device supporting AI voice recognition, gaming, home security, and appliance management.
“In the future, we might not even see voice, pay-TV and broadband as separate services, but a single ‘smart service’,” he added.
“In that aspect, Singapore’s telecom operators are lagging behind some of their peers.”
WHAT ARE SINGAPORE’S TELCOS DOING NOW?
A StarHub representative acknowledged that more households are subscribing to multiple OTT streaming services as a complement to linear TV channels.
“We boldly aligned closely with this worldwide trend – by integrating linear TV channels and OTT streaming services, so that our customers can easily access multiple sources of content all in one place, across multiple devices,” StarHub’s consumer business group chief Johan Buse told CNA.
For instance, he said StarHub is the sole official distributor of Disney+ in Singapore. Customers can also watch programmes from BBC Player, beIN SPORTS CONNECT, HBO Go and Netflix.
Likewise, a Singtel spokesperson told CNA that the company offers a “hybrid model where OTT and pay-TV co-exist to provide the best omni-channel viewing experience for our customers”.
Singtel is also “looking actively at different options” to source some of Disney’s content from other providers, the spokesperson said.
Despite that, the spokesperson said a “sizeable portion” of viewers still prefer the linear viewing experience of pay-TV.
“In the past few years, we have grown our pay-TV market share and became Singapore’s number one pay-TV operator in 2019 with over 377,000 household subscriptions,” the spokesperson said.
Singtel also offers the “most comprehensive” range of channels, particularly in live sports and ethnic content, the spokesperson said.
“Coupled with innovations such as our recently launched 4K services, we are able to sustain our leadership position through superior viewing experiences and content choice in a competitive market,” the spokesperson added.
IS THIS THE DEATH OF PAY-TV IN SINGAPORE?
Mr Tan said pay-TV in Singapore is unlikely to die completely, but rather, “converge with subscription video-on-demand services, becoming more similar, or exist as a component of a broadband connection”.
This is similar to how messaging apps have not rendered SMS completely obsolete, he highlighted.
On the other hand, Mr Liew foresees that pay TV will be phased out if subscriptions fall to a point that makes the service unprofitable.
“Whether operators look to substitute this with their own on-demand offerings are to be seen,” he stated.
“Streaming is a very competitive market, and telcos don’t simply possess sufficient scale or access to content to roll out these services in their home market, where the addressable base is small, and large, global streaming players are already competing aggressively for market share.”