Successful entry into Southeast Asia demands careful attention to market nuances, regulations, and economic models, alongside understanding local preferences and strategic partnerships.
In the ever-evolving landscape of broadcasting, challenges and opportunities abound, presenting a dynamic terrain for industry players. The advent of digital technologies has revolutionised how content is created, distributed, and consumed, posing both prospects and hurdles for broadcasters worldwide.
Kiran Karunakaran, a Partner at Bain & Company based in Singapore, brings a wealth of experience to the table. With a background in media & entertainment and telecommunications, Karunakaran has been instrumental in advising clients on strategy, mergers & acquisitions, corporate finance, and customer engagement. Holding an MBA from the University of Michigan and HEC Paris, his expertise spans from working with digital natives to integrated network operators.
In this exclusive interview, Karunakaran as a judge in the Asia-Pacific Broadcasting+ Awards 2024 delves into the nuances of the broadcasting industry, offering strategic insights on navigating the digital era. From understanding consumer behaviour shifts to crafting innovative business models, Karunakaran sheds light on the path forward for broadcasters in the Asia-Pacific region.
With your extensive experience in the telecom, online, and media industries, how do you perceive the current landscape of the broadcasting industry in the Asia-Pacific region?
There’s no denying that video consumption habits have changed in the face of evolving consumer preferences and accelerated by the pandemic. Consumers want to experience seamless viewing across multiple formats or screens and aren’t happy with just scheduled programming – this is a fundamental change in consumer preferences, catalysed by the proliferation of digital viewing options.
On the supply side, broadcasters and pay-TV providers alike not only need to deal with distributing content to a broad audience but also need to now negotiate with a much more fragmented base of content producers and stakeholders in the distribution ecosystem. This needs a thoughtful balance between innovative business models and seamless customer experience. The best have taken a hybrid approach of distribution business models as well as new models of partnership.
So going forward, it is those innovative broadcasters who are able to play this careful balance in a way that maximises value for the subscribers whilst actively managing their cost position that are set up to win.
The market, however, from a demand side, is poised to grow with an increase in the number of connected devices as well as a broadening of the digital reach in all markets across the APAC region.
Given your expertise in strategy-led transformation, what do you see as the biggest challenges and opportunities for broadcasters in adapting to the digital era?
Video consumption in APAC has been growing steadily and APAC is one of the largest pay-TV regions in the world. According to Media Partners Asia (MPA), the total of APAC pay-TV subscribers is projected to reach beyond 715 million by 2025. That creates revenue topping US$60b.
The region is also home to the world’s largest mobile-first population: 9 out of 10 viewers use smartphones to stream videos and premium video consumption in Southeast Asia is experiencing double-digit growth rates. Despite the rising popularity of OTT and watching TV online, linear broadcast television continues to be the most popular method of consuming video content in APAC.
As consumers seek to expand their existing linear TV services (rather than cut cable completely), pay-TV growth is forecast to be valued at US$26b across all services between 2025 and 2029.
This presents several opportunities as well as challenges for broadcasters such as: Balancing the right set of technological solutions to ensure a hybrid build-in distribution; ensuring the right content mix that appeals to the broadest audience; maintaining the distinction of differentiating using live sport as a hook to ensure loyalty to the core broadcast platform; building the right set of business models, requiring to form partnerships with a broad ecosystem of partners, at the same time balancing between local preferences; leveraging the core relationships with advertisers and other ecosystem players to manage the transition between advt. sponsored vs. subscription sponsored models; competing with the right business model in markets where short-form video is rapidly increasing in popularity; and leveraging the breadth of customer reach to create new revenue sources like “commerce.”
Drawing from your experience in market entry strategies for telecom companies, what considerations are crucial for foreign broadcasters looking to expand into Southeast Asia?
Whilst the SEA market is one of the most attractive markets for foreign broadcasters and streaming service operators, there are key considerations for them to be successful.
The primary consideration is that whilst foreign operators think of SEA as a homogenous market—it is not—there are structural differences in the market, be it language, cultural context, censorship policy, and regulation. Therefore, as foreign operators are looking to expand into the market, it is imperative that they study each of the markets at their stand-alone merit and plan their expansion strategies in line with the specific requirements of each of the specific markets.
The second most important consideration is the regulations set in each of the markets in the SEA region. The range of regulatory frameworks used in each of the markets varies from an extremely liberal Free To Air regime that operates in Indonesia for the benefit of the large population across several islands in the archipelago of Indonesia to a lot more oligopolistic regime that exists in the Philippines. The barriers to entry issues vary and therefore need to be carefully considered.
Goes without saying as well that the economic model of choice in each of these markets varies based on consumer spending preferences. Some markets are a lot more accessible through partnerships with the local telco operators that offer the benefits of carrier billing as well as access to their large subscriber bases, thus reducing the cost of acquisition sufficiently versus spending a lot of marketing dollars to increase viewership. Other markets, on the other hand, have a free market regime that makes it attractive to directly target subscribers, leveraging a broad set of partners that have consumer access.
In your opinion, how can broadcasters balance the need for innovation with the preservation of traditional broadcasting methods, especially in diverse markets like the Asia-Pacific region?
In my opinion, these are not choices anymore. We are in a world where the path that broadcasters take in the future is determined by external factors driven by both technological evolution and a rapid shift in consumer preferences, needing players to do both—innovate the core offering whilst ensuring that some of the traditional broadcasting methods remain in the interim as they find out a path to pivot over time to drastic shifts in business model.
I see the distribution side problem and the content side problem differently across the balance scale. From a distribution point of view, most markets in the APAC region will need a hybrid model—operators will need to leverage their fibre/cable capabilities in key urban markets and balance that with DTH and even satellite-based solutions to ensure that the reach is maintained and increasing in the face of the disruption that the industry is facing. This trade-off becomes critical to maintain the current business model, where advertising still forms a large part of the revenue model for many broadcasters in the region. As this shifts to more innovative revenue models including subscription, PPV, SVOD etc., it becomes important for the players to evolve their business models over time to stay competitive.
On the content side, there is significant fragmentation of viewing preferences and broadcast has been at the short end of the stick with the amount of time spent on video, shifting actively to short-form video options. This presents a real challenge for broadcasters. Therefore, broadcasters need to dig deep to really understand where their core competitive advantage has been in the past and how they can evolve that to stay relevant in the new viewing age. The best broadcasters have been able to benefit from tailoring their core offerings to multiple formats and leveraging short-form video as a way to “hook” into a lean-back, long-form view format.
How do you think broadcasters can build and maintain a loyal audience base amidst increasing competition and evolving viewing habits?
Maintaining a loyal audience is probably the biggest challenge that broadcasters have in the future. There has been a proliferation of devices, content service platforms, user-generated content, short vs. long-form content, as well as multiple means of direct-to-consumer content engagement options that have emerged.
What stands out clearly in this shift is that many broadcasters have not paid attention to their customer experience, as they’ve typically held very strong positions on customer viewership. The increasing competition has resulted not only in the reset of the type of content consumed but also in a step change in the customer experience that consumers today expect. So broadcasters need to up their game on providing a substantially superior customer experience to their consumers.
There are several ways that best-in-class broadcasters have approached this. It all starts with a fundamental zero basing on the customer journey and then building an offering that closely matches the evolved customer journey needs that the consumer has. This requires a complete revamp of the delivery mechanisms that traditional broadcasters have.
Lastly, as a judge at the Asia-Pacific Broadcasting+ Awards, what criteria do you consider most important when assessing entries?
I view the assessing criteria in 2 buckets:
- Present forward: i.e., how does the current offering stand against other broadcasters but also the digital native options? Criteria here include:
- Ability to increase reach & engagement
- Diversity of content offered
- Level of innovation in customer engagement
- Innovation in core offerings
- Improved RoI to advertisers; and
- Leveraging consumer data to improve product bouquet
- Future back : i.e., how has the broadcaster prepared to face disruption and change their business model to stay relevant? Criteria includes:
- Online/connected device readiness
- Ownership and engagement leveraging customer data
- Amount of time spent on broadcasters platform (growth)
- Availability of a multi-device viewership experience
- Ability to engage whilst viewing across multiple formats
- Social media integration with content/programming