Thai TV to expand with
new broadcasting law:
More choices for viewers and advertisers
By Jon Fernquest
New broadcasting laws will give almost everyone
in Thailand more TV choices starting this year (See today's
Bangkok Post article).
The six minutes of advertising per hour allowed by the new law is the revenue stream that will enable these new choices.
Media audiences and media companies will both have more choices.
Most important from the business perpective, advertisers, who have been severely constrained by advertising choices in the past, will have more and cheaper alternatives for targeting customers with TV ads.
Few TV Channels, Expensive Advertising
Advertising on television has been expensive because few TV channels can legally broadcast advertisements.
Channel 3 (operated by BEC) has had few competitors in traditional "free-to-air" TV broadcasting. This has allowed channel 3 to charge a premium on their advertising rates. High advertising rates have, in turn, translated into a Return-on-equity (ROE) that is very high compared to other broadcasters around the world.
Pay-TV operators include satellite and cable television operators. There is some convergence here, in that some satellite channels are also available through local cable television channels.
The current difference between pay-TV and free-to-air TV advertising rates is enormous. The Pay-TV average advertising rate is 10,000 per minute, whereas Channel 3 charges as much as 450,000 baht. Annually, 53 billion baht a year is spent on free-to-air TV advertising.
The Future Evolution of Thai Television
In the future, TV channel choices are projected to increase from the current six to hundreds.
Consumer product manufacturers (Saha, Osotspa) have even launched their own satellite television channels to advertise their products at lower cost.
The benefits of the new law will only be seen slowly in Thailand. According to Phatra Securities, in Thailand:
"If pay-TV penetration increases at 20% per year, the subscription rate will reach 34% by 2012. With 30% growth, penetration would reach 62% by 2012. Once pay-TV reaches critical mass, it will bring down barriers to entry and the lofty ad rates that free TV now commands."
Pay-TV Plans for the Future
The new broadcasting law legalises more than 300 cable broadcasters operating in an industry currently worth $10 billion baht annually.
Currently there are 3.3 million pay-TV subscribers in Thailand, representing 17% of the total television market.
TrueVisions, formerly UBC, has a 19% market share in the pay-TV sub-market. The 300 members of the Thailand Cable TV Association (TCA) account for 74% of the pay-TV sub-market. Satellite Tv companies Samart and Thaicome account for the rest of the market share.
Vocabulary:
a revenue stream
- a steady income over a period of several weeks or months
enable
- allow you to do something
from the business perpective - the way that business
people see the situation and issues (more TV channels means more
advertising possibilities for businesses)
severely constrained - very limited in the actions
they can take
Channel 3
- operated by BEC-Bangkok
Entertainment Company under license from MCOT
free-to-air TV - traditional TV broadcasts that are
sent unencrypted and may be received via any suitable receiver (See Wikipedia)
a premium
- an additional amount over the normal price of a product, charged for
extra value or features
charge a premium - add an extra amount to the normal
price
Return-on-equity (ROE) - a measure of a company's
profitability, "measures the rate of return on the ownership interest
(shareholders' equity) of the common stock owners,...measures a firm's
efficiency at generating profits from every dollar of net assets
(assets minus liabilities), and shows how well a company uses
investment dollars to generate earnings growth." (See Wikipedia)
Pay-TV
- television that a person must pay money to watch, usually a monthly
"subscriber fee" (See List
of television channels in Thailand)
satellite television - television broadcast from a
satellite (See Wikipedia)
cable television - cable television
- TV through a cable rather than the air (radio waves) ("a system of
providing television to consumers via radio frequency signals
transmitted to televisions through fixed optical fibers or coaxial
cables as opposed to the over-the-air method used in traditional
television broadcasting (via radio waves) in which a television antenna
is required") (See Wikipedia)
convergence,
converge - when many things come together into one thing,
unification (for example, many different media such as newspaper,
television, radio, internet coverge into one media form)
barriers to entry
- things that make it difficult for a new company to enter an industry
or market (See Wikipedia on barriers
to entry and Michael
Porter's 5 forces)
bring down barriers to entry - put an end to
barriers to entry, so that more firms can enter the industry, and the
industry can become more competitive
a pay-TV operator - a company that sells access
to TV channels to subscribers