By Ruggero Jenna, director, Dominic Arena, partner, and Cheryl Lim, manager at Value Partners Singapore. Singapore's pay TV industry is experiencing a transformation. The advent of fierce competition and rights bidding, followed by a controversial regulatory development, namely the Media Development Authority of Singapore's (MDA) proposed introduction of an “exclusive content cross-carriage measure”, has captured the attention of pay TV industry groups and other interested parties worldwide. Well-voiced concerns on both sides of the spectrum regarding the formulation, feasibility and impact of such a regulatory measure have been fiercely debated by stakeholders, with the face-off at one stage threatening to snowball into an international incident. However, contrary to some quite negative arguments put forward publicly to date, Value Partners' independent analysis over a 10-year timeframe shows that the MDA measure is not an ill-conceived or hasty retort to a temporary market anomaly which threatens to destroy economic value, but an innovative and well-grounded measure.

1. PERSPECTIVE
Exclusive Content Cross-Carriage Obligation in Singapore:
An innovative intervention that promises to create value
for all stakeholders
Singapore’s pay TV industry is experiencing a transformation. The advent of fierce
Ruggero Jenna competition and rights bidding, followed by a controversial regulatory development,
Managing Director, SEA namely the Media Development Authority of Singapore’s (MDA) proposed introduction
of an “exclusive content cross-carriage measure”, has captured the attention of pay
Dominic Arena TV industry groups and other interested parties worldwide. Well-voiced concerns on
Partner, Head of TMT both sides of the spectrum regarding the formulation, feasibility and impact of such
Consulting SEA a regulatory measure have been fiercely debated by stakeholders, with the face-off at
one stage threatening to snowball into an international incident.
Cheryl Lim
Engagement Manager However, contrary to some quite negative arguments put forward publicly to date,
Value Partners’ independent analysis over a 10-year timeframe shows that the MDA
measure is not an ill-conceived or hasty retort to a temporary market anomaly which threatens to destroy economic value,
but an innovative and well-grounded measure. Its efficacy lies in a simple, yet overlooked, mechanism, enabling exclusive
content owners to retain - and enhance - monetisation of their asset. It is this mechanism which sets this measure apart
from any other of similar name adopted around the world and, subject to certain implementation prerequisites as discussed
herein, promises to create and preserve economic value for all Singaporean pay TV industry stakeholders.
Introduction of the Measure
In March 2010, the Media Development Authority of Singapore (MDA) announced a Public Interest Obligation
requiring pay TV licensees to cross carry each other’s content on a cross-transit basis.
The cross-carriage measure enables a Supplying Qualified Licensee (i.e. purchaser of exclusive content) to
provide access to its content on a paid retailer-customer basis to consumers on any pay TV platform via a
network transit arrangement. In this way, it differs from other ‘cross-carriage’ measures which may have
been implemented in other markets.
From a consumer perspective, Singaporeans will therefore have the convenience and freedom of gaining
access to all content available in the Singapore pay TV market, via a single set top box, for which they will still
be billed by the owner of that content.
From a pay TV operator’s perspective, the exclusive content owner will continue to be compensated
directly at the retail level for consumption of their content, with content being monetised by customers of
another operator incurring a network transit charge. The content is therefore effectively decoupled from the
platform.
MDA’s proposed regulation follows a series of events, most notably SingTel’s aggressive bidding for exclusive
broadcast rights for the Barclays Premier League (EPL) and Starhub-SingTel’s joint bid for FIFA World Cup 2010
broadcast rights – events that resulted in content costs skyrocketing and elicited concerns that the cost might
eventually be passed on to consumers. Although, on the surface, some have argued that MDA is overreacting
to these events, Value Partners’ analysis reveals MDA’s actions are specifically – and effectively – designed
to address the fundamental issues of consumer benefit, viability of the pay TV market and overall industry
development. In summary, the rationale for the introduction of the measure lies in three factual arguments:
• The Singaporean pay TV market is already in a somewhat ailing state, with low-to-negative industry
profitability;
• Consumers are suffering inconvenience and higher costs from having to purchase dual subscriptions
to enable them to view popular but exclusive content concentrated between pay TV providers and
platforms;
• The breadth of content and level of innovation in the Singaporean pay TV market was at risk of stagnation
due to the oligopoly now in place and high entry barriers for new entrants to reach end consumers.
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2. PERSPECTIVE
Overview of Singapore’s Pay TV market and the key issues
Singapore’s pay TV market has, for most of its history, been a monopoly market with a single dominant cable
(CATV) operator - Starhub Cable Vision. With the entry of SingTel’s mioTV in July 2007, competition increased
in the pay TV sector and pay TV penetration has grown steadily to reach approximately 52% of households,
or 659,000. The importance of pay TV in the Singaporean media sector has therefore been rising steadily,
and despite the traditional dominance of free-to-air (FTA), its viewing share fell from 76% in 2001 to 61% in
2007.
As a result of new competition in the pay TV sector in 2007, Singapore saw an initial broadening of content
and consumption options. Specifically, SingTel’s offering has introduced 56 channels over and above the 160
linear channels offered by Starhub, and their ‘a-la-carte’ offering, with a strong focus on on-demand movies,
differentiated it from Starhub’s more traditional ‘tiered bundle’ business model.
SingTel also inked a number of strategic rights/content agreements in a classic market entry play, as seen in
some other markets such as Hong Kong, which has proven highly successful in gaining critical mass market
share. These include a deal with Sony Pictures and the high-profile 2009 acquisition of the Barclays Premier
League (EPL) – formerly with Starhub – for which it reportedly paid a record S$350m for the exclusive
broadcast rights for 3 years.
However, now there are some quantifiable consequences for consumers arising from strategies adopted to
underpin market share for the dominant operator and enable the challenger to attain critical mass.
Exclusive content driving the need for dual subscriptions
Whilst on the surface, the entry of a new player on the scene and growth in pay TV subscriptions appears
positive for Singapore, a growing phenomenon being masked by the headline growth is that of dual
subscription households. Dual subscriptions have become ‘a necessary evil’ in Singapore wherever
customers wishing to view specific combinations of content – such as popular linear channels like CNN or
HBO (available exclusively on Starhub), along with EPL (available exclusively on SingTel) – are required to
double subscribe to gain access to the programmes.
Percentage of pay TV subscribers with dual subscriptions
18.0%
13.5%
18% of
subscribers are
10.0%
incurring the
unnecessary cost
of having a
3.0% second set-up
box
EY2008 EY2009 1Q2010 EY2010 (forecast)
Assumptions for forecast:
•Pay TV penetration reaches 54% or 689K subs
•Starhub and Singtel subscriber base reaches
503K and 310K respectively…
•…implying an overlap of 124K dual subs or 18%
of total subscriber base
Source: Value Partners analysis
Pay TV content in Singapore is considered to be highly concentrated, with only 5% of all pay TV channels
in Singapore available on both Starhub and SingTel pay TV platforms. This is due to both the prevalence of
exclusive carriage agreements (ECAs) between pay TV operators and content providers and the lack of content
wholesale agreements between the two operators. The implication of this is that pay TV subscriptions have
grown faster than actual market penetration, and consumers seeking to view popular content from both
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3. PERSPECTIVE
operators are required to subscribe to both Starhub and SingTel, acquire and maintain a set-top box from
each provider and incur any accompanying costs.
Value Partners estimates that dual subscriptions already exceed 15% of the market and by the end of 2010,
will surpass 18%, taking into account EPL transfer from StarHub to SingTel but without any regulatory
intervention. This means pay TV subscriptions will reach 813,000 (or 62% of households) versus actual market
penetration of 689,000 households (54%) – and this gap would continue to widen in the future, with dual
subscriptions reaching 25% by 2020. Whilst this indicates a sizeable latent demand for accessing content
from both operators, it also implies that a significant number of consumers are incurring the unnecessary
cost and inconvenience of maintaining a second set-top box in the home.
There remains room for real growth in the Singaporean pay TV market
Despite the increase in competition in the Singaporean pay TV market, based on a basket of Asia Pacific
benchmarks, it is evident that Singapore is below its natural penetration level for pay TV based on affordability.
In terms of real household penetration, Value Partners believes that there is further growth to be enjoyed
in the Singapore pay TV market over the next 10 years, even balancing countervailing factors such as the
strength of free-to-air (FTA) offerings and other cultural specificities in this market.
The high level of content concentration in Singapore, however, will form a natural barrier to real future
growth if not addressed; it will prevent the Singaporean pay TV industry from reaching its full potential and
consumers from enjoying the benefits.
2009, pay TV penetration rate versus normalized ARPU
Pay TV penetration rate (%)
100% South Korea
India
Hong Kong
80% Taiwan
Japan
60% Malaysia
Singapore New Zealand
China
40%
20%
Philippines
Thailand
Indonesia
0%
0% 1% 2% 3% 4% 5% 6% 7% 8%
ARPU as % of GDP per capita
Source: Informa, EIU, Value Partners analysis
Rising cost of content threatens to stunt growth
Whilst the walled garden approach was not so significant historically, when the market was a monopoly, in
recent years, it has contributed to operators more narrowly focusing competition on exclusive content as the
primary source of differentiation, and driving operators to pay more for exclusive rights and channels.
Specifically, Value Partners has found that compared to the benchmarked content cost of 35% of revenues,
Singapore’s pay TV operators spend a higher proportion of revenue on content than their peers at 60%, as
shown below.
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Content costs as share of pay TV revenues
2009
60%
Content costs as share of pay TV revenues in
Singapore are significantly higher than international
benchmark average of 35%
41%
32% 34% 34%
Singapore UK New Zealand US Australia
Source: Value Partners project experience, Value Partners analysis
The effect of paying significantly more for content is lower operating margins for pay TV operators. Based on
our analysis, Singapore’s pay TV operators currently operate below the assessed average benchmark of 21%
EBITDA margin or have negative EBITDA margins, as shown in the exhibit below.
EBITDA benchmarks of pay TV operators
Average EBTIDA
benchmark 21% 35%
24% 24%
13% 15%
12%
DishNetwork DirecTV US BSkyB Foxtel Sky NZ Austar
Estimated Singapore pay TV operator business EBITDA (2009-2010)
10%
0%
Both pay TV operators fall below the
2009 2010 2009
average benchmark EBITDA of 21% 2010
-60% -90%
Source: Value Partners analysis
The high cost of content and poor/negative profitability may be attributed to initial competition, which brings
with it the natural desire of the incumbent to defend its market share (i.e. Starhub) and the challenger to
significantly increase its market share (ie. SingTel) and could be transient. However, our analysis over a 10-
year timeframe indicates that although profitability will improve, EBITDA margins are likely to remain low at a
modest 7% without regulatory intervention such as the proposed measure.
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5. PERSPECTIVE
This brings into question the sustainability of the pay TV sector in Singapore over the longer term, which risks
diluting consumer benefits through a reduction in:
• The ability to provide good quality pay TV at reasonable consumer prices; and
• Further innovation in the form of new content, channels and business models.
Singapore Pay TV industry EBITDA forecast (without Measure)
40%
30%
20%
EBITDA ranges based on
international benchmarks
10% 7% 7% 7% 7% 7% 7%
(12%-35%)
3%
0%
0% -3%
-6%
-10%
-10%
-20%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Value Partners analysis
Decoupling the Media/Pay TV value chain for the benefit of the industry
The essence of the MDA measure is that content is effectively decoupled from the pay TV viewing platform
choice of consumers. At the time the MDA introduced the proposed cross-carriage measure in March 2010, it
cited a number of social, industrial and economic benefit reasons for its intervention, including:
• Reduction in content concentration - based on the fact that only 7 of over 180 channels today are
available on both Starhub and SingTel Pay TV platforms;
• Improvement of consumer convenience and programme access - by removing the need for dual set-
top boxes to access popular content, and enabling consumers to gain access to pay TV on the platform
available at their premises;
• Refocusing competition away from exclusive content - to other areas such as customer service, packaging
and value added services; and
• Reducing barriers to entry for new pay TV players.
MDA also reiterated its commitment to not intervene in the prerogative of pay TV operators or content
providers to continue to enter into exclusive arrangements, to protect the rights of intellectual property
owners and to avoid unreasonable losses to any stakeholder group, whilst achieving the aforementioned
objectives.
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6. PERSPECTIVE
Content Advertisers
Provider (Rights
Owner)
Pay to advertise
 Bid & pay f or based on viewership
ECA + other 
content
Distribute content
Pay TV
through RQL Pay TV
as a “pipe”
Operator (SQL) Operator (RQL)
Broadcast ECA +  Pay f or  Pay f or
Distribute SQL
other bundled content at ‘retail content at ‘retail
content 
content  (bundle) price’ (bundle) price’
Pay TV Pay TV
Customers Customers
(SQL Customer) (RQL Customer)
With the effect of the measure being a decoupling of the media/pay TV value chain, with content being untied
from the platform, the end user relationship is being opened up. Customers will be able to purchase and view
almost any content on any platform and will become direct customers of exclusive content providers (SQL),
whilst retaining their platform relationship with their current provider (RQL). This is shown in the exhibit
below.
Singapore pay TV operators Own end-
Rights user
Content Content consumption
Today ownership &
production aggregation
Technology Distribution
management
SQL
SQL end-
Rights user
Content Content
Post-measure ownership &
production aggregation
relationship
management
RQL Own end-
user
Content Content consumption
Technology Distribution
production aggregation
This decoupling of retail relationship and carriage infrastructure has been applied in several infrastructure-
intensive industries. For example, in power and utilities, the power producers and retailers are often
independent of the electricity grid operator. The grid operator charges a fee for transmitting electricity from
source to end user. Although the infrastructure operators and retailers in Singapore’s pay TV industry are
not yet independent from each other, the measure serves to simulate such an environment. The concept of
decoupling and a generic reference model is illustrated below.
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7. PERSPECTIVE
Producer 1 Content, goods, services Retailer 1
Retailer 2 Consumer Examples of
Producer 2 industries in which
Retailer 3 the decoupling model
has been applied:
•Power and utilities
•Telecommunications
Producers “Pipe” Retailers Consumers (MVNOs)
•Transportation
• Can sell to any • Key role is to • Can buy from many • Can buy from any (railway)
retailers distribute products to producers retailer and even
• Can set up own retail consumers • Typically small part of directly from
network • Typical compensation overall value chain producers
• Use pipe to distribute for the service “utility- • Compete on • Perceived to be
products to line” (cost-plus, etc) - customer service cheaper for the
consumers • Often used in national - portfolio of offers “bundle” of products
• Compete on monopoly (i.e. - attractive pricing by consumer buys
- price electricity negotiating favourable • Has limited visibility
- Quality transmission, railway, wholesale price from on overall value chain
- Innovation / NGNBN) producers (through
efficiencies • Compete on market power,
efficiency/reliability exclusive distribution
(often regulated) networks etc.)
Enabling continued monetisation of exclusive content preserves value
Despite the decoupling, the subtlety of MDA’s proposed measure – which enables pay TV operators (SQLs) to
fully extract economic value from their exclusive content at the retail level (as opposed to a wholesale cross-
carriage model) – makes it unlike any other measures benchmarked globally.
Coupled with the forecast growth in viewership as a direct result of the measure, content owners will
potentially be in a position to grow revenues from exclusive rights beyond what was available to them prior
to the measure. This is only evident when analysing the impact of the measure over a period such as 10 years,
as has been done by Value Partners.
This is a salient point, which to date has not been highlighted by various parties commenting on the impact of
the measure on stakeholders and the market, possibly because it may be different to what some stakeholders
may initially assume by using measures in other markets as a frame of reference, and also the true impacts
and opportunities created may not be immediately obvious when focusing on ‘day one’.
Decoupling the Media/Pay TV value chain for the benefit of the industry
With the introduction of the measure, Singapore’s pay TV market is likely to positively evolve in a number of
ways, namely:
• Increased viewership/content consumption through increased access to content independent of
platform;
• Reduced customer barriers to switching pay TV platform operators and access to desired content,
regardless of specific platform unavailability;
• Reduced entry barriers for new entrants such as IPTV players on NGNBN, since previously difficult to
obtain exclusive content will now be available via cross-carriage arrangements;
• Possible emergence of new “virtual” pay TV operators, similar to MVNOs, who only need to make limited
infrastructure investments but focus on content add-ons to other value added services;
• Accelerated direct-to-consumer efforts from major content providers, like ESPN and BBC, who have
previously reached consumers via pay TV operators and focused their direct-to-consumer efforts on the
internet/online; and
• Increased number of pay TV channels and content available in Singapore.
The net effect would not only be increased competition but also increased choice and value for the consumer.
These, in turn, will drive Singapore’s pay TV penetration to reach its potential more quickly, reaching higher
ARPU levels and overall higher industry growth and sustainability.
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8. PERSPECTIVE
Long-term quantitative benefits of the measure are clear
Specifically, over the coming 10 years – being the period of our analysis – Value Partners estimates that pay TV
household penetration will reach 67%-70% by 2020 with the measure, compared to 64% without the measure.
We further believe ARPU levels will reach S$71-S$76 by 2020 with the measure compared to S$65 without the
measure, representing a 25-29% increase in overall annual market revenues by 2020.
Pa
Pay TV household penetration forecast Pay TV Market ARPU forecast
SGD
Counterfactual (without Measure)
Percent
Counterfactual (without Measure)
Factual (with Measrue) Factual (with Measrue)
Pay TV penetration 120
120%
ranges based on ARPU ranges based on international
international benchmarks benchmarks (SGD33-104)
(58%-97%)
100%
100
80%
69% 70%
66% 67% 68% 80
63% 64% 65% 71 72
60% 69
56% 67 68
60% 52% 65
63
62% 63% 64% 61 61
57% 58% 59% 60% 61% 58
52% 54% 56% 60 54
62 62 63 63 64 64 65
61 61
40% 58
54
40
20%
0% 20
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Value Partners analysis
Pay TV operators are not only likely to gain in revenues; the overall profitability of the industry is likely to
improve to a level that will allow its future sustainability. We estimate that EBITDA margins can improve to
18% by 2020 – in line with international benchmarks, albeit at the lower end of the range.
Singapore pay TV operators EBITDA forecast
Counterfactual (without Measure)
40%
Factual (with Measrue)
30%
20%
12% 13%
10% 11%
EBITDA ranges based on 8% 9%
10% international benchmarks (12%-35%)
5%
1% 7% 7% 7% 7% 7% 7%
0% 3%
-3%
-6% 0%
-10% -3%
-10% -6%
-10%
-20%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Value Partners analysis
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9. PERSPECTIVE
Specifically, Starhub and SingTel (and any other new entrant) would be able to continue to compete equally,
since:
• The majority of households are able to freely choose between operators, given that almost all homes
(99%) are fixed line and most (94%) cable ready;
• The measure does not reduce content’s value as a competitive lever, so operators can still use this as a
component for bundling; and
• Operators’ hubbing strategies are still intact, since both are still free to offer their pay TV service with their
other offerings.
Content owners will benefit from the measure through monetisation of the combination of an increase
in market size and addressable viewers made possible by the measure. Specifically, content providers are
expected to enjoy a neutral-to-marginally-positive impact from the measure through the net effect of:
• Gain in additional revenues from increased subscriptions from pay TV operator customers monetised
through viewership-based contracts;
• Gain in additional revenues from increased advertising and sponsorship; and
• Loss of some strategic rights premium due to non-exclusivity of content but potential for underpinning of
economic value through the ability to calculate incremental revenues from wider viewership forecasts.
Although content costs as a percentage of pay TV revenues is likely to decrease to levels in line with
international benchmarks as a result of the measure, absolute content cost will still grow at 4% CAGR, driven
by overall industry growth. This further indicates that content providers will still enjoy healthy revenue
growth, although this will vary across different categories of content providers, with premium sports content
providers retaining the biggest share.
This also means that Singapore is likely to remain an attractive market for content providers.
Pay TV content cost forecast
Counterfactual (without Measure)
Factual (with Measrue)
Percentage Content cost (SGD Mn)
400 410
100% 389 420
378
368
347 355
339 370
329
310
320
80% 281 Content cost
266
increases at 270
4% CAGR
60% 60% 59% 220
60% 57% 56% 55%
60% 53% 53% 53% 53% 53% 53%170
58%
56%
54%
52% 120
50% 49% 48% 47%
40% 46% 45%
Content cost as % of pay TV revenues 70
based on international benchmarks
20
(32%-47%)
20% -30
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Value Partners analysis
For consumers, the overall impact of the measure will be positive as consumers have access to more content
and pay less in dual subscriptions. Although consumers collectively spend more, we expect individual
consumers to enjoy savings of around 2-8% over the 10-year period.
We expect advertisers to experience a minimal impact, since pricing for advertisements is based on viewership
and advertisers are not expected to pay more to reach the same number of viewers.
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10. PERSPECTIVE
Finally, in concert with determining the potential for market growth and new entrants, Value Partners also
made an assessment of the potential growth in the number of channels in the Singaporean pay TV market
over the next 10 years, as a direct result of the measure. Based on this, we believe that the number of channels
in the Singaporean pay TV market could grow from 187 in 2010 to 269 in 2020, representing absolute growth
of 82 channels, or 44%.
Decoupling the Media/Pay TV value chain for the benefit of the industry
While the measure appears to be conceptually sound and well conceived, its ultimate success in achieving
the benefits outlined above in practice over the coming 10 years will depend on actual implementation.
Fundamentally, MDA needs to ensure that the measure remains true to its intentions, is fair to all players and
does not impede stakeholders’ ability to deliver their content/services to all subscribers.
In particular, there are implementation challenges we have assessed as being the most linked to the
realisation of benefits. Those that must be carefully considered can be grouped into Commercial, Operational
and Technical, and Scope Limitation considerations, as follows:
• Commercial considerations, including the extent to which SQLs are obliged to bundle/unbundle their
content (both basic and exclusive); cross-carriage fee model, both the form (e.g., Interim proxy-based
Average Channel Cost, TSLRIC-based cost-plus, Retail-Minus, revenue share), the actual quantum and
whether it should be symmetric/asymmetric across operators with different platform technologies;
billing and customer support, specifically with regard to increasing the number of billing relationships
for consumers and the complexity of customer support interactions.
• Operational and technical considerations, including handling of on-demand and live content; cases where
customer content contracts are shorter than their platform subscription contract; copyright protection of
supplied content once transmitted over the receiving network; sharing of customer information across
pay TV operators for resolution of billing and customer care issues.
• Scope limitation considerations, including limiting the scope of the measure to specific content genres
enabling market power to be exerted; embedding a review date in the measure, where issues such as
content concentration and programme access will once again be assessed; enabling content owners to
continue to restrict ECA content, but only for a limited period following which they would have to make
it available.
Implementation principles underpinning success of the measure
In Value Partners’ view, the above considerations could be effectively addressed by upholding the following
principles during implementation of the measure:
1. Ensuring that transit fees between operators are broadly symmetric and represent incremental cost
recovery, so that operators are not over or undercompensated and relatively lower cost platforms are
not exploited unfairly, particularly by new entrants. Value Partners believes that MDA would benefit from
being prescriptive and transparent in setting the transit fee, instead of allowing it to be determined by
market forces.
2. Preserving competitive dynamics, especially with regards to operators’ ability to extract value from their
content and bundled offers. We believe that operators should be allowed to continue to offer content in
its bundled form and offer content a-la-carte only if they choose to do so.
3. Mandating that the relationship between operator and subscriber remains intact regardless of platform.
We believe that, to ensure equity and minimal interference to market dynamics, contractual obligations
for set-top boxes and content should be separate, meaning that the onus is on the customer to ensure
they have the appropriate infrastructure to access the content they have purchased.
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Gaining a competitive advantage in times of change
In conducting our analysis on the impacts of the proposed MDA measure, several insightful revelations came
to light regarding how different pay TV industry stakeholders could potentially position themselves to gain a
competitive advantage from the change, as the measure is likely to alter the market landscape in a number
of ways. This is summarised below:
• Due to differences in business models, market share, content/rights and platform (ie. CATV, xDSL IPTV,
NGNBN), the MDA measure will have differing impacts on pay TV operators in Singapore, creating
asymmetric opportunities for stakeholders.
• Implementation of the measure will require pay TV operators (ie. variously in the SQL and RQL roles) and
content providers to reassess their strategy both at the retail level and in sourcing & distributing content.
Specifically, changes will evidently be required in retail content pricing & bundle structure, advertising
on exclusive channels (to be seen when viewing on competitor’s platform as RQL), as well as exclusive
content sourcing/bundling and contractual mechanisms (eg. viewership based compensation).
• For content providers and market entrants– particularly direct-to-consumer content aggregators and/or
virtual operators – new opportunities are being created, with strategic elements of the business model
needing to be evaluated, such as retail content/bundle pricing and structure, distribution platform
exploitation and associated value-added services, increasing in importance.
• For existing operators who are also exclusive content owners opportunities are also evident, such as the
potential for them to look beyond their existing platforms for distribution, under a hybrid distribution/
exploitation model.
Conclusion
Overall, Value Partners believes that over the next 10 years, as assessed in our quantitative analysis, MDA’s proposed
cross-carriage measure will have a net positive impact on the Singapore pay TV industry and participating
stakeholders, and will not be value destructive nor cause unreasonable loss to any key stakeholder group of pay TV
operators, content owners, consumers or advertisers.
Coupled with the fact that Singaporean pay TV household penetration is below benchmarked levels, the design
of the measure will bring about increased viewership, a broader basis for competition, reduction in content
concentration and improvements in program access for consumers. At the same time, it will enable stakeholders
to monetise their assets fairly. Therefore, the Singapore pay TV industry has the potential for continued sustainable
growth and innovation.
As the pay TV industry experiences stronger growth and broader-based competition, pay TV operators will in turn
enjoy healthier financial results that ensure the long-term viability of the industry. Consumers will avoid unnecessary
costs and enjoy wider content availability, and at the same time, content providers will preserve and likely grow
their revenue streams as a result of the increased viewership, potential for direct-to-consumer business models, and
growth of the industry overall.
Finally, it is our view that the measure is also a regulatory innovation that, once implemented and proven in
Singapore, could potentially set a new model for media regulators around the world who are grappling with how to
deliver similar consumer and industry benefits whilst at the same time, preserving economic value and upholding
free market principles.
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About Value Partners
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