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How much are you willing to pay for TV?

Sports broadcasts are not the only things at stake with rising prices

Up until a day before the Rio de Janeiro Olympics, it was still unclear if Singapore would get to catch sport's grandest occasion live on television.

For many sports fans this was particularly vexing. Delayed broadcast is not a notion Singapore is used to, having enjoyed free live telecasts since 1984.

But what was more unsettling was how national broadcaster Mediacorp was willing to settle for delayed telecasts. While a deal for limited live coverage was eventually struck with rights holder Dentsu, it proved one thing - that there are no longer any sacred cows when it comes to programming.


ST ILLUSTRATION: MIEL

Sure, there have been hints of a pushback against escalating rights fees. The 2010 World Cup was only guaranteed 35 days before kick-off. The last La Liga season was shown only midway through the campaign as rights holders beIN Sports and StarHub haggled over price.

But the latest fiasco has now made it clear that we are in the middle of a new normal for the content industry - that the uncertainty looming over sports content, and perhaps even aspects of general television content, is here to stay.

Mr Carey Wong, investment analyst at OCBC, said: "Unfortunately, with ever-rising content cost, we see even more uncertainty ahead as operators here would really need to correctly work out their numbers carefully to avoid over-paying for content."

Many companies have aligned themselves with local sports governing body Sport Singapore and the Singapore National Olympic Council, indicating an inclination from the private sector to help home-grown sports...

But surely more can be persuaded to ensure that Singapore athletes get support before and during the Games.

This unsettling landscape is the confluence of several factors.

First, industry experts say content prices, while subject to market forces, have generally increased in recent years.

This is all the more so for live content, as seen from the astronomical fees forked out for live sports in recent years.

In 2014, American network NBC paid the International Olympic Committee (IOC) US$7.65 billion (S$10.3 billion) for the right to broadcast six editions of the Olympics from 2022 to 2032, up from the US$4.4 billion it paid for four editions of the games in the 2014-2020 cycle.

Last year, Britain's Sky paid a record £4.2 billion ($7.3 billion) for three English Premier League seasons, 83 per cent more than it paid in the previous cycle.

As for the Olympics, the IOC's decision to sell the broadcast rights to a profit-driven third party like Dentsu means prices are only going to go up. As it is, rights have been going up, from US$1.7 billion for Beijing 2008 to US$2.57 billion for the 2012 London Games.

Live events are particularly lucrative as viewers have to watch it in real time, including the commercials.

This allows content buyers the chance to chase for more advertisement revenue from such events, given how with the advent of streaming services like Netflix, viewers can actually choose to watch on demand without watching a single commercial.

 
 
 

Second, Singapore is also a unique pay-TV market.

For one thing, while the subscriber base is not high in terms of absolute figures (StarHub's is 518,000, Singtel's 423,000), subscribers here are known to be affluent, and there is also strong consumer demand.

Singtel's exorbitant bid for the EPL rights in 2009 only cemented this reputation.

Rights holders come to Singapore with the knowledge that they can charge top dollar, especially for marquee content like the Fifa World Cup and the Olympics, because they see Singapore as a high ARPU (average revenue per user) market.

Then there is the issue of a fairly saturated market. With the pay-TV penetration rate nearing 70 per cent, pay-TV operators face an uphill challenge to get bang for their buck when acquiring rights.

Short of a boycott, how can Singapore navigate this new age of uncertainty?

For sports at least, corporate Singapore could support the acquisition of broadcast rights through either sponsorships or placement of advertisements, especially for events with a large number of Team Singapore athletes.

Many companies have aligned themselves with local sports governing body Sport Singapore and the Singapore National Olympic Council, indicating an inclination from the private sector to help home-grown sports.

For instance, the Sports Excellence Business Network, which pairs athletes with suitable jobs, has 33 corporate partners from 19 industries. But surely more can be persuaded to ensure that Singapore athletes get support before and during the Games.

As former national synchronised swimmer and double SEA Games gold medallist Stephanie Chen said: "Support can come in many ways and I'm sure the athletes have gotten as much support as they could have on their road to the Olympics. But if they know everyone back home is able to watch them compete live, I think it gives them a very different kind of motivation to do their very best."

While the government has been clear that negotiating for content is a commercial decision it will not get involved in, it can still play a part to help better protect content buyers.

Previously, the government had clamped down on set-top boxes that illegally decode content from StarHub, allowing its users to watch for free.

But there are other over-the-top (OTT) platforms which, once connected to the Internet, allow users to stream live events for free by tapping on to networks overseas. There are also websites hosted abroad that provide live feeds.

These are tough to combat, particularly in Singapore where residential wired broadband penetration rate is 102.6 per cent, according to the Infocomm Development Authority of Singapore. It is also a legal grey area as many of the service providers are based overseas.

For now, these OTT sets are openly sold at technology fairs and several electronics retailers here, raising the ire of pay-TV operators. They eat away at subscription revenue and, with that, purchasing power.

Pay-TV operators will benefit from stronger regulation in this area, said Mr Aravind Venugopal, vice-president at consulting and research provider Media Partners Asia.

He said: "Singapore is positioning itself as the intellectual property (IP) and media hub of the region, priding itself on the creation and protection of IP. It should be able to act against these manufacturers and providers, otherwise operators will be affected."

Finally, operators also need to start thinking out of the box when it comes to monetising their content.

Singtel's sub-licensing of three live English Premier League matches per week to Eleven Sports Network is one such example, said Mr Avi Himatsinghani, founder and chief executive officer of multimedia entertainment company Rewind Networks.

He added: "It's also a good time to look at what the market really wants and give it to them in the easiest way possible."

Mr Wong suggested shifting to an a la carte model where viewers pay for content they desire, as opposed to the current buffet-style, where they pay a lump sum for content they might not want.

This means operators also need to plan ahead. After all, the initial impasse between Mediacorp and Dentsu was due in part to the fact that an offer was made only this year, even though negotiations began in 2013.

There is no panacea as Singapore enters this new era, but, borrowing from Prime Minister Lee Hsien Loong's National Day Message, unity on all fronts - in this case the relevant authorities, pay-TV operators, corporates and viewers - is required to make this period of transition a less painful one.

A version of this article appeared in the print edition of The Straits Times on August 11, 2016, with the headline 'How much are you willing to pay for TV?'. Print Edition | Subscribe