Are pay TV pirates on the rampage in Asia?

Posted by: Bruce Einhorn on October 24, 2006

Free cable. For some, those are magic words. But how many people really try to get cable TV for free? In the U.S., most Americans recognize free cable for what it really is: theft. But if you believe what the pay-TV industry in Asia now argues, that’s not the case in this part of the world. According to the Cable and Satellite Broadcasting Association of Asia (aka CASBAA), around the Pacific Rim there’s one thing that seems to unite TV viewers: The idea that pirated pay-TV is okay. CASBAA is having its annual meeting in Hong Kong this week, and the industry group says that the news is grim. According to CASBAA, pay-TV piracy is a billion-dollar industry in Asia, with the cost to operators at $1.13 billion in 2006, a 6.6% increase over last year. Needless to say, the folks at CASBAA are very unhappy. “For four consecutive years the cost of pay-TV piracy has risen,” CASBAA’s press release says, “and in 2006 the number of illegal subscriptions across Asia Pacific is estimated to have increased by 20% in 2006 to 5.2 million connections.”

CASBAA would have us believe that this is a huge problem. I don’t buy it. A CASBAA spokeswoman says that number refers to 11 countries, where the total number of pay TV subscribers is 61 million. No wonder CASBAA didn’t include the number. At less than 10%, the problem is tiny compared to the headaches of the software companies. According to stats released by the Business Software Alliance in May, the software piracy rate in Vietnam is 90%. China has made some progress but still 86% of the software used in China is counterfeit. India does better, at 72%. The U.S., 21%.

Unfortunately for Asia’s cable TV operators, local governments don’t seem to have the ability or the willingness to stop the piracy. Why? One reason lies buried inside the CASBAA statement. The industry organization estimates that pay-TV piracy will result in tax losses to Asian governments of – wait for it! – a grand total of $158 million. That’s million, with an “M.” And it’s not $158 million per government, but $158 million combined. With such a piddly amount of money at stake, maybe it’s not surprising that governments don’t see cracking down on pay-TV piracy as a top priority. CASBAA chief executive officer Simon Twiston Davies says in the CASBAA statement that “more action is required from governments – even the good ones – to counter the corrosive effects of piracy on the pay-TV and related industries.” I’m not looking to stand up for the rights of pirates, and I know that one reason that PCCW’s IPTV service has done so well in Hong Kong is because content providers like Disney and HBO believe that IPTV is more secure than pirate-prone cable TV. (See, for example, this BusinessWeek story that I did early this year on PCCW.) In a perfect world governments certainly would be fighting the pirates to the end. But with counterfeit DVDs and software still so easy to buy, I think it’s fair to say that Asian governments have a lot more serious IPR problems that they need to address.

Reader Comments

Andy

October 24, 2006 12:08 PM

In Asia, there are a lot of free local and international TV channels. They can get it through antenna or satellite dish; the quality is quite good too. The concept of pay TV is new to most Asians. Don't be surprise that they don't know that what they do is wrong.

Reflecture

October 24, 2006 9:41 PM

We have pay TV services in all of our 8 facilities - half of which are located in developing or 3rd world countries. The cheapest is US$25 per month. That isn't a lot of money for industrialized countries, but in some countries that is a week's wages.

Of course no one will spend a week's wages on TV. But because of pay TV local free TV isn't developing well. And if you don't have pay TV you are out of the education and culture loop.

Who is as fault? That argument will never be answered. But if the pay TV industry were smart they would drastically lower their fees - they would get a lot more subscribers and the revenue and costs would be the same. But they would be building a long term business where their prices could be raise inline with inflation. And someday these countries will have the incomes to pay $25 a month for pay TV. But if you have been stealing something for 20 years it is very difficult to change.

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