PETALING JAYA: Competition and the proliferation of illegal television boxes, along with the sprouting of new streaming services, is having an adverse effect on Astro Malaysia Holdings Bhd’s subscription and advertising revenue.
But it is not the only broadcaster facing these negative issues – with even Netflix experiencing similar declines.
However, Astro has several initiatives in place, including providing its own broadband bundles and streaming services, to combat the decline.
Hong Leong Investment Bank (HLIB) Research said the drop in subscription revenue is being led by the proliferation of the use of illegal TV boxes, which allows users to stream paid content for free.
Unifi TV is bundled with other Telekom Malaysia Bhd (TM) services (Internet and telephone), apart from other streaming services.
This was accompanied by lower household income and operating restrictions caused by the pandemic, leading to declining household subscriptions.
Social restrictions from the pandemic negatively impacted commercial subscriptions, the research house added.
The decline in advertising revenue was due to the advent of digital advertising, such as on Facebook and Google, which caused a cannibalisation of market share from traditional advertising channels and Astro’s declining user base in its broadcasting assets (TV and radio).,
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Netflix’s loss of 200,000 and 970,000 subscribers in its first quarter 2022 (1Q22) and 2Q22 respectively, was the group’s inflection point, stoking concerns of stagnating growth and possibly the beginning of a declining trend, HLIB Research said.
With regards to Astro, both its subscription and advertising revenue marked a year-on-year (y-o-y) decline in its 3Q18 financial results.
HLIB Research said there have been some key developments that could possibly help turn things around for Astro.
The Copyright (Amendment) Act 2022 will help reduce the number of illegal TV boxes being used and sold. It allows Astro to take legal action against illegal TV Box sellers and illegal distributors of its content.
With the launch of its own broadband service, Astro is able to provide a similar value proposition to its customers as TM, with the convenience of a single bill and additional cost savings from bundles.
Instead of directly competing with streaming services for viewership, Astro has pivoted its strategy to become a streaming service aggregator and provides more value in its content bundles.
With Malaysia entering an era endemicity and with stronger job security, HLIB Research believes this should also buck the decline in household and commercial subscriptions.
It said more advertisers should start returning to traditional channels of advertising such as TV and radio, especially with the launch of Astro’s addressable advertising.