Cable, Satellite TV to drive media sector in next decade

A Sri Lankan research agency said last week that future growth in the media market in Sri Lanka next decade will be driven increasingly by Cable and Satellite based pay TV services.

Research by Frontier Research showed that the Sri Lankan Pay TV sector could expand at a much faster pace as the market is significantly under penetrated relative to peer countries in Asia.

“This represents a golden opportunity. However this opportunity is limited by regulatory constraints. As a result, Frontier Research projections are made within a conservative framework and reflect the regulatory and commercial realities of the Sri Lanka,” the report by Frontier analyst Imran Furkan noted.

“A transparent and growth friendly regulatory structure is also critical to accelerate digital media adoption amongst consumers and bring about the competition that governments desire. This is particularly relevant in a context where policy makers in some other regional markets have tended to be uneasy about transitioning from utility-driven frameworks to structures that encourage growth and investment,” it said.

According to the Department of Census and Statistics the average household income per month in Sri Lanka reached Rs.20,048 in 2005 up 36% from the 2002 figure of Rs12, 1803 while the average household income per month in the urban areas went up to Rs.31, 239 from Rs.22, 420 in 2002, an increase of 39%. A continued rise in incomes within the last few years, lowering costs of technology in particular in start up cost could lead to increasing affordability of pay TV within Sri Lanka.

The Sri Lankan Cable and satellite TV operators have however been rocked by various recent moves ranging from disputes over ownership, regulatory action over licenses and more recently consolidation in the sector, the report said.

“As in other Asian countries the market for pay-TV in Sri Lanka is entering a phase of convergence, driven by rapid technological change; increasing investment in both content and distribution; and growing competition and consolidation as aptly manifested by Dialog’s acquisition of Asset media and now CBN Sat. The need to add a critical customer base quickly may have prompted Dialog to acquire CBN Sat so soon after the Asset Media acquisition,” it said.

The digital convergence, also known as quadruple play allows Telecom operators to offer cable television, broadband, and fixed-line and mobile telephone services.

While total advertising expenditure reached Rs.7, 337 million last year in conventional television alone, media acquisition costs also remains high.

“We expect that the Sri Lankan regulator, increasingly aware of the significant capital costs of media and communications infrastructure, will move on greater liberalization in the long-term. At the same time, we expect market forces to prevail over time with scalable investments in content and distribution likely to grow over the next decade,” the report said.