StarHub payTV subscribers dropped 1.5%.
Is Netflix choking the life out of payTV businesses? If the number of users choosing online videos over the usual TV content is anything to go by, the answer may be yes. More than 3 in 4 connected consumers in Singapore are watching online videos on a daily basis, a survey by Kantar TNS revealed. This is slightly higher than the number of viewers watching traditional broadcast TV (71%)-18% of these consumers use paid-for subscription online services such as Netflix.
These figures bring bad news to Singapore's payTV service providers such as Singtel and most especially StarHub, which just lost 11,000 pay TV subscribers. UOB KayHian analyst Jonathan Koh says this has been the telco's fifth consecutive quarter of shrinking numbers, as management shared that a larger-than-usual proportion of its payTV subscriber base completed their contracts. It also faces competition from alternative viewing options, such as over-the-top video services, which are TV streaming options that can be purchased without a cable subscription.
StarHub is obviously badly and directly hurt as its payTV business makes up 18% of its service revenue. DBS analyst Sachin Mittal says,"Since Netflix entered the Singapore market in early 2016, the giant telco already saw its payTV subscribers drop 1.5% QoQ in 1Q16 due to Netflix's entry and it eventually ended its 'TV lite' promotion."
Lacking local content
However, Mittal notes that Netflix does not offer comprehensive local language content and sports content, which is a key driver in the Singapore payTV market. Analysts from RHB express a similar view. They note that whilst there are concerns that Netflix would cannibalise existing payTV services of operators such as StarHub, they expect this to be mitigated by the lack of "local, iconic, and live content on Netflix including sports. Netflix, however, plans to have more localised content.
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