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Astro COO Henry Tan: Local is the new premium as Hollywood risks being ‘oversold’

Henry TanHenry Tan, the COO of Malaysian pay-TV giant Astro, has said that locally produced content now commands a greater premium than Hollywood formats, which he says are in danger of losing their value due to piracy and being “oversold”.

In an interview with Mumbrella in Kuala Lumpur, the outspoken executive said that Astro’s content packages with local signature shows see a stronger uptake than Hollywood offerings, which are now effectively sold as add-ons.

“In the last few years, as we’ve strengthened our local offering, we’ve found that local content packages have seen the strongest take up among our customers. And we’ve found that with some of the international Hollywood content, take up comes from smart packaging or bundling,” said Tan.

“So if you give the consumer a choice, the first pack they’ll take is the local one, because of the local signature shows,” he said.

“The way we sell Hollywood packs is to bundle it with local content for a nominal sum,” he said.

“The trend has reversed. Ten years ago, Hollywood was the main driver and the local content was the nice to have. Now Hollywood is the add on.”

Tan said that customers are not willing to pay for Hollywood content on Astro’s platforms if they can get it faster and cheaper in pirated form, and a deal with content creators in the US now means that some shows will be shown on Astro channels on the same day as in the UK or the US.

Though local content is more expensive to produce than shipping it from overseas, home-grown television delivers better ROI for Astro, Tan said, since local shows can be promoted through live events and roadshows to introduce the stars to their fans.

“The value perception is fast changing,” Tan said. “We have to redefine the value that customers are willing to pay for.”

Western formats, which still feature strongly on Astro’s channel line-up, are at risk of overexposure, Tan suggested.

“If I were to be brutal, I would say that Hollywood is in danger of being oversold, meaning it is so readily available everywhere that it may lose its premium value,” Tan said.

“Like anything in life, if something is common and easily available, it no longer commands a premium.”

Piracy is the biggest threat to Astro’s business, Tan said.

“In the old days, piracy was offering the product at a lower price. Today’s piracy is a real challenge for any legitimate content creator around the world – the access to pirated free content,” he said.

“This is a challenge not only for us, but for OTT [over-the-top] operators, as consumers who are used to the OTT space are also well versed in pirated methods.”

As well as persuading Hollywood to release its content sooner, Astro has tackled piracy by introducing more live shows, such as sport, reality TV and singing competitions.

On the subject of Malaysia’s economy, which has been hit by a dip in consumer confidence following the introduction of goods and services tax as well as ongoing political upheaval, Astro may see a slowdown in the paid portion of its business this year, Tan conceded.

“Given the economic challenges in the coming year, we think the pay portion of the business may slow down. But were are very buoyant about our free offering, Njoi,” Tan said.

“We are optimistic that Njoi will grow significantly. And we think Astro will move from reaching 65 per cent to 80 per cent of the population, largely driven by Njoi.”

The full interview with Tan is to run on Mumbrella next week.

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