Astro COO Henry Tan on piracy, local as premium, and why TV measurement must change

Henry Tan Henry Tan is the chief operating officer of Malaysian pay-TV giant Astro.

In this interview at the company’s headquarters in Kuala Lumpur, the outspoken executive talks to Mumbrella Asia editor Robin Hicks about an issue that he is particularly passionate about – measurement, what’s wrong with it, and how and why it needs to change.

Your session with Turner boss Ricky Ow at the CASBAA Convention was the most talked about of the event last year. You said that the current system was flawed. Where do you stand now on measurement?

The whole point with any kind of measurement is, it has to be reasonably accurate to be useful. I’ve told people that either you me give reasonably accurate feedback, or I’d rather not know about it. You end up more confused than knowing what to do. You have to make sure that the research is robust and accurate. If you know something is wrong, but not only a little bit wrong, but very wrong, why even bother to use it?

For example, I don’t even look at the ad ex report for Malaysia. I’m not talking about pay-TV, I’m talking about the overall ad ex for the country. It is so grossly wrong that it is of no real benefit whatsoever.

So what we do to solve the problem is I get the large media buying agencies to give us their best estimates of what they think the real ad ex is. And I find that far more useful for my analysis and my understanding of what’s happening and therefore my decision making.

What do you think is wrong with it? Why is it flawed?

A few things. For instance, everything is estimated based on rate card. Promo slots are charged at full value and the reality is there’s discounting and if you don’t factor that in, you will get highly erroneous reporting.

I am practical enough to know that you will never get 100 per cent accuracy. And I can live with a plus or minus five per cent error factor. But when you’re talking about plus or minus 40 per cent? Where should I draw the line?

What about research for pay-TV. What is your issue with the TAM research? 

The key issue is sample size. Malaysia has four key languages, three major ethnic groups, and 300 TV options – and you have a sample size of 500? Even if the population was homogenous, a sample size of 500 would be a far stretch. If you don’t get the samples size right, everything else follows.

We think that the reason ratings have been so erratic is because the sample size is too small. Let’s say for a Korean show, if the people are on holiday who like Korean shows, the data would be skewed dramatically.

We invest RM1.8bn in content every year, which if I’m not wrong is bigger than the entire TV ad ex in Malaysia. This research is not just for ad ex. We want to use it for our own decision making around content. So you can just imagine why we’re very concerned about the accuracy of measurement. We can’t make RM1.8 billion worth of decisions knowing that the measurement is wrong.

The irony is people carry on using the data without questioning it. That’s why I said what I said at CASBAA. When people enforce its legitimacy by using it day in day out, and not doing anything to solve the problem – that, I find so baffling. If you know if it is wrong, correct it. The truth is, leave it to the natural course of things, and I think for the next 10 years we will not see any real change.

That’s the reason why we decided to grab the bull by horns to address the shortcomings and be sponsor and initiator of a new, far more robust, far more reflective measurement system that can be of benefit to the whole industry.

Hence, Dynamic Television Audience Measurement – or DTAM – which you launched with Kantar Media in July. How is this of benefit to the whole industry?

We didn’t do this is just for Astro. We did it because it’s time to have an accurate measurement system that is reflective of changing TV consumption, it’s as simple as that. Truth be told, someone had to kick start this. The industry would just keep talking and nothing would happen. That’s why, as I said at CASBAA, we would put our money where our mouths are.

How is the research different and better than the existing research, TAM?

To begin with, the sample size is 10 times bigger. I’m not a statistician, but if you don’t have a robust sample size, everything stops there. Malaysia is a highly colourful, complex country. For a population of 30m, Malaysia has multilingual, multiethnic and multiracial composition that is very unique compared to other countries. The UK will argue that it is a very cosmopolitan country. So does the US and Australia. India will tell you they have 500 languages. But we are equally complicated.

The difference is, in those other countries there are clear commonalities. In Malaysia, there’s no common language, ethnicity, religion or culture. Look at that complexity, and think that there are close to 200 channel options, that’s why the previous sample size was inadequate to reflect the TV habits of Malaysians.

We have found that the urban and more affluent parts of the country were not well represented, for instance those who watch in HD were grossly underrepresented and DTAM hopes to address that.

We are also taking into account East Malaysians. For the longest time, the previous research only covered Peninsula Malaysia.

The research will also cover, particularly in urban areas where people lead a busy lifestyle and don’t watch much scheduled TV, playback TV, which previously was not captured at all.

The old research was designed in an era where free TV was prevalent, when there was no pay television, or recorded or on-demand viewing and no proliferation of multiscreen viewing.

We’re trying to evolve with the changes of media consumption. As TV consumption changes, we need research that reflects the changing lifestyle of consumers.

In the next phase of DTAM, we will include on-the-go viewing, through tablets and OTT services.

At CASBAA it became clear that there was a block from some channels who did not necessary want a new system to be introduced. Could DTAM become a model for the region? If so, how?

We are happy to share the information. I made it quite clear that we’re the sponsor and the initiator, but we have no ambition whatsoever to be the permanent owner or home of DTAM. When we soft launched last month, we made an open offer to the industry, whether that is the MSA [Media Specialists Association] or the AAs [Advertisers Association], I’m happy to hand all of it to them to take over.

As a side note, DTAM is open to any audit anytime, unlike the previous research where it’s very hard to look at the sample size or the composition of the data. If you ask to look at the details of the research, you won’t get very far.

What’s their response been from the industry?

They have said they will examine it and consider it.

We’ve already shared the data with all the agencies. We’ve taken a very open view. All the data is available to agencies, advertisers and channel owners. Everyone can have it. This research belongs to everyone.

What have the results been like so far?

The initial findings bode well. They show overall TV – including free to air – to be doing better than previously thought. We have made sure all TV is adequately and fairly covered. We have seen a strong increase for a lot of content, but the biggest gainers are niche content. Finally, they are adequately measured and reflected.

So niche content has been the most overlooked by the existing research, in your view?

Yes, some of the ratings of the individual shows I do not think are reflective of what’s really happening, which is again a sample size issue. For example, CNN will be classified as zero rated – as insignificant – so it won’t be supported by advertisers. But you and I know that can’t be right. How can a channel like CNN have a zero rating?

Financial papers don’t have high readership, yet they command premium in advertising. Ironically, people can understand that with newspapers, but they’re blind to it when it comes to TV. If you can buy ads in a very low-readership newspaper, why can’t you buy into niche TV content?

What are your hopes for Astro this year, the challenges and opportunities you face given the economy is struggling?

Let me start from an ad ex perspective. Historically, in the last five years we’ve been growing steadily. Our average growth is three times higher than free to air television. And as every business person will now, momentum is a powerful thing. According to the laws of physics, if you’re heading upwards, you’ll keep going, but if you’re sliding, you’ll keep sliding.

Our view is that the market is always a little bit slow to catch up with the reality. And we hope that DTAM would arrest some of the perception gaps to come closer to the reality.

If you look at subscription growth, we’ve been growing steadily over the last five-six years. Our ARPU [average revenue per user] has been growing too. So our base is growing and our current customers are buying more from us. So on both counts we’re positive – which is quite unusual in pay-TV. Usually, as a pay-TV company grows, RPU usually suffers.

In our case, we have double growth, and we think that will be reflected in the new data. If you look at viewing share – using TAM – you will find that there are only two growing platforms in Malaysia – the internet and Astro. And you’re talking about consistent growth, year on year. 

What about the broader implications for the overall economy on pay-TV?

Given the current sentiment in the country, we have a two pronged approach – a pay offering and a free offering under the brand Njoi. In combination, we have an overall reach of 65 per cent of the Malaysian population; 50 per cent are paying customers, 15 per cent are free. Given the economic challenges in the coming year, we think the pay portion may see a slow down. But were are very buoyant about our free offering. We are optimistic that Njoi will grow significantly. And we think Astro will move from 65 per cent to 80 per cent of the population, largely driven by Njoi.

What do you see as the biggest threat to your business?

It’s piracy. But let me qualify that. First, piracy has always been there. We’ve always been contending with piracy from day one. So, we’re quite used to it in all its forms.

It will be a big challenge to us, and anyone in the content business worldwide. The new form of piracy is free content – people pirate the content and give it out for free. In the old days, the product was offered at a lower price. But today’s piracy is a real challenge for any legitimate content creator around the world – the access to pirated free content. This is a challenge not just for us, but for OTT operators, as consumers who are used to the OTT space are also well versed in pirated methods.

What we’ve done is spend a lot of time and energy challenging our content partners to share these challenges and responsibilities with us. Last year, you saw Astro and as a result the whole region benefited.

We went to Hollywood, met with the key studios and shared with them that we cannot have our content running after pirated content. It would be ridiculous that a paying customer gets their content after pirated offerings.

So, the HQs for a lot of the content partners understands the challenge. They were very supportive and as a result we launched a campaign where Hollywood series come out on the same day, or sometimes ahead of the US or the UK.

We were saying, hey, you can’t have a case where you’re chatting with your friends about a TV series and a paying customer finds out that the hero died from someone who’s pirated the show. That would be so wrong. Customers need to have it fresh.

We’re also doing a lot of original content of our own. Today, our own signature shows are our most watched content. That’s a way of making our offering attractive. We also carry a lot of live shows. Two types are key – sports and live signature events, be it reality shows, singing competitions or awards shows. Carrying it live is one of the key differentiators that have worked really well for us.

Do you think that the pay TV industry is partly to blame for piracy? If it was better at marketing its wares, piracy wouldn’t be such a problem, surely?

Yes and no. I think what’s happened is that TV overall has changed. In the past, there were few offerings. Life was simple. Now you have abundant choice. With lots of choice comes complications. And sometimes people forget the basics.

I think when you have abundant choice, curation and promotion becomes important. The better a provider is at that, the easier it is for the viewer to follow. There’re too many choices. There’s a need to simplify and make things easier for people to understand and follow.

There’s also, if you were to be critical of some of the content rights owners, I think some content is oversold. If I were to be brutal, I would say that Hollywood is at danger of being oversold, meaning it is so readily available everywhere that it may lose its premium value. Like anything in life, if something is common and easily available, it no longer commands a premium and loses its exclusivity. A balance needs to be struck between premium and value.

My view on Hollywood is that it is in serious danger of being oversold. Some years down the road, it might lack the ability to command the premium it once had. That’s why we started to create our own signature shows, and to control the access and distribution much better. So if you look at it today, in some ways local is the new premium.


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