The cost of pay-TV piracy in the Asia-Pacific region has risen to $1.13 billion this year from $1.06 billion in 2005, with the number of illegal subscriptions up 20% to 5.2 million connections, according to a recent industry study.
The report, released by the Cable and Satellite Broadcasting Association of Asia (CASBAA) and Standard Chartered Bank (Hong Kong), said pay-TV piracy would cause an estimated tax revenue loss of $158 million to the region's governments in 2006.
Piracy in India, Hong Kong and Vietnam, in particular, continues to worsen.
"Pay-TV piracy should raise an alarm not only in the pay-TV industry, but also for a range of Asian governments," noted Lee Beasley, head of media and entertainment at Standard Chartered. "Having said that, we believe the pay-TV market still presents huge potential for growth."
The new study estimates that the cost of pay-TV piracy in Hong Kong for 2006 will be $32.4 million, a 29% increase over last year, due partly to increases in illegal set-top box use and to satellite overspill reception, as this year's World Cup energized sales campaigns by criminal pirate syndicates.
"This could have a genuine impact on Hong Kong's reputation as an intellectual property rights hub," said CASBAA chief executive Simon Twiston Davies.
Leading the region in dollar terms, India's pay-TV revenue leakage has reached a massive $685 million in net losses. The gray market deficit in India, due to under-reporting by last mile cable operators, has grown from $632 million in 2005 to $667 million this year.
Thailand also suffers from a rising cost of pay-TV piracy, at $160 million, the second largest dollar loss in the region resulting from an alarming 1.27 million unauthorized connections.
The "greenfield" market of Vietnam has the worst ratio of piracy in the region with one legal pay-TV subscriber to 15 illegal connections. According to the study, there are only 90,000 authorized subscribers in Vietnam compared to 1.37 million illegal subscribers.
"The piracy issue notwithstanding, the pay-TV industry in Vietnam is growing fast and represents enormous potential. CASBAA has advised industry players to work together with the Vietnamese authorities to correct the situation as soon as possible," Twiston Davies said.
In the Philippines, there are few signs of improvement, with the number of illegal pay-TV subscribers increasing to 887,000. The estimated net piracy cost due to illegal distributors, largely in the provinces, has risen by 24% this year.
Despite being a fast-growing pay-TV market, Indonesia is suffering from a revenue leakage of $23.8 million as government and industry insiders indicate a substantive piracy growth.
Macau, covered by the study for the first time, has the distinction of having the region's second highest piracy rate with 10 pirated connections for every one legal subscriber. Last year the Macau government announced measures to deal with the problem, but the wholesale piracy of international content remained rampant.
Singapore is the only market covered by the report that registered a 15.8% drop in pay-TV piracy cost.
"Nevertheless, more action is required from governments - even the good ones - to counter the corrosive effects of piracy on the pay-TV and related industries," said Twiston Davies.