Before 2007, StarHub was the only pay-TV provider in Singapore. After the entry of SingTel with its mio TV service, there has been stiff competition in Singapore's pay-TV market. The two providers have been especially competing to acquire exclusive content carriage rights.
One of the high-profile content bidding between StarHub and SingTel took place in the second half of 2009 for the broadcast of the English Premier League (EPL) in the 2010/11, 2011/12 and 2012/13 seasons. SingTel won the bid with a hefty price tag of around $300-$400 million, significantly higher than the price set in the previous cycle. These exclusive agreements have resulted in a spike in content acquisition costs, negatively impacting profitability of the pay-TV business.
Consumers in Singapore are not comfortable with content being exclusive to one provider. Most of the popular content and channels are exclusive to either provider, and many Singaporeans are now having to face the prospect of being forced to subscribe to services of both the providers and getting two set-up boxes.
With content acquisition costs rising, it is inevitable that the subscription prices for pay-TV service will also rise significantly. This will negatively impact future growth of Singapore's pay-TV market, which has a relatively low household pay-TV penetration rate of 51%. Pay-TV ARPU in Singapore is already high compared to other similar markets, and even higher subscription rates would slow down the market's growth.
After the EPL bidding war, Singapore media regulator the Media Development Authority (MDA) started looking more closely into the issue of content exclusivity. In a new ruling, the MDA requires that the content for any exclusive carriage deals that take effect from March 12, 2010 will have to be carried by all pay-TV providers in the market.
The MDA is currently in talks with industry participants and was due to decide on the implementation of the ruling last month. The new directive was needed to cool down the content acquisition wars, but it might take three years for it to take effect fully and for Singapore to become a pay-TV market where any content is sold by all providers and available to all subscribers.
The new ruling will be welcomed by new providers aspiring to launch pay-TV service in Singapore because it will allow them to build attractive content considering the imminent roll out of IPTV service.