With 3.7 million pay TV subscribers in a country with a population of 90 million, and its economy has grown over the last 15 years averaging 7.3%/year, Vietnam is a promising destination for U.S. pay TV equipment suppliers and service providers. The Government of Vietnam (GVN) has also set forth a roadmap to digitalize broadcasting networks in the country by 2020. The pay TV market in Vietnam is forecast to increase at a compound annual growth rate (CAGR) of 17% through 2015. The industry’s annual market revenue reached $2 billion in 2011, and is expected to increase to $2.5 billion in 2012.
Vietnam’s pay-TV major buyers are categorized into five groups: (i) pay TV content providers, (ii) agents for foreign TV channels, (iii) pay TV editors and translators, (iv) pay TV service providers, and (v) pay TV network infrastructure providers. Technology used in the pay TV sector in Vietnam includes cable TV (e.g. analog, digital or IPTV), digital terrestrial TV (e.g. DVB-T), direct-to-home (DTH) and mobile TV.
Many U.S. hardware suppliers such as Harris, Sigma Designs, etc., have been successfully doing business in Vietnam for many years. U.S. service providers such as American channels across all genres are present in Vietnam nowadays including movie channels, news channels, general entertainment channels, factual channels, sports channels and kid channels. Examples of major U.S. channels in Vietnam include HBO, Star Movies, CNN, CNBC, Bloomberg, National Geographic, Discovery, MTV, Cartoon Network, and the Disney Channel.
Vietnam’s Prime Minister Nguyen Tan Dzung issued Decision No. 20/2011/QD-TTg on March 24, 2011, promulgating regulations on pay TV. This Decision replaced Decision 79/2002/QD-TTg issued in 2002 and is the first-ever legal document that codifies regulations on major business activities in terms of the provision of pay-TV services in Vietnam.
With 22 million households, Vietnam’s yearly per capita GDP reached US$1,300 in 2011. Vietnam’s pay-TV industry enjoys spectacular growth, driven largely by the country’s impressive economic expansion. Despite the global recession, the World Bank estimates that Vietnam’s economy grew by 6% in 2011. Even during the slowdown, many major domestic players were still rolling out big investments in the sector, hoping to be ready for the next economic rebound, which could truly unleash the potential of pay-TV.
According to MIC statistics, as of May 2011, Vietnam has a total of 67 broadcasters that manage 899 TV stations with 1,610 broadcasting machines that cover 98.9% of Vietnam’s territory, and 90.4 percent of Vietnamese households have televisions.
With around 20 million TV subscribers in 2011, of which 13.5% (or 3.7 million) are pay-TV households - the percentage of pay TV subscribers in the Asia region is 40-60%, Vietnam offers the pay TV industry huge growth potential.
Vietnam has no shortage of promising indicators: PriceWaterhouseCoopers sees it as the world’s fastest-growing entertainment and media market, projecting it will exceed US$2 billion by 2013. PwC also projects Vietnam’s TV subscription and license fee market to grow by 25% annually. This growth trend has been evident for some time: TV advertising surpassed even the most optimistic projections, exceeding US$750 million in 2010. Despite the global slowdown, media advertising spend for Vietnam in 2011 was projected to grow 16.6% (topping US$850 million). The total advertising market (media, plus outdoor and miscellaneous spend) now surpasses US$1.5 billion.
Vietnam’s broadcasting industry has developed rapidly in recent years. At present, Vietnam has one national television station (VTV), one national radio station (VOV) and four inter-provincial broadcasting stations. Additionally, each of the country’s 63 provinces and cities has its own local broadcasting station. Apart from these broadcasters, other new entrants include cable television, satellite (DTH/Direct-to-Home) and on-line television providers.
Moreover, 50 percent of the country’s broadcasting facilities have been digitalized. Annual market growth in 2010 was estimated to have reached approximately 17% and is expected to reach 20-25 percent in the next 2-3 years. Digitization covers up to 40% of country’s technical facilities. The Government of Vietnam (GVN) also set forth a roadmap to digitalize the country’s local broadcasting industry by 2020.
The pay TV market in Vietnam is forecast to increase at a compound annual growth rate (CAGR) of 17% through 2015. The industry’s annual market revenue reached $2 billion in 2011, and is expected to increase to $2.5 billion in 2012. There are only 3.7 million subscribers at this moment, Vietnam represents a significant growth market for U.S. exporters of pay-TV equipment and services.
Vietnam's pay-TV sector is one of the fastest developing markets in the Asia Pacific, led by cable operators. Cable subscriptions grew from roughly 1 million in 2006 to over 2 million in 2009 and 3 million in 2011.
Other pay-TV platforms are also beginning to take off. The 2008 launch of Vinasat-1, Vietnam’s first wholly-owned commercial satellite, was a big boost for the domestic satellite television business. In 2009, national digital TV operator VTC launched its DTH service, bringing the first HD channels to Vietnam. Today, VTC says subscriptions are growing 150% a month. In 2009 VTC announced a contract with Hong Kong satellite operator AsiaSat, which will dramatically increase VTC’s transponder capacity. In 2009, VCTV, the pay-TV affiliate of national broadcaster VTV, announced a US$54-million joint venture with French broadcaster Canal+ to provide premium DTH packages. That project launched in 2010 under the “K+” brand; VCTV’s once slow-growing DTH service is expected to grow its modest subscription base of 130,000 exponentially. A number of other pay-TV operators have also obtained licenses to broadcast via Vinasat-1. Vinasat-2 is scheduled to be launched into the orbit in Q2 of 2012.
Digital terrestrial (DTT) is also an attractive platform for new and old operators alike. VTC dominates the market, trailed in the distance by HTV and BTV (Binh Duong Television). Despite apparently slowing sales of VTC’s DVB-T set-top boxes, some players still have high hopes for the technology and are moving ahead with plans to invest heavily in digital terrestrial platforms. They see opportunity in Vietnam’s fast-urbanizing landscape where more and more high-rises and towers threaten to disrupt satellite signals aimed at Vinasat dishes. Vietnam’s urban centres will be up for grabs in ways once unforeseen, and with the advantages offered by next-generation digital terrestrial technology (DVB-T2), investors believe they can compete effectively against cable.
IPTV has also raised hopes for Vietnam’s telcos. With Vietnam’s broadband subscribers numbering roughly 3 million, and growing 150% annually, all major telcos eye IPTV as an important revenue stream. After FPT Telecom concluded an IPTV trial with 10,000 users, the telco officially launched its iTV service in major urban centres in 2009. Subscriptions, now 20,000, are expected to reach 1 million in 2011, according to the company. National telecommunications carrier VNPT officially launched its MyTV IPTV service in 2009. With 60% broadband market share, VNPT believes it can become Vietnam’s biggest IPTV operator. Viettel and VTC have also announced plans to launch IPTV services.
3G has renewed hopes for mobile TV which Vietnam has struggled with since early 2007. Both SPhone’s CDMAbased service and VTC’s DVB-H-based service failed to attract a substantial subscriber base. SPhone’s core mobile phone service today claims 8.5% of the mobile telephony market, leaving Viettel, Vinaphone and MobiFone to serve larger market segments. VTC’s mobile broadcasting operation was (and is) independent of the company’s mobile phone service and relied heavily on propagation of expensive and relatively scarce DVB-H handheld devices. However, 3G may present new opportunities to deploy more robust business models. And as major mobile service carriers roll out their 3G plans (Vinaphone in 2009, Viettel and MobiFone in 2009), VTC has been eyeing a new business: providing content for other players in addition to its own mobile TV operation. VTC’s MiTV service delivers content to handheld devices with broadband connections (Wi-Fi or 3G Internet). Roughly 50 million Vietnamese are now regular mobile users, giving 3G operators hope that each of them will be able to sign up several million TV subscribers in a few short years. The inaugural Vietnamese 3G mobile services launched by a series of local mobile networks provided a boost, but the market remains dominated by low-priced handsets. Vietnam’s Ministry of Information and Communications (MIC) has recently granted a 4G-LTE (long-term evolution) pilot license to a number of telcos, namely: VNPT, Viettel, FPT, CMC Telecom and VTC. After the pilot, licenses for this service will be issued through tender.
Currently there are some 170 TV channels of all kinds in Vietnam, yet in the view of many industry players this is not sufficient to meet market demand, especially with audiences demanding a high level of content in their local language. According to the MIC, all 63 provinces and cities in Vietnam have at least one cable TV network. Some 43 percent of urban families are using cable TV services and 18 percent use satellite TV receivers. Pay-TV services have boomed in Vietnam, with various types like cable, digital, satellite, mobile, IP TV services, offering many choices for users. Vietnam is considered a potential market for pay-TV services because the rate of families that use pay-TV services in Vietnam is still low. In other countries, this rate is 50-60 percent. The boom of Pay-TV services in Vietnam has created many issues related to copyright and competition to hold broadcast right of international football events, etc. Of over 50 pay-TV service providers in Vietnam, Canal+ is the first foreign investor. This French TV firm with over 13 million subscribers has cooperated with the national Vietnam Television (VTV) agency to launch Pay-TV K+ channel, with nearly 200,000 subscribers, accounting for nearly 10 percent of the market.
Some Pay-TV service providers still add advertisements to Pay-TV channels though the nature of Pay-TV is collecting fees from subscribers to supply them with “clean” TV channels (without advertisement).
There has been an unprecedented influx of new pay TV entrants, including state-owned Radio Voice of Vietnam (VOV TV), Vietnam News Agency (VNA TV) and numerous private-sector operators who have partnered with incumbent licensed pay-TV operators (now totaling 47) to produce new channels. This has resulted in astronomical growth of channels and air time. Major operators such as VCTV, SCTV, HTV and VTC offer between 60 and 100 channels each, more than doubling those available two years ago. AVG (also known as An Vien Group or Audio Visual Global) has joined the broadcasting sector as the third biggest broadcasters, after VTV and VTC. However, domestic production capacity (both in terms of capital and talent) has not kept pace. Of the 100 channels available today, over 70% are foreign owned and a large proportion of the locally-produced channels use blocks of foreign content. Quality local fare is hard to find, leaving viewers frustrated by decreasing programming quality on new locally-produced channels, and complaining of being inundated with game shows and ads. Quality content (both local and international) also faces competitive pressure from pirated signals used to a greater or lesser degree by local TV platforms. A few operators, both big and small, have even broadcast whole bouquets of unlicensed foreign channels until ordered to stop. In the provinces, there is still no effective means to control signal theft by dozens of smaller operators.
Another challenge in the cable TV segment is poor signal quality, especially in high economic growth areas such as big cities and their surrounding provinces. Cable is the most affordable pay-TV platform and should be growing at a much faster pace than it is. Poor quality programming hasn’t helped either. Should these twin problems continue for long, viewership may flatten or even drop – denting ad revenues and hurting both operators and content providers – even if subscriptions continue to increase.
Government regulatory reforms
According to many analysts, broadcasters will need a facilitative environment if they are to reach their full potential. As in other fast-changing industries, Vietnam’s pay-TV sector has left market players scrambling to keep up, and regulators trailing behind. In practice, Vietnam has enjoyed a substantially liberalized business environment; while officially restrictive television policies have remained largely unchanged (with huge legal and bureaucratic burdens for new entrants), their de facto interpretation and/or nonenforcement have meant fewer restrictions than the official picture might suggest. On the ground, Vietnam has swung from one of the most restrictive markets to one of the more liberal in Asia in the past couple of years. However, a reaction seems likely. The influx of foreign channels and their availability to a growing viewership, combined with aggressive involvement by the private sector in programming production has many policymakers worried that television may escape control of the state – breaking a Communist Party of Vietnam principle that views the media as first and foremost an instrument of the state.
Against this backdrop, the Directorate of Broadcasting and Electronic Information (DBEI) was quickly formed in 2008 within the Ministry of Information and Communications (MIC) to oversee all radio, television and internet information platforms. Given its multiple tasks and limited resources, the directorate produced an impressive number of regulations over the past years.