KUALA LUMPUR: Astro Malaysia Holdings Bhd is targeting to serve 90% of Malaysia’s households and increase its average revenue per user (arpu) to RM119 in five years’ time.
Astro’s free satellite TV service, NJOI, which is also Malaysia’s first free satellite TV service, is expected to be the driver of Astro’s reach growth, besides its pay TV model.
“Customer reach is extremely important for us to get scale, because scale brings with it the ability to price and compete from a cost-effective basis.
“We have every intention of growing within the Malaysian landscape.
“We think in five years we can easily be in 90% of Malaysia’s households by virtue of our pay and NJOI models,” Astro CEO Datuk Rohana Rozhan told StarBiz.
As of its first quarter ended April 30, 2016, the company reported an arpu of RM99, and served 69% of Malaysia’s households.
Astro recorded an increase of 80,300 households for the quarter, making the cumulative customer base of 4.9 million households.
From the 4.9 million households, 3.5 million are pay TV customers while the remainder 1.4 million are NJOI customers.
Astro spends 35% of its revenue on content cost, and this is expected to increase to 38% as content costs are increasing.
Some 60%-70% of total content purchased are transacted in US dollars.
This would mean that subscription prices will eventually increase, though Astro has yet to make such announcements.
The last general subscription price revision was made in 2013, while the high definition (HD) subscription price was revised in 2014.
Astro will then be able meet its arpu target of RM119 through customers purchasing more content and price hikes of their products.
Rohana added that the expected higher arpu will be contributed by existing top premium and middle class customers purchasing more discretionary products.
“These customers, whom we regard as a marketing base, will purchase movies like the Minion franchise, Frozen and Deadpool, when we bring it to their convenience in HD through our Astro Best and Astro First channels.
“We are addressing individuals so that the hours of viewing content through all platforms and channels will increase.
“When total viewing hours are increasing as a family, they are paying and buying more, because each family member wants to watch different types of content,” she said.
Rohana noted that Astro is sensitive towards its customers by remaining selective.
The inevitable price hike came as cost issues had to be addressed.
Thus, Astro provides these higher-priced content as an option.
Customers can still enjoy Astro’s product offerings via the NJOI platform, only paying if they seek for paid content.
Although NJOI is a free service, it is definitely not a static one because Astro constantly adds new channels and offer more to its NJOI customers, in order to differentiate itself from pirated content services.
“As an aggregator, you have to make sure that even your ‘free’ is compelling.
“Everything is a journey where you have to keep moving up the value chain,” said Rohana.
For example, the sports component is a loss leader for Astro.
Even at current prices for sports channels, Astro is still the cheapest satellite TV provider in the region, beating Singapore, Hong Kong and Thailand, for the same comparable service, Rohana pointed out.
Free-to-air companies have stopped purchasing sports programmes due to the increasing prices, so much so that they are unable to afford co-owning sports intellectual property (IP) rights with Astro, she added.
However, sports remain as an important content to Astro as Malaysians are strong sports enthusiasts.
So, instead of saying that the sports component is too expensive, Astro lives up to its promise of being the home of sports.
“Sports is something that we have to deal with, we have to play a long term game.
“Even though it is expensive, let’s bring it anyway and deal with the pricing, because we have to, it’s a promise that we make.
“We’re quite happy to have the English Premier League rights for the next three seasons, and we will maintain our position, because nothing beats live,” said Rohana.
Apart from that, Astro’s 24/7 online home shopping channel Go Shop is another notable growth driver to look out for.
Rohana expects Go Shop alone to contribute RM1bil in total sales in five years.
Last year, Go Shop contributed revenue of RM189mil, which is already profitable on a group level.
On a company level, Astro GS Shop Sdn Bhd is expected to be profitable by this year.
Astro has also launched a content-based merchandise e-commerce site, iSooka, where products associated to content aired on Astro are sold.