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PHILIPPINES IN VIEW 2021 Table of Contents

Chapter 1: Overall TV Market Environment ...... 2

Chapter 2: Online Curated Content (OCC) Market Environment ...... 13

Chapter 3: Traditional Pay TV Market Environment ...... 45

Chapter 4: Piracy in the : Piracy and Unauthorized Distribution for Online and Traditional TV ...... 97

Chapter 5: Regulatory Environment for Digital Content ...... 102

References ...... 113

Annex A: Top TV Programs ...... 121

Annex B: Glossary of Acronyms ...... 125

1

Chapter 1: Overall TV Market Environment

The disruptions to the Philippine (TV) industry over recent years are many and the most recent of them, the 2019 coronavirus pandemic (COVID-19), has not made things easier.

In June 2020, the World Economic Forum cited the myriad ways the pandemic has affected the media industry from content creators to distributors, saying that while consumer demand for content has skyrocketed due to lockdowns and the prevalence of remote work, revenues have steeply declined. 1 The crisis has also accelerated the devastation of local news organizations and has caused a widespread cancellation of media events, lowering consumer spending outside the home due to closures and self-isolation, and disrupting sectors such as music, gaming, sports and others. Other studies cite the near-cessation of activity in the film and TV industry worldwide, with scores of productions, events and studio shoots having been halted and thousands left out of work.2

This puts the Philippine -to-air (FTA) industry squarely in the spotlight, as it is still in the process of digitalization, switching to the Japanese ISDB-T (Integrated Services Digital Broadcast - Terrestrial) standard for digital terrestrial TV (DTT) service, expected to be completed in 2023.

The local TV industry (including FTA and pay TV, but not primary online content services) is already experiencing its fair share of trouble. research showed total TV viewership had a significant drop between 2019 and 2020, with afternoon and evening dayparts seeing the biggest change (Figure 1.1). Much of this could be attributed to a slew of devastating incidents that claimed the attention of Filipinos, such as the Taal Volcano eruption which affected most of Mega and , Typhoon Ulysses (international name: Typhoon Vamco) that submerged the metro under floods in November, and the forced shutdown of Philippine TV giant ABS-CBN Corp.

1 https://www.weforum.org/agenda/2020/06/covid-19-has-upended-the-media-industry-this-is-how-it-can-come- back-stronger/ 2 https://www.willistowerswatson.com/en-GB/Insights/2020/05/the-value-chain-of-the-tv-and-film-production- industry-and-covid-19

2

Figure 1.1: TV Viewership (Traditional and Pay TV) in 2020 (By Dayparts)

2017 2018 2019 2020 50 45 40 35 30 25 Rtg% 20 15 10 5 0 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 25:00

Source: Kantar TV

Rtg%: Rating % which is the estimate of the size of television relative to the total universe, expressed as a percentage. The estimated percent of all TV households or persons tuned to a specific station. E.g. If three of the 10 homes in the universe are tuned to channel 9. That translates to a 30 rating.

Filipinos initially enjoyed more TV time after the quarantine was announced, yet the bump in viewership was quickly offset by the decision of Congress to revoke ABS- CBN’s franchise in May 2020, forcing the network (and later, its DTT segment through ABS-CBN TV Plus and direct-broadcast satellite subscription channel through subsidiary Cable Corp.’s ) to go off-air. Being the market leader in the FTA TV segment with a 39.6% market share prior to the Enhanced Community Quarantine (ECQ) in March 2020, the network’s shutdown was a consequential blow to the industry, the ramifications of which will be discussed later.

Audiences continued to watch other channels, with rival GMA Network, Inc. (GMA) quickly taking up the market share left by its competitor. Yet, TV viewership has not recovered since. By the end of the year, viewership dropped by almost an hour compared to the beginning of the ECQ (Figure 1.2), recovering only slightly with the entry of FTA blocktime broadcast network A2Z, the joint venture of Zoe Broadcasting Network, Inc. and ABS-CBN, in October. Likewise, TV reach declined quarter by quarter, seeing a massive decline in the third quarter and bouncing back in the fourth quarter. However, compared to 2019 data, TV in 2020 still reached fewer Filipinos overall.

3

Figure 1.2: Average Time Spent Viewing (minutes) in 2020

300

245.86 250

201.36 200 187.88

148.04 150 150

100 Average Time Spent (mins) Average 50

0 Pre-Quarantine Start of ECQ ABS-CBN Shutdown Sky Direct and TV Launch of A2Z Plus Shutdown

Source: Kantar TV Audience Measurement

There is a likely possibility that many TV viewers are turning to online platforms for their viewing experiences. The growth of online video continues unabated in the Philippines, powered by the increasing number of mobile internet users. Alongside traditional modes of viewing, Filipinos are also accessing online video from mobile devices wherever they want and whenever they want. According to the Digital 2021 report published in partnership between We Are Social and Hootsuite, almost the entirety (99.4%) of the country’s recorded 73.91 million internet users aged 16-64 watch videos online every month.3

The surge in the demand for digital platforms has also been associated with the country’s year-on-year growth in digital video ad spend at 4.8% to US$558 million in 2020. This, despite ad spend in the total video industry shrinking by 4% year on year.

Putting this into context, the number of internet users in the country has kept growing, increasing by 4.2 million (+6.1%) between 2020 and 2021, while internet penetration among all households in the Philippines stood at 67% in January 2021. An astonishing total of 152.4 million mobile connections was recorded in the Philippines in January 2021, or equivalent to 138.2% of the total population, suggesting that many Filipinos access the internet on multiple devices. Furthermore, the country leads the world in internet usage, with nearly 11 hours (10 hours and 56 minutes) on average for users aged 16 to 64 in January 2021. Of the internet users that used mobile connections, 92.6% use entertainment and video apps in January 2021, and 69% were found watching TV content via a streaming subscription every month in 2020. When ranked by total consumer spend, excluding revenues made on mobile commerce or mobile advertising, livestreaming platform Bigo Live and video streaming subscription service topped the list of apps Filipinos spend money on.

3 https://datareportal.com/reports/digital-2021-philippines

4

Data from Kantar Group shows TV advertising spend from January to September 2020 plunged to around P313 billion, a steep 20% fall from 2019. This translated to 1,042,179 campaign insertions for TV during the period, 7% below the previous period, or 420,703 minutes of total advertising time aired. 90% of the expenditure went to FTA networks, while the remaining 10% went to pay TV. COVID-19 and the ABS-CBN shutdown drove the ad spend, with ABS-CBN’s pay TV shifting part of the ad spend to pay TV (Figure 1.3).

Figure 1.3: How COVID-19, ABS-CBN Shutdown Drove TV Ad Spend Jan- Sept 2020

March 16: May 5: Jun 30: DTT and Sky Jun 10: Congress denies ECQ starts ABS-CBN Shutdown Direct Shutdown ABS-CBN franchise 1800 1600

1400

illions) 1200 M 1000

800 Jun 28: AMCARA 600 Jun 1: TV AdTVSpend ( 400 GCQ; New Apr 9-11: monitored 200 Holy Week holidays channels 0 5 9 6 5 9 6 8 5 9 7 8 5 9 13 17 21 25 29 10 14 18 22 26 13 17 21 25 29 10 14 18 22 26 30 12 16 20 24 28 13 17 21 25 29 11 15 19 23 27 31 12 16 20 24 28 13 17 21 25 29 3-Jul 1-Jan 1-Jun 2-Apr 2-Feb 1-Sep 4-Aug 1-Mar 4-May

Source: Kantar TV Advertising Intelligence

However, the decline in industry revenues is more of a fallout of general economic turmoil due to the COVID-19 pandemic rather than the symptoms of a flailing industry. Disruptions in the landscape could very well signal a paradigm in the relationship between consumers and TV networks, particularly how consumers access media. Over-the-top (OTT) media services, which offer media directly to viewers via the internet, and include subscription-based video-on-demand (SVOD) platforms such as WeTV/, Netflix and , have continued to grow, with revenue in the SVOD segment projected to reach US$101 million in 2021 this year. With an expected annual growth rate (Compound Annual Growth Rate (CAGR) 2021-2025) of 13.56%, this could result in a market volume of US$167 million by 2025. User penetration will be 5.7% in 2021 and is expected to hit 6.9% by 2025.

Pay TV subscription has generally seen an uptrend since 2019, with Kantar data showing that subscribers increased by around 14% to 32% in 2019. Urban segments saw an overall growth of 23%, a bump from 2018’s 22%, while rural subscriptions rose by double-digits, from an overall growth of 34% in 2018 to 42% in 2019. Pay TV subscription in the suburbs segment were not as rosy, declining to 6% in 2019 from 11% in 2018.

5

While these figures reflect pre-pandemic conditions, it could be argued that the trend would have continued had it not been for the pandemic. Still, the 2019 figures will serve as a good baseline to measure the overall trend once newer data becomes available.

Moreover, these numbers could lend some credence to the notion that more Filipinos are shifting away from FTA TV in general, not just towards online video content but to satellite and cable TV as well. The ABS-CBN shutdown severely restricting the choices of FTA viewers and the network’s launch of Kapamilya Channel obviously does not help.

Additionally, there is a notable trend of declining TV ownership across the country (Figures 1.4 and 1.5). In a previous report by Kantar Group, total TV ownership decreased by 3% in 2019, primarily driven by , South Luzon, Urban , and . In the same report, almost all urban sectors showed a decline in TV ownership, except for suburbs which remained stable from 2018 and North Luzon which saw a slight increase, while most rural sectors saw a decrease in TV ownership for 2019, save for Visayas which remained relatively unchanged.

Figure 1.4: TV Ownership (Urban Philippines), 2018 vs. 2019

2018 2019 120

97 98 100 93 96 96 96 95 95 94 93 90 89 87 85 87 88 87 85 81 83 80

60

% of Total Homes Total of % 40

20

0

Suburbs

Mega Manila Urban Visayas Total Philippines Urban Mindanao Urban Philiippines Urban North Luzon Urban South Luzon Urban Central Luzon

Source: Kantar TV Establishment Survey 2019; Base: Total Homes

6

Figure 1.5: TV Ownership (Rural Philippines), 2018 vs. 2019

2018 2019 120

98 100 92 87 88 87 87 85 82 83 79 78 78 80 73 66 60

% of Total Homes Total of % 40

20

0 Total Rural Rural North Rural Central Rural South Rural Visayas Rural Philippines Philiippines Luzon Luzon Luzon Mindanao

Source: Kantar TV Establishment Survey 2019; Base: Total Homes

One can assume that the push for FTA digitalization would only serve to bring the industry closer to a tipping point. Previous reports recorded an estimated 15 million households in the Philippines as having TVs, many of which are analog cathode-ray tube sets. Given that in 2018 17.6 million Filipinos lived below the poverty threshold,4 according to the Philippine Statistics Authority (PSA), many will not be able to afford to upgrade their TV sets once the digital migration is completed in 2023. In fact, when analog broadcasting stops, the Department of Information and Communications Technology (DICT) expects that 5% of households5 will not have access to digital TV, creating a digital divide that will separate consumption among socio-economic classes.

On the plus side, the potential of FTA digitalization could entice more viewers to turn to TV for their entertainment. Previous research has shown that digital TV technology has enhanced capabilities to cater to the demands of the media consumer and satisfy the preference for a TV viewing experience.6 Significantly, media consumers think that digital TV has more to offer in terms of value added services and enhanced viewing experiences as compared to analog TV, opening the doors for a promising future in the TV broadcast industry.

Yet, the socioeconomic aspect (financial capability to buy new digital receivers) is a significant barrier to unlocking the potential of digital TV. And with the rising prevalence of online video streaming content and growing popularity of satellite and cable TV, it remains to be seen how much this growing divide between socio-economic classes will affect viewership across the local industry landscape at large.

4 https://psa.gov.ph/content/proportion-poor-filipinos-was-estimated-166-percent-2018 5 https://asia.nikkei.com/Business/Philippine-push-for-all-digital-TV-becomes-blessing-and-burden 6 http://www.ieomsociety.org/ieom2018/papers/507.pdf

7

Major players in the TV landscape

Following the shutdown of ABS-CBN, rival GMA has become the Philippines’ leading media and broadcast network, reaching over 84 million Filipinos across the country with a 48.8% audience share in the Nationwide Urban Television Audience Measurement (NUTAM) based on Nielsen’s Philippines full year 2020 data. Its flagship channel, GMA, broadcasts FTA via VHF and its permanent digital TV signal on UHF channel 15.

Based on Nielsen data, among FTA channels, GMA accounted for approximately a 40% share in loading minutes in 2020 coming from a 34% share in 2018. Combined with GTV and its other digital channels (Heart of & Hallypop), the network had registered 49%, or about half of the loading, among FTA channels last year. Most of the categories that advertise are Fast-Moving Consumer Goods (FMCGs) and Pharmaceuticals, owing to the COVID-19 pandemic and subsequent restrictions on business.

GMA is currently available on digital terrestrial broadcast TV using the Japanese standard ISDB-T adopted by the Philippines in the following service areas and corresponding (UHF) TV frequencies: on Channel 15, North Central Luzon (, Benguet, , La Union) on Channel 38, North Luzon () on Channel 15, (Batangas, parts of ) on Channel 32, Central Visayas () on Channel 26, Southern Mindanao (Davao) on Channel 37 and Northern Mindanao () on Channel 47.

GMA also plans on airing its digital broadcast in Western Visayas (Iloilo, Guimaras) on Channel 29 and () on Channel 44. All DTT broadcast stations carry the following channels: national/local GMA, GTV, Heart of Asia, Hallypop, DepEd TV, and soon .

In an e-mail interview, GMA stated that by the time ABS-CBN had been taken off the air in May, GMA had superseded ABS-CBN in both reach and viewership. The network also revealed that it is expanding its presence outside of Metro Manila through GMA Regional TV. On the digital business side, GMA has spent the last two years fortifying its digital capabilities by rolling out high-powered DTT transmitters, launching digital devices such as the GMA Affordabox and GMA , and creating new DTT channels such as Heart of Asia, Hallypop, and I Heart Movies. Recently, the network has also inked a landmark partnership with the National Collegiate Athletic Association (NCAA) to strengthen its sports programming.

According to data from Kantar Group, ABS-CBN commanded a 39.6% share of the market prior to the ECQ in March 2020 (Figure 1.6). Around that time, the network held some of the highest-rated program spots for both daytime and primetime during weekdays, including comedy-drama series and action drama FPJ’s . On weekends, the network shared more or less equal top programs with GMA, with programs like legal drama Ipaglaban Mo! and anthology . This trend continued until the shutdown took effect in the middle of the second quarter, and resulted in GMA mostly dominating the top program spots for the rest of the year.

8

Figure 1.6: TV Audience Shares in 2020

ABS-CBN GMA CineMo! TV 5 Yey Others Kapamilya Ch A2Z

100% 0 0 0 4.30 3.40.1 3.5 3.8 90% 15 18.2 26.8 4.2 23.6 80% 2.2 4.1 28.8 5.4 1.8 30.2 7.3 0 70% 4.3 6 5 0.3 0 7.5 0 60% 9.5 0.4 6.53 32.6 1.98 50% 32.4 40% 65.8 30% 59.8 53.6 54 20% 39.6 35.7 10% 0% 0 0 0 0 Pre-ECQ ECQ Post-Shutdown DTT/TV Plus Start of Classes A2Z Airing Shutdown

Source: Kantar TV Audience Measurement

More than a year after it was taken off the air, ABS-CBN remains popular among a large number of Filipino viewers, as exemplified by PIRMA Kapamilya, a nationwide signature campaign that aims to create a coordinated effort to bring back the network’s free TV and radio channels to the airwaves. Most recently, over 20,000 registered voters have submitted their signatures for validation to the Commission on Elections. ABS-CBN can resume its free TV and radio services if the granting of a franchise wins in a national referendum after gathering at least seven million signatures.7

In Congress, Senate President Vicente Sotto III in January 2021 filed a bill seeking to revive ABS-CBN’s franchise after observing “mediocrity” and the “absence of competition” in the TV industry. Senate Bill No. 1967 seeks to grant ABS-CBN a new license to operate its TV and radio broadcasting stations for 25 years. 8 Not long afterward, a similar bill was filed in the House of Representatives. However, given the staunch opposition of the Duterte administration to the franchise renewal, it is unclear if such initiatives will bear fruit before the country’s next national election in 2022.9,10

At the other end of the , TV (launched in 2009) currently reigns as the country’s premier direct-to-home (DTH) satellite provider with over 3.5 million subscribers, providing pay TV channels with nationwide coverage and availability. The network transmits 134 FTA, Standard Definition (SD) and High Definition (HD) channels to household and commercial venues in the country. It also offers a mix of 17 audio channels and on-demand services through pay-per-view channels and

7 https://news.abs-cbn.com/news/05/15/21/pirma-kapamilya-submits-1st-batch-of-signatures-for-abs-cbn- franchise-renewal-bid 8 https://news.abs-cbn.com/news/01/04/21/sotto-files-new-bill-to-renew-abs-cbns-franchise 9 https://news.abs-cbn.com/news/02/09/21/duterte-wont-allow-abs-cbn-to-operate-even-if-given-a-franchise-by- congress 10 https://www.pna.gov.ph/articles/1132769

9 content add-ons. Cignal is owned by Cignal TV, Inc., a subsidiary of MediaQuest Holdings, which in turn is the media partner of PLDT Group.

In a recent interview with Cignal TV they revealed that it grew its pay TV subscriber base from 2.2 million in 2019 to 3.5 million as of the end of April 2021 and has shifted its company goals from being a content distributor into a full-time content creator. The company is enacting this change in its pay TV business by venturing into content creation through Cignal Entertainment and partnerships with other production companies. Furthermore, the company is also tapping into the streaming market with its OTT service called CPlay.

Its FTA channel TV5, which in the past years had been a sports broadcast channel with a predominantly male audience, had pivoted back to general entertainment programming in 2020, mixing sports and news programs in its lineup. The goal was for the channel to cater to a much wider spectrum of viewers with a variety of program content. The dramatic change in content programming was brought about by TV5’s blocktime arrangement with Cignal TV wherein Cignal provides entertainment content to TV5, while TV5 handles the free TV broadcast platform. The deal gave TV5 access to “a library of world-class content, more creative talents & big-name stars, and a wider reach with Cignal’s 3.5 million plus subscriber base”.

Digitalization and OTT media

Both GMA and Cignal TV recognize the opportunity presented by the digitalization of the industry, as evidenced by the increased investments of the networks into DTT transmitters and digital devices. GMA called digitalization “a boon for Filipino viewers” as it has allowed them to view crystal-clear TV through devices like the network’s GMA Affordabox. Moreover, the digitalization of the industry is opening doors for free TV to gain a bigger footing among Filipino viewers, expanding its reach to new territories, particularly rural areas. With the advent of DTT, Cignal TV expects the FTA landscape to “dramatically change” as there will be more channel options with competitive and specialized content offerings that will be made available to viewers.

The end result is an empowered consumer with a wide selection of content that can be accessed at any time and with any digital device. Both networks pointed out that the continued growth of pay TV operators with massive channel line-ups alongside the advent of on-demand online video content have “increased the size of the menu”, giving consumers the luxury of no longer being limited by the linear scheduling of video content. Viewers may now view content “whenever and wherever”.

“Content is now available on so many access points that viewing is no longer dictated by a static device that can only be viewed at home, at a certain time,” Cignal TV noted. “In the digital age, there will be a greater amount of customization and matching content with viewers and vice versa. Consumption behavior can now be predicted via available data and this presents many possibilities in the market.”

The changing landscape not only puts pressure on content distributors, but content creators as well. GMA observed the evolving preferences in content among Filipino viewers, especially the younger demographic, over the years due to increasing exposure to foreign movies and series. This manifests in their feedback on local

10 production quality being compared with foreign movies and/or series, resulting in networks being “challenged to produce content for the global viewer”. If the content does not meet the consumer’s heightened expectations, they will simply move to another platform.

Despite this, both networks believe that FTA TV will remain dominant in the industry even as OTT services begin to chip away at audiences. Cignal TV expects TV viewership to remain strong across the broad market as OTT services have not yet penetrated low-income segments. In particular, FTA TV is expected to continue to be the main source of entertainment, most especially in the provincial and rural areas as the country remains a predominantly “one TV household” market.

Moreover, GMA sees the economic impact of COVID-19 limiting viewers’ discretionary income, making free media the preferred option for many. The network also mentions advertising partners being concerned about brand awareness and how advertisers still view TV-based placements as more effective compared to digital-only placements, which adversely affect awareness levels. Even online retail stores like Shopee and Lazada, GMA pointed out, advertise on FTA TV as they talk about breaking records for their TV special buys. FTA TV is overall the most cost-efficient and effective medium to reach large audiences, says GMA.

The price and accessibility of the internet remains the primary barrier to the growth of OTT services. Internet penetration in the Philippines stood at 67% in January 2021,11 while internet speeds rank at the lower part of the global index.12 In the Digital Quality of Life Index 2020, the Philippines also landed at 82nd place out of 85 countries in terms of internet affordability.13

It is for this reason that Cignal TV sees growth of OTT likely to impact high-end pay TV in urban areas first, which represent 3-5% of the total TV market. Pay TV subscribers from the upper market segments, who have access to unlimited broadband, are expected to gravitate to OTT services for their entertainment needs. GMA adds that OTT could act as a complement to FTA offerings, as seen with the network’s flagship newscast being one of the most watched TV programs in the Philippines, even as it is available on livestream on GMA News Online and platforms. People who have access to TV will still watch the shows live there, while those who don’t can watch it online.

As free TV continues to be fueled by advertising (and therefore is highly dependent on a variable amount of investible funds for content), SVOD services could be slightly more predictable in terms of achieving a return on investment as there will be a recurring subscription revenue that provides for either the production or acquisition of content or both. Radically, it may come to a point that fresh new content will be made available first on OTT platforms before they find their way to TV, which is not necessarily the case now.

11 https://datareportal.com/reports/digital-2021-philippines 12 https://www.speedtest.net/global-index 13 https://surfshark.com/dql2020-slides.pdf

11

Over time, OTT services will become more akin to virtual pay channels that will be made available to consumers, a la carte. Varying consumer profiles will determine which OTT services they are most likely to subscribe to.

“We believe that ultimately, it will be compelling quality content that will drive video consumption, regardless of the platform, with economics also playing a significant role,” GMA concluded.

12

Chapter 2: Online Curated Content (OCC) Market Environment

OTT and OCC situation in the Philippines

OTT services have shown rapid growth in the Philippines as Filipinos become more aware of its presence since the start of the COVID-19 pandemic. The country’s late consumption of OTT services and the emergence of video-on-demand (VOD) content can be attributed to pricing of the services as well as lag in technology development.

The Philippine Competition Commission defines OTT as any application or service that delivers content over the internet.14 These services are commonly related to media content and communication platforms that are generally lower in cost compared to traditional media. This includes online curated content (OCC) platforms that specifically stream professionally-curated video content via the internet.15

Presently, there is no clearly-defined structure for OTT providers in the Philippines, but there are two types that became prominent:

● Telco-affiliated OTT providers - These are firms partnered with regional, international, and local OTT services that are marketed as extensions in the subscription plans of their users.

● Non-telco-affiliated OTT providers - These are OTT services platformed independently or OTT services offered by broadcast television providers.

Latest available data from The Trade Desk showed that around 36 million Filipinos consumed OTT content in 2020.16 In a survey about media consumption habits of around 4,500 Southeast Asian consumers, 32% of the Filipinos surveyed were considered to be heavy OTT users — or those spending more than four hours watching OTT content daily. Table 2.1 shows the top three age brackets that consume OTT services are those ages 45-54, 35-44, and 25-34.

Table 2.1: OTT viewers by age group Age OTT viewers by age group (in %) 16-24 years 22% 25-34 years 23% 35-44 years 23% 45-54 years 25% 55 years + 8%

Source: The Trade Desk (2020)

14 https://www.phcc.gov.ph/wp-content/uploads/2020/07/PCC-Issues-Paper-2020-03-Issues-Paper-on-the- Philippine-Digital-Commerce-Market.pdf 15 https://www.itu.int/en/ITU-D/Regional-Presence/AsiaPacific/SiteAssets/Pages/Events/2019/ITU-TRAI- International-Training-on-Emerging-Trends-in-Broadcasting/John_Medeiros_Speech.pdf 16 https://pages.thetradedesk.com/rs/527-INM- 364/images/The%20Future%20of%20TV%20Report%20Philippines.pdf

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Emergence of OCC in the Philippines

The popularity of OCCs in the Philippines was catapulted by the digital broadcasting (DTTB) migration plan of the DICT. The transition from analog to digital will allow media consumers to access broadcast content through , mobile phones, and computers.

However, these services cannot function without internet access. The Philippines has a 72% internet penetration rate as of end-2019, according to the Reuters Institute for the Study of Journalism.17 Despite this, the Philippines is one of the countries with the slowest internet speeds to date. From Ookla’s Speedtest Global index, the country has an average download speed of 29.12 megabits per second (Mbps), ranking 84th out of 134 countries in mobile internet and 49.31 Mbps, ranking 80th out of 176 countries in fixed broadband as of April 2020.18

In a report by We Are Social, there are an estimated 73.91 million Filipino internet users as of January 2021. The average time spent watching traditional TV and streamed online content averaged three hours and 30 minutes, while the total time spent using the internet on all devices averaged 10 hours and 56 minutes — topping 40 other countries in the survey.19

Currently, the leading telco companies in the Philippines are , Inc.; PLDT, Inc. and its mobile unit , Inc.; fiber internet provider Converge ICT Solutions, Inc.; and Corp.’s Sky Fiber internet.

S&P Global reported OTT platforms that partner with telco companies are more often seen in Asia-Pacific economies.20 This type of agreement between telcos and OTT platforms is beneficial for both parties as this allows telcos to appeal to new consumers while OTT platforms become accessible to the telco’s existing user base. The OTT platforms are often defined as a value-added service in this case.

Likewise, a commissioned market survey of 787 Filipino respondents by Ovum in late 2019 showed that 52% of them said they currently had premium media services currently bundled or added with their mobile or fixed telecom subscription (Figure 2.1).21

17 https://reutersinstitute.politics.ox.ac.uk/digital-news-report-2020 18 https://www.speedtest.net/global-index 19 https://datareportal.com/reports/digital-2021-philippines 20 https://www.spglobal.com/marketintelligence/en/news-insights/blog/asia-ott-leaders-continue-to-expand- partnerships-with-telcos 21 https://www.amdocs.com/sites/default/files/Ovum-OTT-market-study-2019-20.pdf

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Figure 2.1: The Philippines’ premium media subscription profile

Do you have any premium Which paid media services do you have bundled with or media services bundles with or added to your telecoms subscriptions? added to your mobile or fixed telecoms subscription? None 6% Mobile phone subscription 4% Fixed broadband subscription Not Other 4% currently, 4% but used to Online games 21% have 19% subscription 18% Currently Online music 46% Never have 52% subscription 35% have 29% Online video 53% subscription 49% Pay TV 22% subscription 35%

Source: Ovum

The Ovum survey also reported that more than half of the Filipinos were subscribed to at least one paid online video service bundled to either a mobile or fixed phone line. 11% of them were willing to shell out more than P600 for an online video subscription whilst the majority were willing to pay between P151 and P300.

Meanwhile, in a market study by Michael Kho Lim of Monash University, he said that Filipinos perceive that the internet is free and having to pay for content is unorthodox.22

This might partly explain why piracy of video content is still prevalent in the country, making this another obstacle for OTTs to thrive, Gilbeys Z. Sardea, a TV production professor in Miriam College, said in an interview. He added that there is a recent rise of OTT consumers in the Philippines as more Filipinos stay at home in accordance with the COVID restrictions.

In a survey commissioned by AVIA in 2020, YouGov reported that 49% of 1,098 surveyed Filipinos accessed streaming piracy websites or torrent websites. It also showed that 47% of consumers who accessed pirate sites cancelled some part of their local and foreign content services.23

Many Filipino households owned information and communication technology (ICT) devices that have access to the internet, even before the pandemic in 2020 (Table 2.2). In 2019, it was recorded that 86.8% of Filipino homes have at least one cellular phone and 79.9% own a television, while 16.5% only responded to having owned a broadband, fiber or digital subscriber line (DSL) internet connection, the PSA’s Functional Literacy, Education and Mass Media Survey showed.24

22 https://global-internet-tv.com/netflix-country-reports/philippines/ 23 https://avia.org/new-survey-shows-philippines-among-highest-in-online-piracy-in-southeast-asia/ 24 https://psa.gov.ph/sites/default/files/2019-FLEMMS-Final- Report_Signed_FULL%20VERSION_15%20January%202021rev.pdf

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Table 2.2: Proportion of Philippine households that own specific ICT devices (as of 2019)

ICT Device Percent Cellular phone 86.8% Television 79.9% Radio 40.1% Cable (e.g. SkyCable, Destiny, Cignal, etc.) 26.4% Personal computer (desktop, laptop, netbook, iPad, iPod, 24.9% tablet) Broadband internet/Fiber internet/DSL 16.5% Note: Respondents were allowed to have multiple response to ICT ownership, that is, if the household owns a personal computer, a cellular phone, and a broadband Internet, that household is counted in each of the three types of ICT devices.

Source: Philippine Statistics Authority, 2019 Functional Literacy, Education and Mass Media Survey

Moreover, the PSA survey results showed that most Filipinos access the internet for social media purposes (Table 2.3). Notably, most users are located in the National Capital Region and the least number of users reside in the Bangsamoro Autonomous Region in Muslim Mindanao.

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Table 2.3. Proportion of population 10 to 64 years old using the internet by gender and purpose of surfing the internet by region, urban-rural classification, and age group, Philippines: 2019

Proportion (in percent) Region/ Urban-Rural Classification/ Both genders Male Female Age Group Email/ Social Email/ Social Email/ Social Research Media Research Media Research Media

Philippines 63.6 73.9 60.8 70.8 66.5 77.1

National Capital Region (NCR) 82.4 90.0 81.5 88.6 83.3 91.4 Region IV-A () 70.8 83.2 68.2 80.2 73.6 86.1 Region III (Central Luzon) 68.7 78.8 66.0 75.8 71.5 81.9 Region VII (Central Visayas) 65.3 73.3 63.9 70.7 66.7 75.9 Cordillera Administrative Region (CAR) 63.1 72.5 58.2 67.8 68.1 77.2 Region VI (Western Visayas 62.5 71.3 59.1 67.7 66.0 75.1 Region X (Northern Mindanao 62.1 70.4 59.6 67.4 64.7 73.6 Region I (Ilocos Region) 60.6 73.2 56.7 69.5 64.6 77.1 Region II (Cagayan Valley) 57.6 65.9 55.3 63.6 60.0 68.5 MIMAROPA Region 56.9 67.2 52.8 62.8 61.2 71.9 Region XIII (Caraga) 56.4 67.3 52.4 63.2 60.7 71.8 Region XI (Davao Region) 56.4 66.3 53.2 62.3 59.7 70.5 Region VIII (Eastern Visayas) 55.1 65.1 50.9 60.7 59.6 69.8 Region V () 54.9 63.9 50.9 59.5 59.2 68.5 Region XII (SOCCSKSARGEN) 51.4 62.8 48.2 60.6 54.8 65.2 Region IX (Zamboanga Peninsula) 41.5 59.1 39.2 55.2 43.9 63.2 Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) 39.2 52.9 37.5 52.1 40.8 53.7

Urban-Rural Classification Urban 72.4 82.5 70.0 79.8 74.8 85.2 Rural 52.3 62.8 49.4 59.4 55.5 66.4

Age Group

15-19 87.1 93.1 84.2 91.4 90.1 94.9 20-24 82.1 91.8 80.5 90.7 83.8 93.0 25-29 74.3 86.3 72.2 84.6 76.5 88.2 10-14 69.6 76.5 66.5 73.2 72.8 79.9 30-39 63.4 76.9 59.2 72.6 67.7 81.3 40-49 48.2 60.5 45.0 55.8 51.5 65.3 50-59 34.1 43.9 30.8 38.4 37.3 49.2 60-64 24.0 33.3 21.8 29.4 26.0 37.0

Source: Philippine Statistics Authority, 2019 Functional Literacy, Education and Mass Media Survey

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OCC market in the Philippines

The market for OCC videos in the Philippines is in an upward growth, with local players outnumbered by regional and international OCC providers (Table 2.4).

Table 2.4: Major OCC Players in the Philippines

Local players Regional and international players Cignal Play Apple TV+ GMovies Amazon Prime Video iWantTFC HBO Go NBA League Pass Netflix WeTV/iflix

Nearly all Filipinos aged 16 to 64 watch online videos while 83% watch vlogs and 82.2% listen to music streaming services. This was also evident after YouTube took the lead across most used social media platforms, cornering a 97.2% share in 2020.25

The OCC video platforms currently available in the Philippines are expanding. But considering the trend and behavior of Filipinos with online purchases and the internet, a proper strategy must be used by these platforms to gain revenue and more consumer traffic.

There are four approaches 26 OCC platforms use to monetize their service in the Philippines:

1. Subscription-based video-on-demand (SVOD) ○ This allows users to pay a recurring fee daily, weekly or monthly, depending on the subscription plans of the service. Once the user is subscribed, they have complete access to the OCC catalogue or library (e.g. , iflix, Netflix).

2. Transactional video-on-demand (TVOD) ○ A transactional VOD is also known as the “pay-per-view”. The user must pay a fixed amount to gain access to the OCC for a limited time as specified by the platform (e.g. GMovies).

3. Advertising-based video-on-demand (AVOD) ○ The most common approach known by consumers. This allows people to watch content for free for the price of watching a series of advertisements (e.g. YouTube).

25 https://datareportal.com/reports/digital-2021-philippines 26 https://ottverse.com/svod-avod-tvod-pvod-monetization-models/

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4. “Freemium” or a hybrid of subscription, transactional, or advertising-based video-on-demand ○ This mix of AVOD and SVOD allows users to access a basic catalogue of video content for free but with advertisements. However, subscription plans are offered on the same platform to entice consumers to access exclusive content without advertising (e.g. Cignal Play, iWantTFC, Viu TV).

Competition

With the Philippines being under lockdown since March 2020, demand for activities that can be done at home like viewing OCC services has significantly increased. This has piqued the interest of more players to enter the Philippine market this year, although staying in the market is another story (refer to “Competitive Rivalry” below)

Looking at the Philippine context through Michael E. Porter’s five forces of competitive position analysis, 27 , 28 this section examines how OCC players take advantage of content, features, and pricing strategies to capture and capitalize on the growing market of the video industry in the country:

● Substitutes

The congressional franchise expiration of the free TV giant ABS-CBN increased the interest of Filipinos in OTT services as a substitute for their screen time. The company has branched out to the ABS-CBN News Channel, , and YouTube in airing key segments following the expiration of its license in early May 2020. The company also kept its streaming content of live shows on its OCC service iWantTFC.

● Competitive rivalry

Competition among OCC players in the Philippine market has kept challenging the dynamics and flexibility of these companies. Currently, there are more than 10 active players in the market. However, challenges posed by the pandemic forced some players to pull out of the competition or shift gears.

As of April 2020, players and Fox+ are no longer accessible in the country. HOOQ — which was majority-owned by , Ltd. — reportedly struggled to boost sufficient profits on par with the costs of operating its platform as well as keeping its catalog variety competitive. The company filed for liquidation in May.

Meanwhile, Fox+ has announced through its telco partner Globe Telecom that it is no longer available in the country.

27 https://hbr.org/1979/03/how-competitive-forces-shape-strategy 28 Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: The Free Press.

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Mergers and acquisitions have also been a strong opportunity for OCC players to strengthen their market position. Last year saw three cases: acquisitions of Crunchyroll and iflix by Global Group LLC and Holdings Ltd., respectively; as well as the merger of iWant and TFC Online.

Anime streaming platform Crunchyroll was acquired in December 2019 by Funimation Global Group, LLC, which is a joint venture between Pictures Entertainment Inc. and Entertainment () Inc.’s subsidiary, Aniplex Inc.29 Crunchyroll was acquired from AT&T with a purchase transaction worth US$1.175 billion.

In June, Chinese internet giant Tencent Holdings Ltd. bought assets of the Malaysia-based company iflix. 30 The platform was operating in 13 markets across Asia and had garnered 25 million active users, however, it was also struggling to post gains from its content and pricing strategy like its direct competitor in the region, HOOQ. The acquisition is intended to help Tencent expand its reach outside of China, particularly for its own in-house streaming service WeTV (now called WeTV/iflix).

Last year also proved to be a challenging period for the ABS-CBN group. As a bid to further improve its subscription-based service, the company merged its iWant and TFC Online to iWantTFC in September 2020 as a globally available streaming service.31

● The threat of new entrants

The Philippine OCC landscape this year welcomes a new player, WeTV/iflix. Special features — such as regional variety of dramas and movies, as well as English subtitles — offered by new platforms will likely affect market shares of operating OCCs in the country.

WeTV/iflix, owned by the Chinese company Tencent, launched its services in the country with its core Asian content.32 It announced in November 2020 that it will offer popular Chinese, Korean, and Thai dramas alongside a mix of local content. The company further said it will add 20 exclusive films and 12 original productions this year to its platform. Subscription costs P59 monthly, P159 quarterly, and P599 annually.

Another prospective player that could enter the Philippine market this year is Disney+. The platform is owned and operated by the Media and Entertainment Distribution division of the Walt Disney Co. It was only in February 2020 that the OCC player became accessible in Asia, specifically in Singapore.

29 https://www.sonypictures.com/corp/press_releases/2020/1209/atttosellcrunchyrolltosonysfunimationglobalgroup 30 https://www.bloomberg.com/news/articles/2020-06-25/tencent-buys-assets-of-struggling-streaming-platform- iflix 31 https://news.abs-cbn.com/entertainment/08/24/20/iwant-to-merge-with-tfc-online 32 https://www.abs-cbn.com/newsroom/news-releases/2021/3/17/wetv-iflix-abs-cbn-partnership?lang=en

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● Buyer power

Filipinos as consumers of internet services have been a mobile-centric niche. Netflix noted its users in the country spend an average of 3.3 hours watching content on their mobile devices.33

In response, the company launched its mobile plan in the Philippines in March 2020 as a more competitive pricing strategy against international players that are also active in the market. The subscription price for the mobile plan that is only accessible on mobile devices like cell phones and tablets was 50% lower than its basic plan.

● Supplier power

Subscription decisions still heavily depend on the attractiveness of each OCC service’s content variety, special features, platform quality, and pricing strategy.

Exclusive content is a driving force for OCC platforms to position themselves in the market. Among the 30 most-watched Netflix titles in 2020 by users in the Philippines, more than 90% are exclusively offered on the platform. 34 Meanwhile, ABS-CBN Corp.’s iWantTFC allocated P347 million out of the company’s P791 million production cost in 2019 for producing and boosting the platform’s original content.35

Apart from its effort in producing original content, the homegrown player also stepped up to offer some Filipino-dubbed content. Viu also offers a dubbed feature for its Korean content on the platform. Meanwhile, international players like Netflix and Amazon Prime Video provide several audio languages in select content.

Maturity ratings, content synopses, and tech-enabled parental controls are also a growing decision factor for families as a consumer segment for OCC players. Netflix and WeTV/iflix separately came up with a special library targeted to offer content on their platforms to children of all ages. Some platforms also have adjustable settings in the library content that can be personalized depending on the maturity level for selected age guidance.

In a 2019 working paper published by Centre for North South Economic Research, Elias Carroni and Dimitri Paolini36 illustrated other special features influencing subscription decisions that represent further the quality of the OCC experience such as “recommendation systems; creation, access of and sharing of playlists; synchronization on several devices; and quality of page layout/video/sound.” Players offer HD options in premium subscriptions compared to basic plans that may only offer SD. For instance, Netflix’s

33 https://www.rappler.com/technology/netflix-mobile-plan-philippines-p149 34 https://about.netflix.com/en/news/what-philippines-watched-2020 35 https://docs.google.com/viewerng/viewer?url=https://data-corporate.abs- cbn.com/corp/medialibrary/dotcom/corporate+governance/company+policies/accs_cfs1219+abscbn+corporation _sec+(signed)_2.pdf?ext%3D.pdf 36 https://crenos.unica.it/crenos/sites/default/files/wp-19-02.pdf

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packages have different levels of video quality that can range from SD to Ultra HD.

Consumer preferences

Over the series of quarantines and strict lockdowns, the OCC market gained more attention from Filipino consumers. Among the top ten apps in terms of consumer spend in the Philippines last year, two of them offer online video content — Netflix and YouTube, which ranked second and ninth, respectively.37 According to App Annie, the rankings are based on iOS App Store and Google Play earnings from paid downloads and in-app purchases and excludes earnings from in-app advertising.38

According to YouTube, it has reached more than 40 million Filipinos aged 18 and above in 2020, with more than half of this in the 18-34 age group.39 Watch time in the platform increased by more than 50% year on year, while YouTube Philippines has nearly 2,000 “channels” with over 100,000 subscribers.

As one of the fastest growing emerging markets in the region, the Philippines holds vast market opportunities for brands and industries, said Siddhart Srinivasan, head of YouTube Content Partnerships for Singapore, Malaysia, and the Philippines.

“With the platform’s over 40 million unique adult viewers in the country and with more than two billion monthly logged in users globally, YouTube is in a unique position to help creators shape their content distribution strategy through scaled and personalized programming across content genres, which works for viewers, partners, and advertisers,” he said in an interview.

TVOD and freemium models also turned out to be very suitable business models for OCC players in the Philippines. The same survey showed that 72% of respondents are willing to buy one-time passes for short-term access to specific content, while 74% said they are more willing to accept ads if it would mean they have to pay less or nothing for the service.

Profile of local players

OCC Player: iWantTFC

Background iWantTFC, previously known as iWant (which replaced SkyOnDemand), is a hybrid of free and subscription-based video streaming platform that offers a wide range of Filipino content locally and internationally. In 2020, (TFC) merged with ABS-CBN’s iWantTV, due to the former’s franchise renewal issue. TFC began in the early 1990’s as a linear television channel, mostly to cater for overseas Filipino workers with primetime hits. ABS-CBN’s iWant TV launched in 2015 with a selection

37 https://www.appannie.com/en/go/state-of-mobile-2021/ 38 https://s3.amazonaws.com/files.appannie.com/2101_State_of_Mobile_2021_Methodology_EN.pdf 39 https://www.thinkwithgoogle.com/intl/en-apac/country/philippines/there-something-everyone-what-are-people- philippines-watching-online/

22 of foreign TV content, it also relaunched in 2018 as iWant with the goal to include originally produced content. iWantTFC’s special features allow its subscribers to create their own playlists, stream on multiple devices at once and enjoy early-access to exclusive content.

Subscribers As of 2019, iWant had 1.6 million subscribers in the Philippines. On ABS-CBN’s digital platforms alone, total revenues reached P1.2 billion, a 27.6% increase from the previous year.

Business model ABS-CBN’s iWant generates revenue from TVOD and SVOD with the help of consumer engagement through the digital websites. iWantTFC is also partnered with some DTT providers internationally, which allows its customers to access iWantTFC services.

Content and pricing strategy

● Up to 500 movies FREE ● Latest seven episodes of currently airing shows ● Three live channels: Kapamilya Channel, , Teleradyo ● 26 drama series with different titles per month ● Selected episodes of drama anthologies, documentaries, news, variety shows and more ● Video quality in SD ● Watch with ads on up to one device at a time

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Content and pricing strategy cont.

● One free movie for rent of your choice PREMIUM per month ● 500 Filipino movies including select iWant Originals ● Eight Channels: TFC, ANC, Teleradyo, ABS-CBN Regional Channel, Lifestyle Network, , CineMo!, and S A ● Live daily episodes of TV Patrol ● All episodes of available drama series ● All episodes of available variety, reality, and talk shows. ● iWant Originals (series and movies) ● Specials such as sports, events and entertainment (Live and VOD) ● Watch up to two screens at the same time. ● Movies for rent are not included in the package and should be purchased separately

Its pay-per-view prices range from P30 to P1,500, depending on the genre such as recorded live performances, TV series, and films. Prices also depend on exclusivity of the content.

Available platforms iWantTFC is available on desktop, mobile, smart TVs, and also offered by cable TV providers.

OCC Player: Cignal Play

Background Cignal Play is an OCC provider by Cignal TV, a premier DTH provider and a subsidiary of MediaQuest Holdings, Inc., the media unit of PLDT Group. In 2019, PLDT partnered with several international OCC providers as well as the pay TV provider, Cignal, to offer its subscribers easy access to various content online. Cignal Play offers live TV channels, as well as replays of local pay TV shows and a catalogue of series and films.

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Subscribers Cignal Play’s subscriber count is not disclosed, but its content offerings are available to about 62 million subscribers of PLDT Home and Smart telco in the Philippines.

Business model Cignal Play is open to non DTH subscribers and offered as a package to DTH subscribers. For those with subscription plans tied to Cignal TV, access is granted depending on the entitlements of the plan. Cignal Play is currently working on a download feature as well as implementing access for other users outside the Philippines.

Content and pricing strategy

● Limited access to channels offered BASIC (FREE) by Cignal TV ● Live broadcasting of shows

● Wider access to channels PREMIUM (P75) ● Users have an option to choose add- on channel feature

EXISTING CIGNAL ACCOUNT

• Accessible channels are dependent PLAN (P1,050 and UP) on your active Cignal TV plan. • You get to mirror channels from your Cignal TV subscription onto Cignal Play. • You can order from the add-on channels list available and charge it to your bill.

• You can access channels under PLAN (P720 and BELOW) Cignal Play Basic. • You can upgrade to Cignal Play Premium to gain access to more channels and mirror channels from your Cignal TV subscription onto Cignal Play. • You can order from the add-on channels list available and charge to your bill.

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Available platforms The Cignal Play app is available on iOS and Android, desktop and is also offered by the parent cable TV provider.

OCC Player: Gmovies powered by UPSTREAM

Background Gmovies is a third-party app developed by Globe Telecom and powered by an independent streaming provider UPSTREAM. UPSTREAM provides Filipino produced films for a low price and recently partnered with Gmovies. Prior to the partnership, Gmovies provided Filipino movie-goers the convenience of booking tickets online for over 100 cinemas in the country.

With Gmovies powered by UPSTREAM, viewers have paid access to a nostalgic catalogue of movies, as well as new and exclusive ones featured in the Metro Manila Film Festival 2020.

Business model Through Gmovies, users are able to choose and pay for content for one time viewing at a limited time (TVOD).

Content and pricing strategy Pricing for films varies as it depends on the producers. Price range is from P120 to P250.

Features The Stream Now feature of Gmovies allows you to “rent” videos via mobile or web and watch this in the comfort of your own time and place. These movies are distributed and made available by UPSTREAM.

There are different types of local and international videos available within the UPSTREAM movie portfolio found in the Stream Now section. These videos can be bought either on-demand or in advance and content is updated periodically.

All videos are available for rent and streaming within a certain time frame depending on the production house. The timer to start watching for on-demand rentals starts upon successful purchase while the timer for advanced booking starts once the video has been released and becomes available for viewing.

Available platforms Gmovies application is available on iOS and Android and can be streamed on a desktop through its website.

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Profile of regional and international players

OCC Player: Viu

Background Viu — which is operated by ’s PCCW Media Group — expanded its operations to the Philippines in 2016. The streaming platform caters to Korean and Japanese content followers. A selection of its Korean content is also offered with Filipino-dubbing and subtitles.

Subscribers As of 2020, Viu Janice Lee said in an e-mail interview that the company reached 45 million monthly active users with its paying subscribers growing 47% year on year to 5.3 million. Viu ranks second based on paid subscribers and streaming minutes among major video streaming platforms in , according to a report by Media Partners Asia.40

Business model Viu entered the Philippine market with both a freemium and a subscription-based model. The company said the Philippines is the most receptive to online advertising in the region according to a Digital TV Research report in March 2016.41

Content and pricing strategy Viu offers its services through the following packages:

Package Service Fee Details

Free User Free ● Access to dramas and variety show ● With ads ● One download allowed ● Available on phone, tablet, or PCs ● SD resolution

Viu Premium ● P50 for first three ● Access to movies, dramas, and months, P129 variety shows thereafter ● Zero ads ● Free via subscription ● Unlimited downloads allowed to Smart ● Content available as soon as eight Communication’s hours after original telecast GIGA K-VIDEO ● Available on phone, tablet, PCs, TV app, or TV casting ● Full HD

40 https://avia.org/viu-ranks-first-by-number-of-users-amongst-major-video-streaming-platforms-in-southeast- asia-per-media-partners-asias-ampd-research/ 41 http://www.pccw.com/media-centre/news/detail.page?pressId=20161129-00001422

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Available platforms Users watch through the Viu app using internet-connected devices such as smartphones and tablets, PCs, and smart TV.

OCC Player: WeTV/iflix

Background After obtaining US$30 million funding in April 2015 from and PLDT, Inc., iflix entered the local market the next month with a 14-day trial granting subscribers access to the platform’s full library. It offered content from Hollywood and international studios, including BBC Worldwide, 20th Century Fox and Warner Bros, as well as widely popular Asian movies and dramas. The company was bought by Tencent in June 2020 as it faced financial difficulties. It has since been rebranded as WeTV/iflix. WeTV/iflix is currently operating in 22 markets across Asia.

In March 2021, WeTV/iflix also partnered with ABS-CBN in bringing “Primetime Bida” programs to the platform two days ahead of its regular broadcast as well as offering to stream it two to three hours after its free-TV screening.

Subscribers WeTV/iflix boasts 25 million active subscribers in Southeast Asia.

Business model The company operates a freemium model and a subscription-based model.

Content and pricing strategy Operating under a freemium model, several titles are free for access in WeTV/iflix. It has a number of Hollywood and Asian content ranging from movies and dramas from , Japan, South Korea, and .

Around 9,000 hours of Philippine content are also available on the platform through partnerships with ABS-CBN and Viva.

Here are the packages available in the country:

Package Service Fee Details

Free Free ● Offers limited content ● Ad-supported

WeTV/iflix VIP ● P129 monthly ● First 30 days are free of charge ● P99 monthly for Smart, ● Access to the full library Sun, and PLDT Home subscribers ● Zero ads

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Available platforms WeTV/iflix can be accessed via its application in smartphones, tablets, PCs, and smart TVs.

OCC Player: Netflix

Background Netflix launched in the Philippines in 2016, two decades after its inception in the US. The OCC platform is mainly recognizable for its exclusive content made in-house by its production department.

The company has aggressively partnered with local film studios in 2020 like ABS-CBN, Globe Studios, Mavx Productions, Regal Film, TBA Studios, The Idea First Company, and Viva to expand Filipino content on the platform.42

Subscribers The pandemic boosted its subscriber base worldwide to 203.6 million in 2020 from 167 million in 2019, of which nearly 13% are located in the Asia-Pacific region. According to Statista, there are 296,140 Netflix subscribers in the Philippines as of 2020.43

Business model Income of the company is derived from subscription-based services.

Content and pricing strategy Users can access unlimited movies and TV shows across all Netflix packages available in the Philippines. Subscriptions are paid on a monthly basis only.

Package Service Fee Details

Mobile P149 ● only at a time ● One device allowed for content downloads ● Accessible on mobile phone and tablet only ● SD only

Basic P369 ● One screen only at a time ● One device allowed for content downloads ● Accessible on mobile phone, tablet, PCs, and TV ● SD only

42 https://about.netflix.com/en/news/netflix-brings-more-filipino--to-fans-worldwide 43 https://www.statista.com/statistics/607624/philippines-netflix-subscribers/

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Content and pricing strategy cont.

Standard P459 ● Users can watch on two screens at the same time ● Two devices allowed for content downloads ● Accessible on mobile phone, tablet, PCs, and TV ● HD available

Premium P549 ● Users can watch on four screens at the same time ● Four devices allowed for content downloads ● Accessible on mobile phone, tablet, PCs, and TV ● HD and Ultra HD available

Available platforms Subscribers can access Netflix on smartphones, PCs, laptops, tablets, and smart TVs.

OCC Player: Apple TV+

Background Apple TV+ became available in the Philippines in November 2019 along with the rest of the world. The platform started as a TV streaming service.

Subscribers The company has not yet disclosed its subscriber count, but customers who have bought Apple products like iPhone, iPad, iPod Touch, Apple TV, or Mac are given a one-year free subscription.

Business model Apple TV+ offers access under a fixed payment plan, but it also offers TVOD on select content.

Content and pricing strategy Subscription to Apple TV+ is priced at P249 monthly that can be shared by up to six people with zero ads. The service can also be bundled with two other Apple services under its Apple One subscription and charges P375 a month.

Prospective subscribers are also given a seven-day free trial period apart from customers who received the one-year free subscription after a purchase of an Apple product. Upon its launch, the company vowed to release Apple Originals monthly as

30 exclusive content to the platform. There are currently 55 original titles as of January 2021.44

There are also buy or rent options of select movies in the platform which can be purchased separately and usually range from P150 to P600. A rental option gives the viewer 30 days to start watching the movie, however, the user can only access the movie for 48 hours once they have started watching.

Available platforms Users can access the platform through Apple TV, iPhone, iPad, Mac, Airplay, PCs, smart TVs, and the game console PlayStation.

OCC Player: HBO Go

Background HBO Go launched its service in the Philippines in December 2019 after serving as a streaming service of cable network HBO for its viewers outside the US since 2010.

Business model HBO Go operates under a subscription-based model.

Content and pricing strategy Members are given a seven-day free trial to avail of the service and are charged P149 monthly for access to the standalone video streaming service. Through its partnerships with local cable provider Sky Cable, the OCC platform is free of charge for postpaid subscribers of HBO Pak which includes other HBO channels such as HBO, HBO Family, HBO Hits, HBO Signature, Red by HBO, and .

HBO Go subscription can also be paid on top of a Globe Telecom postpaid plan.

Its library consists of award-winning programs and theatrically released movies from studios 20th Century Fox, , and Warner Bros. Pictures. Original and exclusive content on the service is sourced from HBO and Cinemax, as well as originals. 45 The platform also offers multi-language subtitles of contents in its library.

Available platforms Users can watch in select smart TVs, mobile phones, tablets, PCs, and game consoles PlayStation and Xbox One.

44 https://variety.com/2021/digital/news/apple-tv-plus-freeloader-problem-percent-free-1234890385/ 45 https://variety.com/2020/biz/asia/hbo-go-expands-taiwan-philippines-1234715614/

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OCC Player: Amazon Prime Video

Background Initially launched as Amazon Unbox in the US in 2006, the Amazon Prime Video entered the Philippine market in 2016. Two years later, the company partnered with Globe Telecom to increase its reach by providing a six-month discounted access of the service to Globe postpaid plan subscribers.

In 2020, the OCC worked with GMA Network in offering the network’s TV shows in 58 countries including , New Zealand, the UK and the US.

Subscribers As of the end of 2019, there were 150 million global subscribers of Amazon Prime Video. Business model Amazon Prime Video operates under a subscription model.

Content and pricing strategy Membership to Amazon Prime Video costs US$5.99 monthly or roughly around P300 after a seven-day free trial. Under its partnership with Globe Telecom, postpaid subscribers are charged US$2.99 per month for six months of access.46

A subscription allows the user to watch on three screens simultaneously as well as a Twitch Prime membership that grants access to exclusive and other contents on video game streaming service Twitch.

Apart from several original titles, the platform also has some licenses to carry content from its direct competitors such as HBO’s and ’s The Handmaid’s Tale. It also offers a la carte content that is paid separately.

Available platforms Subscribers can watch through mobile devices, tablets, PCs, smart TVs, and game consoles PlayStation and Xbox One.

OCC Player: NBA League Pass

Background NBA League Pass is a subscription-based service that allows access to National Basketball Association (NBA) games and more. In 2019, the Philippines made it to the top five markets of the streaming service outside of the US and China.

46 https://shop.globe.com.ph/entertainment-subscriptions/amazon-prime-video

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Business model NBA League Pass operates under a mix of TVOD and SVOD models.

Content and pricing strategy A subscription to the NBA League Pass heavily depends on the package offerings. The Philippines currently has a three-game choice pass worth P85 while a one-month subscription costs P485. This includes live and on-demand games and shows archives of exclusive features, interviews, and press conferences.

Globe Telecom47 and Smart Communications48 allow the subscription service to be paid on top of their postpaid plans. Additionally, Smart partnered this year with NBA to offer subscribers an NBA League Pass, as well as access to NBA.Smart which is the network’s OTT service to live stream NBA TV Philippines. The online destination will provide game highlights, statistics, standings, scores, and schedules. It is also a step further to localize the NBA experience with recap and analysis from local basketball reporters and experts.

Available platforms Users can watch the games on their mobile phones, tablets, PCs, smart TVs, and game console Xbox.

OTT Player: YouTube Premium

Background YouTube Premium is a subscription-based service of video streaming platform YouTube that offers an ad-free experience for users. Google Philippines launched the service in the country in November 2019.

Business model Free access to videos uploaded on YouTube is ad-supported, while a paid subscription to YouTube Premium offers a viewing experience without ads.

Content and pricing strategy Users get to enjoy ad-free access to all videos uploaded on YouTube. Special features of the subscription include access to YouTube Originals and YouTube Music as well as background playback and unlimited offline viewing or download of content. The following rates are available in the country:

Package Service Fee

YouTube Premium Student ● P65 monthly

47 https://www.globe.com.ph/apps-content/nba-league-pass.html#gref 48 https://smart.com.ph/Pages/nbaleaguepass

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Content and pricing strategy cont.

YouTube Premium ● P159 monthly for Android/Play Store and Web ● P209 monthly for iOS/App Store

YouTube Premium Family (allows five ● P239 monthly for Android/Play family members to share the plan) Store and Web ● P309 monthly for iOS/App Store

Available platforms YouTube Premium is supported by mobile devices, PCs, smart TVs, and game consoles PlayStation, Nintendo Switch, and Xbox.

OCC Regulatory Environment in the Philippines

Amazon Prime Video, Netflix, Viu and WeTV/iflix are among the many legitimate, international video streaming platforms that are running their businesses and earning revenues in the Philippines. Like other markets around the world, this is possible virtually, where in there is no need for physical offices. This has led to a government focus on whether and how to capture some of the economic returns generated by these services.

At present, the Philippines has several agencies regulating the telecommunications and movie industries but does not have yet legal instruments to regulate the services offered by these OCC companies, particularly foreign entities that could be a potential tax base.

As the COVID-19 pandemic pushed the government to impose strict lockdowns in the country, amusement venues such as cinemas, concert halls and nightclubs were not allowed to operate. This led many Filipinos to online streaming to watch movies and other shows.

Rep. Jose Maria Clemente S. Salceda, chairman of House ways and means committee, pushed for taxation on digital services, mainly in respect of subscriptions on video and music streaming applications, ads on social media sites, and making online sales platforms as withholding tax agents.49

Mr. Salceda filed House Bill 6765 or the “Digital Economy Taxation Act of 2020” to create more revenues to help the government recover from the impact of the COVID- 19 pandemic. He said that the collection of 12% value-added tax on subscriptions to video and music streaming sites will augment the country’s revenue collection. The

49 https://www.cnnphilippines.com/business/2020/5/19/Lawmaker-digital-service-tax-Netflix-Lazada-.html

34 measure would bring in P29.1 billion annually in revenues for the government if the bill passed into law.

Meanwhile, the National Tax Research Center (NTRC) proposed in a study that local government units (LGUs) could expand the coverage of their amusement taxes to include online streaming sites. 50 According to NTRC, LGUs have P470 million in foregone revenues last year because of the closure of leisure activities amid the pandemic.

However, another government think tank, the Philippine Institute for Development Studies (PIDS), said that it would be difficult for the government to tax the digital economy because of the “major policy gaps” such as the extent of the digital economy to estimate the industry’s potential tax base.51

The local statistics agency started measuring the size of the digital economy relative to overall economic output in August 2018, but more information is needed.

“The opportunities and challenges that the digital economy bring are particularly important for developing countries, including the Philippines. Thus, it is deemed critical for the Philippine government to eliminate the barriers and challenges and also address the identified policy gaps to fully reap the benefits from the digital economy,” PIDS said.

As of the time of writing, no legislation to impose new tax obligations has passed the Congress.

Philippine ICT performance

The Philippines has been significantly affected by the disruptions brought by the COVID-19 pandemic as the economy shrank annually by 9.6% — its worst economic slump since the 1940s.

Accounting for 3.3% of the Philippine economy, the information and communication sector’s gross value added last year showed moderate growth of 5% to P584.91 billion last year from 8% growth in 2019, according to PSA data.52

Based on Chinese technology firm Huawei Technologies Co. Ltd.’s 2020 Global Connectivity Index (GCI), the Philippines ranked 59th out of 79 countries with a score of 38, higher than the 37 posted in the previous year.53

50 https://www.bworldonline.com/think-tank-suggests-netflix-tax-as-lgu-collections-slump/ 51 https://www.bworldonline.com/taxation-of-digital-firms-seen-hindered-by-policy-lack-of-infrastructure/ 52 https://psa.gov.ph/national-accounts/base-2018/estimates 53 https://www.huawei.com/minisite/gci/en/

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However, the ranking of the Philippines was unchanged and as “starter” meaning that it is in the “early stage of ICT infrastructure build-out. Their focus is on expanding connectivity coverage to give more people access to the digital economy.”

The index evaluates each country in a wide classification of indicators for ICT infrastructure and digital transformation. It has unique quantitative measurements which evaluates connectivity from both a national and industrial perspective. It has 40 indicators under four categories (supply, demand, experience, and potential) which includes telecom investment, ICT laws, Artificial Intelligence (AI) investment, cloud investment, fixed broadband subscriptions, mobile broadband subscriptions, etc.

The expanding OCCs as well as the developments in ICT may boost the industry’s performance in the country. 35.59 million Filipino individuals, or nearly 79% of the population owned a cellphone, while approx. 21% did not have one, according to DICT’s 2019 National ICT Household Survey (Table 2.5).54

Table 2.5: Regional distribution of Filipinos with and without cellphones

Region Without cellphone in % With cellphone in % Total NCR 923,677 13.8% 5,766,921 86.2% 6,690,598 CAR 81,552 12.7% 558,479 87.3% 640,031 REGION I 465,314 18.6% 2,042,932 81.4% 2,508,246 REGION II 284,663 16.6% 1,434,642 83.4% 1,719,304 REGION III 1,064,666 17.9% 4,867,228 82.1% 5,931,894 REGION IV-A 774,570 11.4% 6,007,370 88.6% 6,781,939 REGION IV-B 302,787 25.0% 906,922 75.0% 1,209,709 REGION V 651,647 27.6% 1,707,802 72.4% 2,359,449 REGION VI 853,323 28.6% 2,127,227 71.4% 2,980,550 REGION VII 871,198 36.1% 1,540,479 63.9% 2,411,677 REGION VIII 661,133 28.6% 1,650,577 71.4% 2,311,710 REGION IX 325,324 22.9% 1,098,075 77.1% 1,423,399 REGION X 464,209 29.5% 1,109,109 70.5% 1,573,318 REGION XI 487,827 22.4% 1,691,744 77.6% 2,179,571 REGION XII 683,221 31.1% 1,511,343 68.9% 2,194,564 CARAGA 329,083 29.0% 807,469 71.0% 1,136,552 BARMM 229,996 23.1% 764,912 76.9% 994,908 TOTAL 9,454,188 21.0% 35,593,231 79.0% 45,047,419

Source: DICT, 2019 National ICT Household Survey

54 https://dict.gov.ph/ictstatistics/nicths2019/

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Table 2.6: Regional distribution of Philippine households with and without television

Region With television % Without television % Total NCR 2,829,350 94.0% 180,195 6.0% 3,009,545 CAR 315,885 81.4% 72,303 18.6% 388,188 REGION I 1,090,157 87.2% 160,180 12.8% 1,250,337 REGION II 713,038 83.3% 142,855 16.7% 855,893 REGION III 2,668,170 94.5% 155,029 5.5% 2,823,200 REGION IV-A 3,217,334 92.3% 268,852 7.7% 3,486,186 REGION IV-B 501,164 73.0% 185,752 27.0% 686,916 REGION V 774,635 75.1% 256,351 24.9% 1,030,986 REGION VI 1,388,172 81.4% 317,384 18.6% 1,705,556 REGION VII 1,326,302 72.9% 493,750 27.1% 1,820,052 REGION VIII 732,218 70.2% 310,506 29.8% 1,042,723 REGION IX 514,945 69.2% 228,790 30.8% 743,735 REGION X 799,017 75.5% 259,442 24.5% 1,058,458 REGION XI 1,019,529 80.1% 253,556 19.9% 1,273,085 REGION XII 742,182 69.8% 321,057 30.2% 1,063,239 CARAGA 450,545 74.9% 150,967 25.1% 601,512 BARMM 247,439 47.5% 273,910 52.5% 521,349 TOTAL 19,330,080 82.7% 4,030,880 17.3% 23,360,960

Source: DICT, 2019 National ICT Household Survey

The majority of Filipino households in 2019 had TVs (Table 2.6). However, only 17.7% of them had access to internet (Table 2.7). The main reasons given for not having internet access (Table 2.8) were the high cost of an internet subscription (32.5%), high cost of equipment (21%), and internet service not being available in the area (12%).

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Table 2.7: Regional distribution of Philippine households with and without internet access

Region With internet access % Without internet access % Total NCR 1,000,671 33.2% 2,008,874 66.8% 3,009,545 CAR 115,495 29.8% 272,693 70.2% 388,188 REGION I 224,947 18.0% 1,025,390 82.0% 1,250,337 REGION II 154,330 18.0% 701,564 82.0% 855,893 REGION III 663,095 23.5% 2,160,105 76.5% 2,823,200 REGION IV-A 844,147 24.2% 2,642,039 75.8% 3,486,186 REGION IV-B 52,140 7.6% 634,776 92.4% 686,916 REGION V 75,063 7.3% 955,923 92.7% 1,030,986 REGION VI 177,260 10.4% 1,528,295 89.6% 1,705,556 REGION VII 186,621 10.3% 1,633,431 89.7% 1,820,052 REGION VIII 173,539 16.6% 869,184 83.4% 1,042,723 REGION IX 46,424 6.2% 697,312 93.8% 743,735 REGION X 68,753 6.5% 989,706 93.5% 1,058,458 REGION XI 163,277 12.8% 1,109,807 87.2% 1,273,085 REGION XII 108,209 10.2% 955,030 89.8% 1,063,239 CARAGA 46,331 7.7% 555,181 92.3% 601,512 BARMM 23,580 4.5% 497,769 95.5% 521,349 TOTAL 4,123,881 17.7% 19,237,079 82.3% 23,360,960

Source: DICT, 2019 National ICT Household Survey

Table 2.8: Regional distribution of household by reason for not having internet access*

in % High cost of internet subscription 32.5 High cost of equipment 21.0 Internet service is not available in the area 12.0 Do not know how to use it 10.0 Do not need internet 5.5 Members have individual/personal connection 5.5 Poor quality and speed 4.4 Don’t know what internet is 3.7 Have access to the internet elsewhere 2.8 Others 1.3 Privacy of security concerns 0.7 Not allowed to use the internet 0.3 Exposure to harmful content 0.2

* Multiple responses

Source: DICT, 2019 National ICT Household Survey

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Major telecommunication players

1. PLDT, Inc. Background The Manuel V. Pangilinan-led PLDT, Inc. (formerly Philippine Long Distance Telephone Co.) is one of the biggest industry players and a stock firm with three principal business segments: wireless, fixed line, and others. These services include mobile services, home broadband services, mobile virtual network operations (MVNO), fixed line business and other services such as investment holding services. The firm’s original franchise was granted in 1928 and it currently operates under the regulations of the National Telecommunications Commission (NTC).

PLDT also became the first Philippine telecommunication company to roll-out fifth generation () mobile network services. At the end of July 2020, the company’s wireless and mobile unit, Smart Communications, Inc. launched its 5G services to its Smart Signature, Infinity and other Smart postpaid subscribers. The 5G setup is initially available in key business districts of Metro Manila as well as key cities in the Visayas and Mindanao using Smart-certified handsets with 5G-activated SIMs.

Operations PLDT’s consolidated revenues went up by 6.7% year on year to P181.00 billion last year. Likewise, its attributable net income increased by 7.8% year on year to P24.28 billion.

Media-related activities and plans PLDT said the lockdowns implemented due to COVID-19 have created an expansion in online consumption as the restrictions on the movement of people have resulted in a lot of consumers streaming online content at home instead of doing their usual outdoor activities. The company is already in tandem or in discussion with most of the top global OCCs such as Netflix and NBA.

2. Globe Telecom, Inc.

Background Globe is a strategic partnership between Ayala Corp. and Singapore Telecom International Pte. Ltd. (Singtel). Its franchise originated in 1928. Currently, it offers local and international full-service digital wireless communications as well as carrier services which include mobile, fixed, broadband, and data connectivity.

In 2020, Globe set up a higher number of new cell towers at 1,300 from 1,100 a year ago and upgraded its 11,529 existing towers to /LTE. In addition, Globe already rolled out its 5G sites in Metro Manila and specific cities in Visayas and Mindanao. The company reported that 5G is now available in 1,045 areas across the country.

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Operations Globe’s revenues inched down by 3.7% year on year to P160.52 billion in 2020. Its net income attributable to parent meanwhile declined by 16.6% to P18.58 billion.

Media-related activities and plans Some OCC services being offered through Globe are the following: HBO GO, NBA, Netflix, Spotify, and Viu, among others.

Nikko Acosta, Globe senior vice-president for Product Management and Content Business, noted the company’s vital role in fostering OCC adoption.

“The boom of OCCs in the country may be traced back to 2013 when Globe launched a multi-pronged transformation strategy that included investing in network & IT systems to support massive data consumption. This was complemented by Globe’s game-changing OCC product innovations such as the first-in-the-world Google Search Free Zone, Free Facebook, and Free Viber campaigns. These drove the democratization of mobile data use,” Mr. Acosta said in an interview.

Mr. Acosta also noted that Globe is earning from video/media content via direct partnership monetization. “Indirectly there is business value in increasing the data usage of our customers,” he added.

3. Corp.

Background DITO, formerly known as Mindanao Islamic Telephone Co. (Mislatel) and recognized as the country’s third major telco player owned by Davao-based businessman Dennis A. Uy’s group, was rebranded to its current company name in July 2019, the year when NTC granted the company a Certificate of Public Convenience and Necessity, or the license to operate. The company won the government-sanctioned bidding for the new major telecommunications player of the Philippines held in November 2018.

The new player’s primary focus is to build, maintain, and operate commercial telephone and communication systems and to engage and/or operate in the telecommunication business.

As of 2019, China Telecommunications Corp. — a Chinese-owned telco — has the largest share of ownership in DITO at 39.92%, followed by DITO’s Philippine parent company Udenna Corp. at 35.10%, while Chelsea Logistics and Infrastructure Holdings Corp. holds 24.95%.

Timeline Commitments According to its license, DITO shall accomplish the following commitments during the initial five-year period:

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Commitments Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative Network Coverage (%)* 37.03 51.01 70.01 80.01 84.01 Internet speed (Mbps)* 27 55 55 55 55 Capital Expenditures (in billions P)* 150 176 203 230 257

Source: PSE EDGE *Figures were based on the company’s 2019 audited financial statements.

DITO spent P12 billion in 2019 for the telecommunication sites and equipment in accordance with its commitments to the government.

As of March 2021, DITO officially launched its services in the Visayas and Mindanao Areas. Based on audit findings, the third major telco player demonstrated an average speed of 85.9 Mbps for 4G and 507.5 Mbps for 5G with a population coverage of 37.48% nationwide.

4. Converge Information and Communications Technology Solutions, Inc. Background Beginning operations in 2012, the company, founded by Dennis Anthony H. Uy (not to be confused with DITO’s Dennis A. Uy), provides only pure-play fixed broadband services.

As of the end of December 2020, the residential subscriber base had doubled to approximately 1,038,000 subscribers from 530,000 by the end of 2019. Meanwhile, its enterprise business also went up with a net addition of 1,007 customers during full- year 2020. This resulted in a 10% expansion.

In 2020, the company’s net income went up by 77.8% to P3.39 billion, from P1.91 billion a year ago.

Operations Converge’s consolidated revenues jumped by 71% year on year to P15.65 billion in 2020. Its bottom line likewise increased by 74% to P3.39 billion.

5. Sky Cable Corp.

Background Incorporated in 1990, Sky Cable provides TV services under the tradenames of “Sky Cable” and “.” In November 2020, the company posted its internet plans as more Filipinos rely on internet amid the pandemic through its SKY Fiber. The company is 59.4% owned by ABS-CBN Corp.

SKYcable is a high-definition cable TV subscription service which provides a “top- notch” programming system with a large number of channels.

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SKY Fiber is a high-speed broadband service with affordable prices.

The SKY Fiber internet services are available in Metro Manila, , , , , Batangas, Cebu, Dumaguete, Bacolod, Iloilo, and Davao.

In 2019, Sky Cable posted P154.97 million net earnings, a reversal from 2018’s P221.54 million loss.

Players’ internet speed

Smart and PLDT were given awards by the Ireland-based Ookla for providing the fastest download and upload speeds in the country with a fixed and mobile network speed score of 27.28 and 24.99 respectively during the second half of 2020.55

PLDT’s fixed network download and upload speed averaged 79.48 Mbps and 92.18 Mbps respectively. This was followed by Converge at 49.16 Mbps (download) and 47.06 Mbps (upload); Sky at 47.39 Mbps and 9.79 Mbps; and Globe with 37.13 Mbps and 18.53 Mbps.

Meanwhile, Smart mobile network’s download and upload speed averaged 20.88 Mbps and 15.25 Mbps. This was better than Globe’s 15.25 Mbps and 4.11 Mbps average download and upload speed.

5G experience

The network analytics organization Opensignal published an analysis on global 5G experience last February. 56 It aimed to assess the real-world experience of 5G, showing how it has changed and improved, as well as identify the leading countries.

Among the top ten 5G “emerging” economies noted, the Philippines has a 5G vs 4G download speed improvement ratio of 10.1. This means mobile users see 5G download speed 10.1 faster than 4G download speed, the second-fastest only behind Thailand’s 13.4. In addition, its 5G vs 4G video experience showed the highest improvement among the ten at 40%. On the other hand, the country’s 5G download speed and video experience score is the lowest among the ten with 117.2 Mbps and 77.1 respectively (Tables 2.9-2.12).

Meanwhile, Opensignal’s 2021 global awards last March recognized Globe as the most improved in “video experience” in the Philippines. Meanwhile, Smart was awarded as the most improved in “4G availability” in the country.

55 https://www.speedtest.net/awards/philippines/ 56 https://www.opensignal.com/2021/02/03/benchmarking-the-global-5g-experience

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Table 2.9. 5G vs 4G Download Speed Improvement (ratio) Thailand 13.4 Philippines 10.1 Saudi Arabia 8.8 7.7 Ireland 7.3 Kuwait 6.9 UAE 6.6 South Korea 5.6 Australia 5.5 Hong Kong 5.3 Source: Opensignal 2021 Global awards

Table 2.10. 5G vs 4G Video Experience Improvement (%) Philippines 40 Thailand 29 Hong Kong 14

Poland 14

UAE 13

Saudi Arabia 12

Ireland 11

Taiwan 10

United Kingdom 9 Australia 9 Source: Opensignal 2021 Global awards

Table 2.11. 5G Video Experience (score) United Arab Emirates 83.7 Taiwan 83.2 Thailand 83.1 Australia 82.0 Hong Kong 81.5 Poland 80.2 Ireland 80.2 Saudi Arabia 79.9 United Kingdom 79.0 Philippines 77.1

Source: Opensignal 2021 Global awards

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Table 2.12. 5G Download Speed (Mbps)

South Korea 354.4 United Arab Emirates 292.2 Taiwan 272.2 Saudi Arabia 264.7 Australia 250.5 Kuwait 201.6 Ireland 197.6 Thailand 162.3 Hong Kong 136.9 Philippines 117.2 Source: Opensignal 2021 Global awards

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Chapter 3: Traditional Pay TV Market Environment

This section gives a brief overview on the traditional pay TV market in the Philippines, which includes cable and DTH satellite services, as well as internet protocol television (IPTV).

Current State of the Philippines’ Pay TV industry

Pay TV in the Philippines continues to evolve (and be disrupted) by the several developments that unfolded in the past months such as the COVID-19 pandemic and the shutdown of the country’s broadcasting giant, ABS-CBN.

With the pandemic apparently keeping the majority of the population in their homes, increased TV viewing was observed. In April 2020, global measurement and analytics company Nielsen showed that an additional 3.8 million viewers were gained at the onset of the pandemic.57 Moreover, the number of viewers increased throughout the day, including a newly found “prime time” between 10 a.m. and 12 noon.

Figure 3.1: TV viewing shape of day for total Philippines (January-April 15, 2020)

Average Minutes Ratings % Ratings Minutes Average

Source: Nielsen

57 https://www.bworldonline.com/tv-viewing-up-27-under-ecq/

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However, as another analytics firm Kantar spotted, TV viewing went on a “rollercoaster ride” in 2020.58 While increased viewing (by 22%) was seen since the start of the ECQ on March 15th, 2020, the decrease (by 24%) began when ABS-CBN shut down its terrestrial channel on May 5th upon the cease-and-desist order of the NTC.

Kantar’s viewership figures further plunged by 21% with the shutdown of some of ABS- CBN’s businesses, particularly the DTH satellite service SKYdirect and the digital terrestrial television (DTT) service ABS-CBN TVplus by the end of June 2020.

The figure showed a slight rebound around October, when ABS-CBN’s programs surfaced on Zoe Broadcasting Network-owned A2Z Channel 11 and ABS-CBN’s very own Kapamilya pay TV Channel started airing on satellite service Cignal.

Figure 3.2: Overall TV Viewing in 2020

From lockdown to shutdown to A2Z, TV viewing is on a rollercoaster ride in 2020.

25 Pre ECQ March 15: May 15: Jun 30: Aug 16: Start Oct 10: A2Z starts airing in ECQ starts ABS_CBN DTT and Sky Direct of Private FTA; Kapamilya shutdown Shutdown: School Classes channel starts airing in 20 Kapamilya Channel Cignal

15 24%

21% 22% 24% Rtg% 10

5

0

8 8 8 9 15 22 29 12 19 26 11 18 25 15 22 29 13 20 27 10 17 24 15 22 29 12 19 26 16 23 30 14 21 28 11 18 25 1-Jan 1-Jul 5-Feb 4-Mar 1-Apr 6-May 3-Jun 5-Aug 2-Sep 7-Oct 4-Nov

Source: Kantar

"Rtg%: Rating % which is the estimate of the size of television audience relative to the total universe, expressed as a percentage. The estimated percent of all TV households or persons tuned to a specific station. E.g. If three of the 10 homes in the universe are tuned to channel 9. That translates to a 30 rating."

In spite of this lowered TV viewership, Kantar observed a significant increase in viewing in pay TV during primetime.

58 Kantar’s 2020 Media Year In Review

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Figure 3.3: Pay TV viewing in 2020

Pre-Shutdown ABS-CBN Shutdown TV Plus and Sky Direct Shutdown Addition of A2Z Channel

6

5

4

3 Rtg%

2

1

0 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 25:00

Source: Kantar

"Rtg%: Rating % which is the estimate of the size of television audience relative to the total universe, expressed as a percentage. The estimated percent of all TV households or persons tuned to a specific station. E.g. If three of the 10 homes in the universe are tuned to channel 9. That translates to a 30 rating."

Moreover, as reported in May 2020, the TV market reception survey conducted by global content connectivity solutions company SES showed that satellite TV posted the highest satisfaction rate in the Philippines at 76%, followed by cable TV at 70% and IPTV at 54%.59

With the exit of SKYdirect, the satellite industry is now dominated by Cignal TV, GSat, and SatLite. Cable, meanwhile, stays intact with SKYcable, Destiny Cable, and , alongside several hundred local cable operators that are either under the Philippine Association, Inc. (PCTA) or the Federation of International Cable TV and Telecommunications Association of the Philippines (FICTAP).

Regarding IPTV, the visible player appears to be Cignal TV, with its tie-ups with PLDT and Radius Telecoms in offering IPTV services. The past months also observed rapid growth for OTT or SVOD services as the pandemic caused the increased use of internet connections.

An in-depth report on OTT video streaming in the Philippines market by global technology company The Trade Desk revealed that 36 million consumers stream two billion hours of OTT content per month, making OTT one of the fastest growing media outlets in the country.60 The study, published in February 2021, also highlighted that the average Filipino OTT viewer watches 3.3 hours of content per day, compared to a regional average of just 2.5 hours. The country also logs the highest percentage of heavy users across the region, with nearly one in three OTT viewers (32%) watching four or more hours per day.

59 https://www.ses.com/press-release/ses-unveils-first-tv-market-reception-survey-results-philippines 60 The Future of TV by The Trade Desk and Kantar, 2021

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Further confirming the trend, a study conducted by analyst firm Ovum on behalf of communications software company Amdocs showed that Filipinos are some of the most avid users of OTT media services, with more than half (52%) having access to or are subscribed to paid OTT services.61

Furthermore, Ovum’s study revealed that carrier-bundled media services drive consumers to spend more and maintain loyalty, with 44% of Filipino respondents saying bundling media services with their telecom plan was the main reason they were willing to spend more on their mobile and fixed broadband subscriptions.62

At present, curated OTT services in the Philippines include Amazon Prime Video, Apple TV+, Cignal Play, HBO Go, iWantTFC, NBA League Pass, Netflix Philippines, , Viu Philippines, VivaMax, WeTV iflix, and YouTube Premium.

Industry Data

Most of the industry data presented in this section comes from Kantar’s TV Establishment 2019 report and data from its Synergy 2019 study.

TV ownership

In 2019, 85% of the population surveyed across the country were found to have a TV set. This was below the previous year’s 87%. Furthermore, almost all urban sectors showed a decline in TV ownership; except for the suburbs segment, which remained stable at 95% (Figure 3.4). Mega Manila also remained stable at 96%, sharing the same highest share with Metro Manila. Urban North Luzon saw a slight increase at 88%.

Rural segments also saw a decrease in TV ownership, going down from 82% in 2018 to 79% in 2019 (Figure 3.5). Rural Visayas remained relatively unchanged at 78%. Rural Central Luzon has the highest share with 92%, albeit a decline from the previous year’s 98%. Rural Mindanao tallied the lowest share with 66%.

61 https://mb.com.ph/2020/08/20/ph-media-consumption-reflects-filipino-sari-sari-store-culture-amdocs-study- reveals/ 62 https://www.amdocs.com/sites/default/files/Ovum-OTT-market-study-2019-20.pdf

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Figure 3.4 TV ownership in 2019, Urban Philippines

2018 2019

93 96 96 97 96 95 95 98 94 93 87 85 90 87 88 87 85 81 89 83 % of Total Homes

Total Urban Mega Metro Suburbs Urban Urban Urban Urban Urban Philippines Philiippines Manila Manila North Central South Visayas Mindanao Luzon Luzon Luzon

Source: Kantar

Figure 3.5 TV ownership in 2019, Rural Philippines

2018 2019

98 92 87 85 82 88 87 87 83 79 78 78 73

% of Total Homes 66

Total Philippines Rural Rural North Rural Central Rural South Rural Visayas Rural Mindanao Philiippines Luzon Luzon Luzon

Source: Kantar

Pay TV subscription

On a positive note, Kantar’s survey showed that pay TV subscription increased by around 14% to 32% in 2019 (Figure 3.6 and 3.7). Among the urban segments, which overall got 23% (from 2018’s 22%), South Luzon and Mindanao saw the biggest growth with 44% and 35%, respectively. However, pay TV subscription in the suburbs segment declined to 6% in 2019 from 11% in 2018.

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Figure 3.6: Pay TV subscription in 2019, Urban Philippines

2018 2019

44

% of TV Homes 34 35 32 30 31 28 27 26 26 22 23 22 23 18 17 15 17 11 6

Total… Urban… Urban… Urban… Suburbs Urban North… Urban South… Mega Manila Metro Manila Urban Visayas Source: Kantar TV Establishment Survey 2019; Base: Total TV Homes

Within the rural segments, which overall jumped to 42% from 34%, almost all areas saw double-digit increases. Rural Mindanao showed the highest share with 55%, followed by Rural Visayas (46%) and Rural South Luzon (45%). Rural Central Luzon tallied the lowest share with 14%, albeit being a slight increase.

Figure 3.7: Pay TV subscription in 2019, Rural Philippines

2018 2019

55 45 46 44 42 40 34 35 % of TV Homes 32 33 28 23 13 14

Total Rural Rural North Rural Central Rural South Rural Visayas Rural Philippines Philiippines Luzon Luzon Luzon Mindanao

Source: Kantar TV Establishment Survey 2019; Base: Total TV Homes

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Cable households

In particular, cable TV subscription remained relatively stable at 11% of TV homes (Figure 3.8). Within the urban segments, which overall stayed at 13%, North Luzon and South Luzon saw double-digit increases, tallying 21% and 25%, respectively. Suburbs, however, declined from 9% in 2018 to 5% in 2019. Within the rural segments, which overall increased to 9%, almost all areas saw an increase, topped by Rural South Luzon which increased from 10% to 17%.

Figure 3.8: Cable subscription in 2019, Urban Philippines

2018 2019

25 21 18 19 19 19 % of TV Homes 17 14 15 11 13 13 13 11 10 9 8 9 9 5

Total… Urban… Metro… Urban… Urban… Urban… Urban… Urban… Suburbs Mega Manila

Source: Kantar TV Establishment Survey 2019; Base: Total TV Homes

Satellite households

Satellite subscription, on the other hand, increased to 21% of TV homes in 2019 (Figure 3.9). Overall, the subscription in urban segments slightly increased to 10%, primarily driven by the growth in Central Luzon (3%), South Luzon (19%), and most especially Mindanao (26%). Growth was further seen within the rural segments, from 28% to 34%, with all areas seeing an increase. The most significant growths were observed in Mindanao, which jumped to 50%, and in North Luzon, which doubled its share to 28%.

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Figure 3.9 Satellite subscription in 2019, Rural Philippines

2018 2019

50

% of TV Homes 39 41 34 35 29 28 28 25 18 21 19 6 8

Total Rural Rural North Rural Central Rural South Rural Visayas Rural Philippines Philiippines Luzon Luzon Luzon Mindanao

Source: Kantar TV Establishment Survey 2019; Base: Total TV Homes Internet connection

With OTT or SVOD services continuing to gain traction among the viewing public, and with some pay TV services bundled with broadband services, it is worth noting how much the internet has penetrated households across the country and so allow for further use of streaming services.

Based on data from Kantar’s Synergy 2019 report (Table 3.1), the internet has penetrated 64.22% of the households surveyed. The highest share of internet penetration came from the Metro Manila segment, which garnered 85.94% of households. This was followed by a much bigger Mega Manila segment, which tallied 80.65%, and the Mindanao segment, which recorded 76.73%.

Within the urban segments of Philippine households, which account for 72.76% of the total, North Luzon was observed with the largest internet penetration at 75.85%, followed by the Suburbs with 74.33%, South Luzon with 70.12%, Central Luzon at 69.83%, Visayas at 67.41%, and Mindanao at 59.53%.

Within the rural segments, which account for 54.7% of households with internet connection, North Luzon was also observed with the largest internet penetration at 68.59%, followed by Central Luzon with 66.74%, South Luzon with 55.34%, Visayas with 52.55%, and Mindanao with 43.18%.

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Table 3.1: Share of households with internet connection in 2019

Segment Percentage Total Philippines 64.22 Urban Philippines 72.76 Rural Philippines 54.7 Mega Manila 80.65 Metro Manila 85.94 Suburbs 74.33 Total Balance Luzon 78.48 Total North Luzon 70.2 Total Central Luzon 68.23 Total South Luzon 59.45 Total Visayas 58.03 Total Mindanao 76.73 Urban North Luzon 75.85 Urban Central Luzon 69.83 Urban South Luzon 70.12 Urban Visayas 67.41 Urban Mindanao 59.53 Rural North Luzon 68.59 Rural Central Luzon 66.74 Rural South Luzon 55.34 Rural Visayas 52.55 Rural Mindanao 43.18

Source: Kantar Media

Meanwhile, in terms of what platform households use for internet connection, data plan/load for mobile devices dominated, tallying 84.68% of respondents. Home broadband internet (DSL/fiber/cable) had a 17.66% share; while pocket WiFi, WiFi sticks, or plug-in WiFi had 4.71%.

This was also reflected in both overall urban and rural segments as well as regional segments (Table 3.2). Within the overall urban segments, 23.59% of households have home broadband, 81.57% use mobile data, and 3.87% use pocket WiFi. Within the overall rural segments, meanwhile, 8.86% of households have home broadband, 89.28% use mobile data, and 5.96% use pocket WiFi.

Among households that use home broadband, most came from Metro Manila (40.57%), Mega Manila (31.57%), and the Suburbs segment. The rest of the segments have shares of between 8% and 20%. Among households that use mobile data, most came from Mindanao (90.86%), North Luzon (89.84%), and Visayas (87.24%). The shares of the rest fall between 75% and 84%. Among households that use pocket WiFi, most came from North Luzon (6.62%), South Luzon (6.08%), and Visayas (5.87%).

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Table 3.2: Share of households with internet connection per platform in 2019

Percentage Segment Broadband Mobile data Pocket wifi Mega Manila 31.57% 78.73% 3.20% Metro Manila 40.57% 75.19% 2.76% Suburbs 19.12% 83.63% 3.82% Total Balance Luzon 13.28% 85.50% 5.64% Total North Luzon 12.90% 89.84% 6.62% Total Central Luzon 14.99% 84.83% 3.70% Total South Luzon 12.49% 82.53% 6.08% Total Visayas 10.95% 87.24% 5.87% Total Mindanao 8.46% 90.86% 4.45%

Source: Kantar Media

Subscribers

Based on data gathered across the Asia Pacific region by S&P Global Market Intelligence as of December 2018, the Philippines has an estimated 2.3 million cable subscribers, 3.6 million DTH subscribers, and 200,000 IPTV subscribers (see Figures 3.10, 3.11, and 3.12).63

Figure 3.10 APAC Cable subscribers by market, as of December 2018

250 206.5 200

150

98.1

Million 100

50 15.5 14.3 14 8.1 7.9 5.1 3.3 2.3 0.8 0.8 0.7 0.4 0 0

China India Other Japan Taiwan Pakistan Thailand Australia Malaysia PhilippinesHong Kong IndonesiaSingapore South Korea New Zealand

Source: Industry data, Kagan estimates; S&P Global Market Intelligence

63 https://www.spglobal.com/marketintelligence/en/news-insights/blog/asia-pacific-pay-tv-growth-slows-as-cable- and-dth-lose-subs

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Figure 3.11 APAC DTH subscribers by market, as of December 2018

70 65.3

60

50

40

Million 30

20

10 4.3 3.6 3.4 3.1 3.1 3.1 2 2 0.9 0.7 0.1 0

India Japan Other China Taiwan Malaysia Vietnam Australia Thailand Pakistan Philippines Indonesia Hong Kong Singapore South Korea New Zealand

Source: Industry data, Kagan estimates; S&P Global Market Intelligence

More recent figures from data analytics and consulting company GlobalData revealed that DTH and IPTV subscriptions are set to increase at a CAGR of 4.1% and 29.3%, respectively, in 2025, while cable TV subscriptions are forecast to decline albeit being expected to grow marginally from 2022 to 2023.64

Figure 3.12 APAC IPTV Subscribers by market, as of December 2018

160 144.5 140

120

100

80 Million 60

40

20 14.3 5.3 4 2 1.4 1.4 1.1 1 0.9 0.9 0.4 0.4 0.2 0.1 0 0

China Japan Other India Taiwan Vietnam Malaysia Australia Thailand Pakistan Indonesia Hong Kong Singapore Philippines South Korea New Zealand

Source: Industry data, Kagan estimates; S&P Global Market Intelligence

64 https://www.globaldata.com/pay-tv-services-revenue-philippines-grow-4-0-cagr-next-five-years-forecasts- globaldata/

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“Although DTH will remain the leading platform to deliver pay TV services in the Philippines through 2025, IPTV subscriber share will increase over the forecast period, supported by the improving fixed broadband infrastructure in the country,” Aasif Iqbal, telecom analyst at GlobalData, stated.

In terms of the number of subscribers per service provider, very few estimates are available. Cignal TV, for instance, has over 3.5 million subscribers evenly spread across Luzon, Visayas, and Mindanao, according to Cignal TV via an e-mail interview. GSat, meanwhile, reportedly has one million subscribers to date.

According to Joel Dabao, president of cable TV regulatory group PCTA, the country had about 2.7 million fixed cable subscribers in 2020 and this can possibly reach 3 million in 2021.65

Current Industry Players and Types of Platforms Used

Cable players

Sky Cable Corporation

Sky Cable Corporation, simply known as Sky, is the pay TV and broadband arm of ABS-CBN. In the business for four decades, Sky is known as the company that introduced cable TV in the Philippines when it started its operations in 1990. The company currently serves through SKYcable, a pay TV service offering HD TV through its wide selection of channels and top-notch programming; and SKY Fiber, a high- speed broadband service. The company also offers individual and bundled plans of these two services.

Aside from serving customers across the country, the company also serves businesses through SKYBIZ, the company’s corporate and commercial arm which delivers both cable and broadband services to any business of any size.

After introducing cable TV in the country, laying out 8,500 strand miles of cable in 1992, Sky Cable Corp. launched its TV service in 2006.66 Two years later, it introduced its internet service as well as its a la carte and prepaid cable services. The company made its firsts by launching the country’s first HD cable TV service in 2009 and the country’s first online streaming service, iWant TV (now iWantTFC), in 2010.

In 2015, SKYcable launched an online streaming service called SKY , allowing subscribers to watch their favorite cable shows anytime. In 2016, it launched its own DTH service, SKYdirect, and its bundle of cable TV and broadband services under the One SKY brand.

After three years in the market, the DTH service hit its one million milestone in its subscriber base. At the end of June 2020, however, following the expiration of its franchise to operate from the NTC, SKYdirect ceased operations. The following

65 https://www.philstar.com/business/2020/10/12/2048820/cable-tv-operators-still-optimistic-despite-competition 66 https://www.mysky.com.ph/aboutus

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September, ended its services and was replaced by a rebranded iWantTFC.67

Destiny Cable

Currently owned by SKY Cable Corp., Destiny Cable is considered as the second largest cable TV provider in the Philippines, with operations in Metro Manila and Cebu. Started as the cable TV branch of the Solid Group of Companies, Global Destiny, Inc. started operating in the mid-1990s. At the start of the new millennium, the company merged with another then-player, Corp. and was rebranded Global Destiny Cable, Inc.

In 2012, Destiny Cable, Inc., together with Solid Group Inc.’s broadband internet assets under Solid Broadband Corp. and its pay TV unit in Cebu, Uni-Cable TV Inc., was sold to Sky Cable Corp.68

Now reverted to its original name, Destiny Cable is delivering its service through both analog and digital (via a set-top box) platforms. According to its website, it has a basic plan for both modes, coupled with add-on or select channels and channel packages.69

Cablelink

Also known by its corporate name Cable Link and Holdings Corporation, Cablelink is another cable TV player in the Philippines. From its beginnings as Concepcion Pay TV Network in 1995, Cablelink was formed in 1998 to consolidate management and operation of all its cable TV systems.70 In 2004, Cablelink started its internet service, known at that time as i-Blaze Cable Internet.71

Cablelink currently offers individual cable TV packages and internet plans, as well as bundled cable TV and internet plans. It also offers business and network solutions powered by Data Over Cable Service Interface Specification (DOCSIS) catering to medium to large businesses.72

Cablelink’s coverage spans Metro Manila areas, as well as and in Cavite, Biñan and San Pedro in Laguna, and and in Rizal.

Other pay TV operators

Aside from these well-known players, the Philippines has many small and medium cable operators scattered across the country. Most of the operators are members of either of the two recognized pay TV groups in the Philippines, namely the PCTA and FICTAP.

67 https://www.mysky.com.ph/skyondemand 68 https://news.abs-cbn.com/business/05/11/12/sky-cable-buys-destiny-cable%E2%80%99s-assets 69 http://www.destinycable.com.ph/ 70 https://www.cablelink.com.ph/aboutus 71 https://web.archive.org/web/20090301044845/http://cablelink.com.ph/web/about%20us.html 72 https://www.cablelink.com.ph/corporate

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According to PCTA’s website, the association has about 300 regular members nationwide that “are serving 75% of the total cable TV subscribers in the Philippines.”73 These members are listed in the association’s website and are classified into members in Luzon, Visayas, and Mindanao. All three big players — Sky, Destiny Cable, and Cablelink — are included in PCTA’s member list.

FICTAP, meanwhile, stated on its website that it has 1,000 members “composed of small and medium cable enterprises that have embraced the expansion from delivering traditional cable TV into telecommunications and value-added services.”

Some of the well-known local pay TV operators in the country include:

Air Cable Part of emerging telco firm Converge ICT Solutions, Air Cable offers both cable and internet services across Central Luzon, especially , Tarlac, , Bulacan, and . Air Cable was formerly known as Angeles City Cable Television Network, or ACCTN.

Planet Cable Planet Cable Inc., a multi-system operator offering cable TV services, cable-internet and digital video broadcast, is reportedly in line to be taken over by Villar group-owned Systems Technologies, Inc.74 It is reportedly operating in Regions I, II, III, National Capital Region (NCR), Cavite, Laguna, Batangas, Rizal, and Quezon (CALABARZON); Iloilo Province, and Davao,

Streamtech’s website75 shows individual and bundled cable TV and fiber internet plans under the Streamtech Home suite. Individual cable TV plans include PlanLITE, with 38 channels; PlanDELUXE, with 101 channels; and PlanPREMIUM, with 1125 channels. Bundled plans range from Plan 1499 (with up to 20 Mbps internet) to Plan 3999 (with up to 150 Mbps).

Asian Vision With operations started in the 1970’s in City, Zambales, Cable Holdings, Inc. has an expansive coverage in the Zambales, Batangas, and Quezon provinces under various brands. 76 In 2005, Asian Vison expanded its services to offering cable broadband internet and, later on, fiber internet. The company’s internet plans can deliver speeds ranging from up to 10 Mbps to 100 Mbps, while its digital cable TV plans include Digi649 and Digi489 plans.

Royal Cable With a stronghold across the Laguna province — from Biñan City to Liliw — Royal Cablevision Corp.77, more commonly known as Royal Cable, also offers cable TV and internet services through its various individual and bundled plans.

73 http://pcta.org.ph/about/ 74 https://www.philstar.com/business/2020/07/25/2030354/villar-launches-internet-unit 75 https://www.streamtech.com.ph/services/services-home-cable-fiber/ 76 https://www.asianvision.com.ph/about 77 https://www.dnb.com/business-directory/company- profiles.royal_cablevision_corp.3b5975024a9d4b2509c6acecc1428e7d.html

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Fil Products In the Visayas region, one of the well-known operators is Fil Products Service TV, Inc., originally named Fil Vision Cable TV, which was founded in 1987 and is considered the largest cable TV provider in Negros Oriental.78 The operator offers bundled digital cable TV and fiber internet plans, with speeds of up to 15 Mbps and more than 100 channels.

Cebu Cable Officially known as Cebu Cable TV Management Corporation 79 , Cebu Cable has almost 20 years of experience in the industry. One of the only two cable companies operating in , Cebu Cable has a wide coverage spanning about 100km from the municipality of Argao to and another 100km to the Daanbantayan municipality. The operator offers three cable TV plans.

Parasat Parasat Cable TV, Inc. is considered a forerunner of cable TV in the Mindanao region. Established in 1991 in Cagayan de Oro City, Parasat has coverage in the municipalities of Opo and Tagolan, as well as branches in City, and San Carlos City, , along with expanding coverage in Misamis Oriental province.80 Parasat offers bundled fiber internet and cable TV services, with speeds ranging from 15 Mbps to 50 Mbps.

Satellite TV players

Cignal TV, Inc.

Cignal TV, Inc., a wholly owned subsidiary of MediaQuest Holdings Inc., which is in turn owned by the PLDT Beneficial Trust Fund, mainly provides satellite TV and IPTV services.

Cignal TV’s satellite service was launched by the MediaQuest Holdings unit, then known by its legal trading name MediaScape, Inc., in 2009. Its operations formally began in February of that year, covering provinces in Luzon, especially areas that still did not have access to cable TV.81

The satellite TV provider transmits 134 channels including FTA, SD, and HD channels, plus a varied mix of 17 audio channels. This is coupled with on-demand viewing via pay-per-view subscription offers. Cignal also has a digital IPTV and video on-demand service called Cignal Play, which allows Cignal and PLDT subscribers to watch live channels offered from Cignal as well as content from third-party players. Cignal’s IPTV service traces back to its Cignal on Broadband service, which is integrated with services offered by PLDT. 82 , 83 The Cignal Play OTT service was relaunched in

78 https://filprod-dgte.ph/about-us/ 79 https://cebucable.tv/about-us/ 80 https://www.parasat.tv/about-us 81 https://www.philstar.com/business/2009/05/08/464957/pldt-unit-offers-direct-home-satellite-tv 82 http://www.pldt.com/news-center/article/2016/05/25/pldt-home-leads-fixed-broadband-market-adds-six-times- more-subscribers-than-competition 83 https://pldthome.com/news-media/2016/08/31/pldt-home-fortifies-leadership-in-fixed-broadband-with- sustained-subscriber-growth

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October 2019 as a standalone product for Cignal’s original content and shows from its partners such as HBO and AXN.

Cignal offers seven postpaid plans and more than 20 prepaid plans, plus channel and OTT add-on options. It also offers plans for hotels, resorts, and hospitals, as well as businesses of various sizes including sports bars, restaurants, and offices.

Cignal’s digital TV service is also bundled on plans under PLDT Home Fibr, a broadband service powered by network Fiber-to-the-Home (FTTH) technology.84

According to PLDT Home’s website, subscribers can avail up to three Cignal TV set- top boxes running on a single fiber connection. In addition, Cignal TV’s connection under this service has its own dedicated port for delivering the TV service without affecting internet speed.

In partnership with group subsidiary Radius Telecoms, Inc., Cignal TV also offers RED Broadband, a 3-in-1 service that provides fiber broadband connectivity, built-in TV plans, and access to the Cignal Play app. Subscribers to this service get to choose their base plan, and then can avail of faster broadband speeds, additional TV boxes, or more channels. The partnership was formalized in November 2020.85

Halfway through May 2021, Cignal TV launched its own satellite broadband service under the brand Cignal CONNECT. 86 The service aims to reach businesses and organizations in remote areas, including resorts, government offices, dams or mining sites, and military bases. The service currently covers Luzon region.

Cignal TV also operates SatLite, a prepaid digital pay TV service that offers a budget- sized lineup of channels. SatLite offers a kit consisting of a and set-top box, coupled with seven load packages, the most primary of which are its Load 99, Load 199, and Load 299 packages.

Aside from providing its satellite and IPTV services, Cignal TV, Inc. also operates satellite TV content channels, namely lifestyle channel Colours, entertainment channel Sari-Sari Channel (in partnership with Viva Communications), PBA Rush (in partnership with Philippine Basketball Association), sports channels and One Sports+, news channels One News and One Ph, entertainment channel One Screen, and NBA TV Philippines.

The company also made a five-year content partnership with production firm APT Entertainment for BuKo Channel, an all-local comedy channel, whose launch was delayed due to the COVID-19 pandemic.

Cignal TV, Inc. also has a film and TV production unit, Cignal Entertainment. Launched in 2017, Cignal Entertainment produced several series and movies co-produced with

84 https://pldthome.com/fibr 85 https://www.bworldonline.com/cignal-tv-and-radius-telecoms-launch-newest-fiber-broadband-provider/ 86 https://www.bworldonline.com/cignal-launches-satellite-broadband-service/

60 other production houses. Cignal TV serves as the main content provider of its sister company TV5 Network.87,88

Global Satellite Technology Services (GSat)

Another primary player in satellite TV in the country is GSat, owned by Global Satellite Technology Services (GSTS), formerly known as First United Broadcasting Corporation (FUBC).

GSat originally launched its DTH service in 2009 with affordable access to a mix of international and local programs, and in 2011 it looked to expand its satellite capacity further with an HD programming package.89

GSat currently provides its satellite TV services through prepaid subscription packages, consisting of three Direct TV packages, with up to 120 channels, as well as a more affordable GPinoy Satellite TV package consisting of 59 channels.

Aside from its satellite TV services, GSTS also delivers iGSat Broadband, an internet service whose network is connected entirely via the SES-9 satellite. The service, which was launched in 2016, caters to homes and enterprises as well as the maritime industry; medical facilities; government offices; schools; military and police communication; and peace and order monitoring. It also provides satellite virtual private network (VPN) connectivity to companies with multiple remote branches for various applications.

GSTS also runs in-house channels such as news and current affairs channel Golden Nation Network (formerly known as Global News Network and then One Media Network) and local movie channel Global Pinoy Cinema.

Business Models

In 2016, the Cable and Satellite Broadcasting Association of Asia (CASBAA), in their Philippines In View report, cited a report from Media Partners Asia, which showed that the pay TV industry’s revenue consisted of 21% advertising and 79% subscriptions.

Today the business models of current players are still heavily focused on subscription bundles of broadband and TV services. Following is a description of the service bundles offered by major players.

Sky Cable Corp.

Sky currently offers consumers several bundled and individual plans for its broadband and cable TV services.

Individual broadband plans, under SKY Fiber, include 20 Mbps for P999 per month, 40 Mbps for P1,499 per month, 80 Mbps for P1,999 per month, 120 Mbps for P2,499

87 https://www.bworldonline.com/tv5-to-buy-entertainment-content-enter-into-block-timing/ 88 https://businessmirror.com.ph/2021/03/17/cignal-tv-and-tv-5-collaboration-with-top-producers-benefit-viewers/ 89 https://www.ses.com/case-study/gsat

61 per month, and 200 Mbps for P3,499 per month. 90 Add-on subscriptions include SKYcable Lite, Viu, HBO Go, and Netflix.

Plans under SKYcable, all postpaid, include HD 500, HD 1000, HD 1500, and HD 5000. 91 SKYcable also offers add-ons such as individual channels and channel packages such as BeIN Sports Pack, HBO Pak, All In, Fox All In HD, and Korean Pack, to name a few. The service also offers pay-per-view add-ons through SKY PPV.92

Sky’s broadband + HD cable TV bundles include 10 Mbps, 30 Mbps, 60 Mbps, and 120 Mbps.93 The first three bundles SKY Fiber with 10 HD and 39 SD channels, while the remaining bundle has 20 HD and 57 SD channels.

The company’s SKYBIZ service, meanwhile, offers BIZ Fiber and BIZ TV plans classified under Enterprise, Small and Medium Enterprise (SME), and Microbiz.94

Notably, while the company offers several subscription plans and bundles for homes and businesses, SKYcable also offers advertising solutions through Sky Media Solutions.95 SKYcable’s website shows that Sky Media Solutions aims to help build brands and reach their business goals through their creative media solutions and innovative reach amplifiers.

The service’s creative media solutions include Creative Clip Ons, Branded Executions, Studios services, and TV commercial production and airtime placements on Sky Premium Channels. Innovative reach amplifiers, meanwhile, include Blocktime, Channel Lease, Digibox Ads, and Branded PPV.

Destiny Cable

Sky-owned Destiny Cable’s business model centers on its analog and digital cable subscriptions. According to the company’s website, Destiny Cable offers a basic plan consisting of local, news, general entertainment, sports, movie, educational/documentary, music, kids, international, and religious channels. The line- up differs for analog and digital cable services.

Add-ons are also offered as individual channels and channel packs (e.g., Movie Pack, Sports Pack, Kids Pack, Lifestyle Pack, Chinese Pack, Korean Pack).

Cablelink

Cablelink offers consumers individual and bundled packages for its cable and broadband internet services.

90 https://www.mysky.com.ph/skyfiber 91 https://www.mysky.com.ph/metromanila/plans-and-bundles/cable; https://www.mysky.com.ph/metromanila/plans-and-bundles/select 92 https://www.mysky.com.ph/metromanila/plans-and-bundles/pay-per-view 93 https://www.mysky.com.ph/skyfiber 94 https://www.skybiz.com.ph/ 95 https://www.mysky.com.ph/advertise

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As detailed on Cablelink’s website, its cable TV packages include Basic 495, consisting of 60 channels; and Basic Plus, with more than 30 additional channels.96 Add-ons come in individually-picked channels under its Pick One option and bundled selections under its I Choose Plans option. With I Choose Plans, subscribers can pick three, six, nine, or 12 additional channels. Cablelink also offers Fox Sports Pack and Hindi Pack as add-ons.

Meanwhile, Cablelink’s broadband internet is individually offered with the following options based on maximum bandwidth: 2 Mbps, 5 Mbps, and 10 Mbps.

Cable and internet bundles come in the following options: up to 2 Mbps, 3 Mbps, 5 Mbps, and 10 Mbps.

For subscribers with medium to large business requirements, Cablelink offers its Corporate DOCSIS System plan.

Cignal TV

A large part of Cignal TV’s business model is around its pay TV service, which has a wide array of subscription plans that come in postpaid and prepaid options.

As detailed on Cignal’s website, its postpaid plans include Plan 290, Plan 250, Plan 720, Plan 1050, Plan 1350, Plan 1650, and Premier Plan 1990.97

Its various prepaid plans are classified into Ultimate HD, Premium SD, Lite Loads HD, and Lite Loads SD. Ultimate HD and Lite Loads HD plans have a mix of HD and SD channels, while the Premium SD and Lite Loads SD plans only include SD channels.

Both Ultimate HD and Premium SD plans come in the following options: HD/SD 100, HD/SD 175, HD/SD 200, HD/SD 300, HD/SD 450, HD/SD 500, HD/SD 600, HD/SD 800, and HD/SD 1000.

Both Lite Load HD and SD plans, on the other hand, come with three options, namely HD/SD 30, HD/SD 50, and HD/SD 75.

In addition to these basic packages, Cignal also offers add-ons for both prepaid and post-paid. These add-ons come in packages such as HBO Pak, beIN Sports Pack, and Premier Bundle; and individual channels such as the exclusive NBA TV Philippines, One Sports+ HD, and Premier Tennis, to name a few. Subscriptions to OTT players such as hayu and HBO Go are also offered.

For businesses, Cignal also offers tailored Hotels, Resorts, and Hospitals Plans, which comes in Superior (49 SD and 13 HD channels) and Premiere Plans (57 SD + 22 HD channels); and Commercial Plans, which include Plan 350, Plan 750, Plan 1150, Plan 1550, and Plan 1950.

96 https://www.cablelink.com.ph/ 97 cignal.tv

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Furthermore, Cignal, together with Radius Telecoms, started rolling out RED Broadband, a bundle of fiber internet, Cignal’s pay TV service, and access to Cignal Play. RED Broadband’s bundles include Plan 1699, Plan 1999, Plan 2999, as well as Plan 3999, Plan 4999, and Plan 5999. The plans come with 54 SD and 7 HD channels from Cignal and a basic subscription to Cignal Play.

Cignal CONNECT, meanwhile, has the following plans: 2 Mbps, 5 Mbps, 8 Mbps, and 10 Mbps.

Cignal TV’s other pay TV unit, SatLite, offers seven prepaid subscription plans. Load 10, Load 15, and Load 25 allow subscribers to access certain channels for three days. Load 49, Load 99, Load 199, and Load 299, on the other hand, allows subscribers to access more channels for 30 days.

Outside the pay TV service, Cignal TV offers its VOD and linear programming web platform Cignal Play, which is available to Cignal postpaid subscribers as well as non- Cignal subscribers. Cignal Play offers a free Cignal Play Basic subscription and an upgraded Cignal Play Premium with unrestricted access to the platform’s content for P75 for 30 days.98

Moreover, in their interview for this report, Cignal shared that the company’s current business model also consists of advertising revenues from its organic channels (e.g., Colours, One Sports+, etc.), as well as content licensing and syndication, ancillary content deals, and international line production service fees.

Cignal’s original production unit, Cignal Entertainment, emerged in 2017 with the mini- drama Tukhang. It also co-produced series and movies such as Ang Babaeng Allergic sa WiFi, Born Beautiful, Maledicto, Feelenial Feelennial, and Cara x Jagger. Some of these, notably Ang Babaeng Allergic sa WiFi, were released on global streaming platform, Netflix.

In 2019, Cignal TV, Inc. planned to invest about P100 million annually over the following two years to produce its own content.99 According to the company’s vice president and head of content management, acquisition and strategy, Vitto Angelo P. Lazatin, this expansion to content production would serve as “future-proofing” the company.

During the pandemic, Cignal TV partnered with TV5 and several production companies and talent management agencies, namely , IdeaFirst Company, Cornerstone Entertainment, Brightlight Productions, Archangel Media, and .

As a content provider for TV5, Cignal TV has contributed to the refreshed programming of the so-called “third player in a two-network town”,100 with programs co-produced with the aforementioned outfits. These programs include , Rated Korina, Born to Be A , 1000 Heartbeats: Pintig Pinoy, The Wall

98 https://cignalplay.com/faq 99 https://www.bworldonline.com/cignal-to-invest-p200m-in-next-2-years-on-content-production/ 100 https://www.philstar.com/headlines/2020/01/13/1984347/philippine-hosts-asian-tv-awards-1st-time

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Philippines, Encounter, Fill In The Bank, Bawal na Game Show, Paano Ang Pangako, and Pilipinas.

Cignal TV also inked a content-deal arrangement with ABS-CBN Corp.,101,102 which resulted in the airing of ABS-CBN’s shows on TV5. These programs include FPJ’s Ang Probinsyano, , , Pinoy Connect, FPJ: Da King, showcasing the late Fernando Poe Jr.’s classic films, and ASAP Natin ‘To.

GSat

GSTS offers the GSat satellite service in four prepaid plans. Under its Direct TV suite, packages include Family Package, with 74 channels; Executive Package, with 98 channels; and Platinum Package, with 120 channels. The other more budget-friendly plan is the GPinoy plan, with 59 channels.

GSTS also offers its iGSat Broadband 103 , with subscription packages as follows: 1Mbps for P3000 per month, 2 Mbps for P5,000, 5 Mbps for 12,000, and 7 Mbps for P16,500.

Programming

This section first discusses the leading pay TV channels based on Kantar’s most recent rankings, followed by a general view of channel line-ups of each pay TV operator.

Leading channels

Recent data gathered by Kantar during the first quarter of 2021 showed that entertainment, movie, and kids channels are the leading pay TV channels. A few months after its first broadcast, ABS-CBN’s Kapamilya Channel took the lead, with a 21.43% share of total pay TV homes.

This is followed by movie channels , owned by Viva Communications, with 14.66%; and CineMo!, from ABS-CBN, with 9.55%.

Cartoon or kids-oriented channels followed in the rankings, with WarnerMedia’s Boomerang at 6.41% and Cartoon Network at 5.42%; ViacomCBS’ Nick Jr. at 5.38%; and Walt Disney’s at 5.29%.

Other movie channels completed the top ten, namely Pinoy at 3.47%, Fox Movies at 3%, and HBO at 2.76%.

Table 3.3 shows the 20 leading channels in Kantar’s rankings, complete with ratings and shares of total pay TV homes:

101 https://www.bworldonline.com/tv5-to-air-abs-cbn-show-asap-natin-to-fpj-movie-block/ 102 https://www.bworldonline.com/tv5-airs-more-abs-cbn-shows-adds-game-shows-to-its-lineup/ 103 www.gtelecoms.asia

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Table 3.3: Rankings of pay TV channels, Q1 2021

Channels Rtg(000) Rtg% Share [Total Pay TV] (%) Kapamilya Channel 190.68 2.81 21.43 PINOY BOX OFFICE 130.41 1.92 14.66 CineMo! 84.98 1.25 9.55 BOOMERANG 57.03 0.84 6.41 CARTOON NETWORK 48.19 0.71 5.42 Nick Jr. 47.89 0.71 5.38 DISNEY CHANNEL 47.09 0.69 5.29 Celestial Movies Pinoy 30.87 0.45 3.47 FOX MOVIES 26.73 0.39 3 HBO 24.53 0.36 2.76 One PH 23.65 0.35 2.66 CINEMA ONE 23.26 0.34 2.61 Jeepney TV 14.31 0.21 1.61 TELERADYO 14 0.21 1.57 NICKELODEON 10.41 0.15 1.17 ANIMAX 7.88 0.12 0.89 7.41 0.11 0.83 Sari-Sari Channel 6.82 0.1 0.77 One Sports Plus 5.05 0.07 0.57 CINEMAX 4.39 0.06 0.49

Source: Kantar

SKYcable

SKYcable channels are classified into factual entertainment, general entertainment channels (which includes some FTA channels), home shopping, international, kids, lifestyle, mood (a single exclusive channel called The Aquarium Channel), movies, music, news, religion, sports, action, and gaming. Several pay-per-view channels are included in the line-up as well.

To date, the newest channels in SKYcable’s line-up are the Kapamilya Channel, A2Z Channel, and Word of God Network.104 On the other hand, Life TV, GINX Esports TV, , , and Fight Sports were removed from the line- up.105,106

SKYcable used to have audio channels of ABS-CBN’s former FM radio arm MOR Philippines, but these have gone defunct since the broadcaster’s shutdown last year of terrestrial TV and radio. Also affected by the shutdown: , a home shopping channel on SKYcable that ABS-CBN operated in partnership with South Korean CJ ENM, closed down.

104 https://www.mysky.com.ph/metromanila/updates/1396/2020/10/02/a2z-channel-is-now-added-to-skycable- plans 105 https://www.mysky.com.ph/Cebu/updates/1429/2021/01/29/life-tv-end-of-broadcast 106 https://www.mysky.com.ph/Bulacan/updates/1419/2020/12/17/channel-movements

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Destiny Cable

Destiny Cable’s channels, meanwhile, are classified into local, news, general entertainment, sports, movies, educational/documentary/learning, music, kids, international, and religious.

Cablelink

Cablelink’s channels are classified into movies, news, sports, documentaries, music, kids, general entertainment, series and drama, lifestyle, local, religious, international channels, and its own pay-per-view channels.

To date, the latest additions to their line-up are TechStorm, Tagalog Movie Channel, and channels from TAP DMV such as TAP TV, TAP Sports, TAP Edge, Premier Football, and Premier Tennis.107

Cignal and SatLite

Channels in Cignal’s line-up are classified into HD channels (regardless of genre), movies, sports, kids, news and information, general entertainment, lifestyle, educational & documentary, music, foreign channels, religious channels, FTA channels, and home shopping channels.

The DTH provider also has its own pay-per-view channels as well as audio channels consisting of select feeds from FM and AM radio stations, mostly in Metro Manila.

Cignal’s newest additions include ABS-CBN-operated Kapamilya Channel, CineMo!, Jeepney TV, Knowledge Channel, and ; Nick Jr.; ; Channel; ; K Plus; ; TAP Edge; and Japanese entertainment channel WakuWaku Japan.108 New organic channels from Cignal are expected to be launched, including one that will offer 24/7 collegiate sports coverage from a leading collegiate local sports league in the country, as well as a local comedy channel branded BuKo.

Fox Sports 3, FX, Fox Crime, and , on the other hand, were removed from Cignal’s line-up.

Moreover, through Mediahouse.PH’s thematically focused CLUBTV platform, Cignal carries the channels GINX Esports TV, Motorvision TV, Pet & Pal, Luxe&Life, HealthWellness, and My Cinema .109

The company’s OTT service, meanwhile, streams 68 live channels, which are from the Cignal TV line-up. The movies and series which the service distributes are classified under catch-up TV, documentaries, comedy, romance, horror/thriller, and drama. This content is also classified by producer or carrier, such as Cignal Entertainment, Thrill, CineFilipino, and KIX.

107 https://www.facebook.com/CablelinkTV/photos/3567804073287684 108 https://www.wakuwakujapan.com/en/news/20210405/ 109 https://www.ses.com/press-release/mediahouseph-and-ses-launch-clubtv-delivering-more-tv-choices-viewers- across

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With some similar channels from Cignal’s line-up, SatLite’s line-up consists of FTA, movies, Pinoy, sports, kids, news, general entertainment, education/documentary, lifestyle, music, special interest, regional, and religious channels. Audio channels are also included.

GSat

GSat’s line-up is classified into movies, news, entertainment (FTA channels included), kids, sports, documentary, religious, and foreign. It also has audio channels consisting of AM and FM stations in Metro Manila plus some genre-oriented radio channels.

Among the channels GSat uniquely airs are Dreamworks Channel; Golf HD; Motorvision TV and My Cinema Europe from the CLUBTV platform; Macau-based channel Lotus TV Macau; and Taiwanese channels ETTV Western, EBC News, EBC Drama, TTV, CTV, FTV, Formosa News, Era News, CTi, CTS, and LS Times TV.110

Pricing

SKYcable

For SKYcable’s individual cable plans, the entry fees depend on whether their Digibox HD or SKY Evo will be the box installed. For HD 500, HD 1000, and HD 1500, the fee is P999 for Digibox HD and P2,500 for SKY Evo. Both options have a lock-in period of 24 months. For HD 5000, meanwhile, installation is free for both Digibox HD (up to three additional outlets) and SKY Evo. Table 3.4 shows these fees, along with corresponding monthly fees.

Table 3.4: Installation and monthly fees of SKYcable HD plans

Installation fee Plan Details Monthly fee For Digibox For SKY Evo HD 500 15 HD, 53 SD P500 HD 1000 24 HD, 90 SD P999 P2500 P1000 HD 1500 38 HD, 96 SD P1500 HD 5000 48 HD, 148 SD Free P5000

On the other hand, the bundled SKYcable and SKY Fiber plans have an initial cash deposit requirement of P2000. Initial cash deposits for FTTH condominiums, however, is P2,500. The bundled plans come with a high-speed modem and SKY Evo.

110 http://www.gsat.asia/channelsincategory.php

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Table 3.5: Initial cash deposit and monthly fees of SKY’s bundled broadband and cable plans

Initial cash Broadband speed Channel details Monthly fee deposit 10Mbps P999 30 Mbps 10 HD | 39 SD Channels P1599 P2000 60Mbps P1999 120Mbps 15 HD | 52 SD Channels P2999

In addition, under SKY Fiber, Sky offers SKYcable Lite, a service where subscribers can get TV channels for no extra monthly fees. Subscribers avail these either through an All-In Box that combines broadband and HD TV in one device, or SKY Evo. Table 3.6, which is from a page promoting SKYcable Lite111, shows the installation fees depending on whether one is an existing or a new subscriber to SKY Fiber.

Table 3.6: SKY’s installation fees depending on box type

Box Type Existing SKY Fiber Subscriber New SKY Fiber Subscriber

All-in Box FREE SKYcable Lite P1,499

P1,500* SKY Evo For 40mbps in Metro Manila, Cavite, Laguna, FREE Cebu, and Davao 80mpbs nationwide

*Additional 6 months lock-in on current SKY Fiber subscription

From a page promoting SKY Evo, however, the installation fee for new SKY Fiber subscribers choosing SKY Evo to access SKYcable Lite costs P2,000.112

Select, or add-on, channels come in packs or individual channels. The cheapest add- on packs are the News Pack, Celestial Tiger Pack, and AXN Pack, each for P100 per month. The beIN Sports Pack is the most expensive at P350 per month.

Individual add-ons, on the other hand, go for as low as P20 and P50 per month up to as high as P250 per month, the price for adding NHK World Premium SD, and P299 per month, the price for adding Premier Football HD.

In OTT add-ons, HBO Go starts at P99 per month, Netflix at P149 per month, Viu at P99 per month (for a monthly recurring access), and Vivamax at P149 per month (for a monthly recurring access). iWantTFC, meanwhile, offers its Standard Plan for free and its Premium Plan for P59 per month for SKY subscribers.

111 https://www.mysky.com.ph/skycablelite 112 https://www.mysky.com.ph/skyevo

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Destiny Cable

The website of Destiny Cable does not provide the prices for its basic plan for its analog and digital cable services. However, the website lists prices for add-on channels and channel packs. Prices for individual channels are P20, P50, P75, P100, P150, P152, P350, P400, and P800 per month, the price for Korean channels MBC and MBN.

Packs, meanwhile, are priced at P350 per month for HBO PAK; P550 per month for MOVIE PACK; P500 per month for beIN Sports channels; P550 per month for SPORTS PACK; P149 per month for KIDS PACK; P100 per month for LIFESTYLE PACK; P199 per month both for CHINESE PACK and TVBS PACK; P1200 per month for MBC and MBN Bundle; P900 per month for KOREAN PACK; P299 for INDIAN PACK; P100 per month for CELESTIAL TIGER PACK; P350 per month for FAMILY PACK; and P299 for FOX PACK HD.

A bundle of HD channels called HD 30 is priced at P1799, while HD 40 costs P1999 per month.

Cablelink

For Cablelink’s Basic 495 package, the initial price payable is P990 (one-month advance and one-month deposit); while for the Basic Plus package, the initial price due is P1,495, consisting of an installation fee of P1,000 (per set-top box) and a one- month deposit for the Basic 495 package.

Under its Pick One line of options, add-ons are priced from as low as P50 to as high as P800. However, Cablelink’s I Choose Plans options provide subscribers the choice of three additional channels for P99, six for P199, nine for P299, and a dozen for P399 — all on a monthly basis.

Cablelink also offers Fox Sports Pack for P250 per month.

Under Cablelink’s bundled plans, the Basic 495 subscription is apparently bundled with an internet speed of up to 2 Mbps for P999, 5 Mbps for P1,299, and 10 Mbps for P1,699.

Cignal TV

The installation fee for both postpaid and prepaid packages starts at P1,000. While the Cignal Kit is free for postpaid subscribers, prepaid subscribers have another fee to pay on top of the installation fee. Cignal Prepaid has a kit priced at P1,990. On the other hand, postpaid subscribers pay a one-time activation fee on top of the installation fee, which costs P700. In addition, postpaid plans on the higher end pay an advance monthly service fee.

Table 3.7 lays out the postpaid plans with their corresponding initial deposit and total monthly recurring fees.

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Table 3.7: Cignal HDs initial deposit per plan

Channel details Total monthly Plan Total initial deposit recurring fee Plan 290 9 HD | 73 SD P2,000 P290 Plan 520 17 HD | 90 SD P1,700 P520 Plan 720 20 HD | 93 SD P1,700 P720 Plan 1050 23 HD | 98 SD P2,750 P1,050 Plan 1350 24 HD | 99 SD P3,050 P1,350 Plan 1650 28 HD | 107 SD P3,350 P1,650 Premier Plan 1990 30 HD | 108 SD P1,000 P1,990

For Prepaid Ultimate HD subscribers, total deposits are as follows P3,090 for HD 100, P3,165 for HD 175, P3,190 for HD 200, P3,290 for HD 300, P3,440 for HD 450, P3,490 for HD 500, P3,590 for HD 600, P3,790 for HD 800, and P3,990 for HD 1000. The cost of the monthly 30-day loads can be easily found in the names of each of these packages.

With no apparent additional costs, Prepaid Premium SD subscribers only have to pay P1,690 for the Cignal Kit. The packages in this line are similar to those in Prepaid Ultimate HD, so the cost of the 30-day loads can be quickly found as well.

There are also Lite Load HD and SD plans, namely HD/SD 30, HD/SD 50, and HD/SD 75, which prepaid subscribers can avail for two-day loads of P30, P50, or P75.

According to the frequently asked questions page on Cignal’s website, the monthly fee consists of the subscription fee, box maintenance fee, and the outlet fee, if a subscriber has two to three additional digital boxes.113 Subscribers can request additional digital boxes under a LEASE plan, which permits a maximum of three digital boxes per account and which requires additional fees: P500 if the additional box is installed along with the first box, otherwise, a minimum installation fee of P1,000.

For add-on channels, HBO Pak costs P150 and NBA TV Philippines costs P200 for both prepaid and postpaid. Under postpaid, beIN Sports Pack costs P350 and Premier Bundle costs P250. Individual channels range from P40 to P200.

Subscriptions to OTT platforms are additionally offered to postpaid subscribers. A subscription to hayu costs P150 per month, while a subscription to HBO Go costs P99 per month.

Cignal Play, meanwhile, has a free Cignal Play Basic subscription and an upgraded Cignal Play Premium with unrestricted access to the platform’s content for P75 a month.

113 https://cignal.tv/faqs

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In addition, PLDT Home Fibr Plus, whose bundles include Cignal HD TV, come in the following packages: Fibr Plus Plan 2499, Fibr Plus Plan 3099, Fibr Plus Plan 4099, and Fibr Plus Plan 6099.

Cignal’s and Radius Telecoms’ RED Broadband, on the other hand, has the bundles of broadband and digital TV services, as well as add-on TV options114. Table 3.8 summarizes these:

Table 3.8 RED Broadband’s monthly fee for bundled plans and pay TV add- ons, among others

Broadband+ TV plans Broadband only Plans PayTV add-ons Broadband Speed Boost Speeds up Monthly TV Speeds up Monthly Total Monthly Speeds up Monthly to Fee Channels to Fee Channels Fee to Fee 20 mbps P 1699 61 5 mbps P 990 69 SD 16 HD P 420 100 mbps P 3999 channels

30 mbps P 1999 54 SD 20 mbps P1549 74 SD 21 HD P 620 60 mbps P 2999 7 HD 30 mbps P1849 85 SD 25 HD P 950 150 mbps P 4999 100 mbps P 3999 60 mbps P2849 85 SD 28 HD P 1250 150 mbps P 4999 100 mbps P3849 88 SD 30 HD P 1550 200 mbps P 5999 200 mbps P 5999 150 mbps P4849 90 SD 32 HD P 1890 200 mbps P5849

At the more budget-friendly end of the spectrum, SatLite, also by Cignal TV, offers its kit, consisting of a set-top box, a satellite dish, and a remote control, for P1190, together with a minimum installation fee of P1000. Prepaid loads are priced at P10, P15, and P25 for channels accessible for three days, and P49, P99, P199, and P299 for channels accessible for 30 days.

GSat

GSat’s entry costs for its Direct TV packages, namely Family Package, Executive Package, and Platinum Package, with 120 channels have an entry cost of P2,499 plus installation fee. Its GPinoy plan, also known as the Standard Package, costs P1,999 plus installation fee.

The monthly fee is P99 for the GPinoy package, P200 for Family Package, P300 for Executive Package, and P500 for Platinum Package.

Trends in development of ARPUs

There is only very limited research on projections for the average revenue per user (ARPU) in Philippine pay TV.

A recent report by Media Partners Asia (MPA) titled Asia Pacific Pay-TV Distribution, states that the COVID-19 pandemic “impacted pay-TV advertising growth across Asia

114 https://cignal.tv/red/

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Pacific while the suspension of sports activity hurt subscriber and ARPU growth in [first half of] 2020.”115

Nonetheless, MPA Vivek Couto, in his comments on the study’s findings, said that the Philippines as one of the “large emerging markets” will experience “the growth of low-ARPU DTH satellite platforms” that is driven by a strong demand for live sports and entertainment channels.

Also, to recall, GlobalData’s Philippines Telecom Operators Country Intelligence Report revealed their expectation that growth in ARPU for both DTH and IPTV services will support the growth of the country’s overall pay TV service revenue.116

Market Potential

Consumer affluence, ability to spend

As shown in Kantar’s TV Establishment Survey findings in 2019 (see Figure 3.13), most of its respondents around the country came from Class D or the Lower Class, which comprised 68% of total homes surveyed. This is higher than the proportions in the past two years, which was at 65%.

According to the firm’s Socio-Economic Classification of Homes, Class D refers to “households with some comfort and means, but basically thrive on a hand-to-mouth existence.” The total household monthly income among Class D is estimated at P5,001 to P18,000 for urban residents and P4,001 to P8,000 for rural residents.

Class E, or Extremely Lower Class, followed Class D, comprising 21% of total homes. Considered the “fringe” member of the society, Class E households have an estimated monthly income that hardly exceeds P5,000 or P4,000.

Upper classes, which have more ability to spend, comprised the lower proportion of the population in Kantar’s survey. Class C2 or Middle Class, whose homes and lifestyles reflect comfortable and “the capacity to indulge in a few luxuries”, comprised 10% of total homes. Class C1 or Upper Middle Class, “whose homes and lifestyles are quite similar to those of the upper class (Class AB), but have less capacity to indulge in luxuries”, tallied only around 1% of total homes. Class AB or Upper Class, the most affluent group among the classes “whose homes and lifestyles exude luxury”, also registered only around 1%.

Class D’s dominance and the share of each class across the country were also revealed in total homes in both urban (67%) and rural segments (68%) of the country, as well as in Mega Manila (65%).

115 https://www.rapidtvnews.com/2021040660223/asia-pac-pay-tv-revenue-to-reach-us-60bn-by-2025 116 https://www.globaldata.com/pay-tv-services-revenue-philippines-grow-4-0-cagr-next-five-years-forecasts- globaldata/

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Figure 3.13: Socio-economic class proportions in 2017-2019

2017 2018 2019

65 65 68 % of Total Homes

23 24 21 0 1 1 2 2 1 11 10 10

AB C1 C2 D E

Source: Kantar TV Establishment Survey 2019; Base: Total TV Homes

Internet connectivity

Findings from Kantar’s Media Habits Study 2018 give a hint on how much the Filipino population is connected to the internet (Figure 3.14). Surveying individuals aged 13 years old and above, the study revealed that more than half (55%), or 42.2 million Filipinos, across the country used the internet at least once. Users were found to log in to the internet at an average of 5.6 days a week and an average of 3.7 hours a day.

Urban segments take the majority of the respondents reached by the internet, with 66% or 23.9 million Filipinos. Rural segments, meanwhile, registered 45% of total users, equivalent to 18.3 million. Kantar’s survey also shows that urban segments log in to and spend more time on the internet more than the rural segments, although the differences are quite little. Urban Filipinos were found to use the internet for an average 5.9 days a week and an average 4 hours a day. Rural Filipinos, meanwhile, were found to use the internet for an average 5.2 days a week and an average 3.4 hours a day.

The study also showed that most users in the urban segments, or 94% of those surveyed, have internet connections at home. This is also reflected across regional segments, socio-economic classes, and demographics.

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Figure 3.14 Key internet usage measures in 2019

Source: Kantar

Amid these hints of connectivity, however, the World Bank (WB), in its Philippines Digital Economy Report 2020, suggests that a “digital divide” persists, with nearly 60% of households observed to have no access to the internet.

As cited by WB’s report, data from Telegeography and GSMA revealed that in 2018, around 80% of population were reached by 3G, around 20% were reached by 4G, but only between 10% to 20% of households were reached by fixed broadband (Figure 3.15).

Figure 3.15: Fixed and mobile broadband penetration in as of December 2018

Source: Data from Telegeography and GSMA (2019)

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In spite of these lapses in connectivity, which was further stressed by the pandemic and even spurred the president to call telecommunications players to speed up their actions in addressing such issues, several developments are painting a positive outlook for internet connectivity in the country, particularly fixed broadband.

GlobalData forecast last year that fixed broadband will drive the growth of the fixed communication market for the next five years, with revenue expected to increase at a CAGR of 15.9% to reach US$6 billion in 2025 (Figure 3.16).

“Though DSL is the primary technology to deliver fixed broadband services in the Philippines in 2020, fiber broadband lines will expand at the fastest CAGR of 21.4% over the forecast period,” the firm’s telecom analyst, Aasif Iqbal, said. “Growth in fiber broadband lines will be driven by the government’s investments on fiber network infrastructure and FTTH service expansions by operators such as PLDT and Globe Telecom.”

Figure 3.16: Fixed service ARPU by service category in 2020-2025

US$ Broadband ARPU ($) Voice ARPU($) 35

30 29.71 29.96 28.2 29.04 26.71 25 25.16

20

15

10

5 5.77 5.17 4.66 4.18 3.78 3.46 0 2020 2021 2022 2023 2024 2025

Source: GlobalData Technology Intelligence Center

Key advertisers and future trends

In terms of TV advertising, Kantar found that from January to September 2020, almost P313 billion was spent, down by 20% from 2019’s figures; and 420,703 minutes of TV advertisements were aired, greatly declining by 6% compared to the previous year’s tally (Table 3.9). Pay TV only got a 10% share from advertising spend, leaving the FTA segment to take 90% of advertising spend.

Leading categories that advertised on TV are the following: detergent and laundry aids, with P42.2 million spent; milk powder, with P34.6 million; hair shampoo, with P23.5 million; vitamins, with P15 million; and coffee and tea, with P14 million. Kantar noted that the most essential categories such as vitamins, milk products, hair shampoo, soaps, and detergents & laundry aids have regained their ad spending and placements during the third quarter of 2020. The advertising minutes of these categories also have increased during the pandemic. The following table lists the top ten categories, with percent change in ad spend from year-to-date 2019:

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Table 3.9 Top categories in Kantar’s YTD TV Advertising Expenditure Report, January to September 2020

Top Categories P(000) % 1 Detergent & Laundry Aids 42279 +29% 2 Milk Powder 34558 -3 3 Hair Shampoo 23507 -26 4 Vitamins 15049 +6 5 Coffee & Tea 14077 +6 6 Corporate Advertising 13656 +31 7 Media 10991 +21 8 Hair Conditioner 9600 +4 9 Soaps 9273 -9 10 Flavor Enhancers and Food Mixes 8803 -19

Source: Kantar Much of the leading categories were reflected by the top brands spotted by Kantar in the same period (Table 3.10). Downy Fabric Conditioner lead with over P10 million spent, followed by Ariel Detergent Powder, with over P7.2 million; Nescafe Coffee, with over P7 million; Creamsilk Hair Conditioner, with nearly P5.9 million; and Sunsilk Hair Shampoo, with almost P6.8 million. Other brands from the same essential categories followed, as shown in this table:

Table 3.10 Top brands in Kantar’s YTD TV Advertising Expenditure Report, January to September 2020 Top Brands P(000) % 1 Downy Fabric Conditioner 10057 +8% 2 Ariel Detergent Powder 7225 +1 3 Nescafe Coffee 7006 +39 4 Creamsilk Hair Conditioners 5868 +8 5 Sunsilk Hair Shampoo 6791 -18 6 Palmolive Shampoo with Conditioner 5725 -42 7 Surf Detergent Powder 5423 +107 8 Head and Shoulders Hair Shampoo 5397 +6 9 Safeguard Soaps 4675 -21 10 Bonakid Growing Up Milk 4663 -15

Source: Kantar

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In terms of advertising, one notable trend that emerges is what is called “storitization”, which means ad experiences will revolve around narratives, with their own pace and plot points attached.117 Through this, consumers are targeted to feel specific emotions when they think or interact with products through advertisements, compared to remembering technical specifications.

Along with storitization, personalization is seen to shape advertising, leading to “smaller, personalized ads I campaigns” in place of “one-size-fits-all” campaigns. This, however, might sound difficult in a medium that reaches audiences simultaneously rather than individually.

Moreover, new marketing channels are seen, such as virtual or augmented reality, smart assistants, smart TVs, even displays on fridges or microwave ovens. In smart TVs, in particular, a possibility is seen among TV manufacturers to go beyond the display of ads in the context of apps installed in these sets by displaying ads by themselves, the TV brands.

Also, in his comments on the recent disruptions in Philippine TV, Jay Bautista, managing director of Kantar Media Philippines, said that TV advertising should have to adapt to the recent changes in audience behavior and channel landscape, as much as TV industry players did amid an increased move to digitalization.118 He suggests “looking at possible alternative digital platforms which seem to be the likely substitute for TV as an advertising medium,” although the preference of consumers against advertising messages online might pose a challenge.

TV Audience Measurement

Measuring TV viewers used to be done by firms AGB Nielsen Media Research and Kantar Media Philippines. However, as announced last year, Kantar ended its TV monitoring services in the country, effective from the end of 2020. This was caused by the ABS-CBN shutdown, as Kantar considered ABS-CBN as its “keystone client for TV ratings information in the country”.119

Kantar does however continue to provide other research services in the Philippines, one of which is its Cross Media Audience Measurement, which aims to give clients “a true understanding of how individual types of media and channels perform”. Aside from getting data from TV sets, the service also collects data from other devices such as computer, mobile, and smart TVs.

Meanwhile, AGB Nielsen couple TV ratings with detailed analysis of consumer viewing behavior and demographic information. According to Nielsen’s website, the firm’s ratings process center on electronic metering technology.120 “Our tools capture not only what channel is being watched, but also who is watching and when, including “time-shifted” viewing,” Nielsen explained.

117 https://voluum.com/blog/future-of-advertising/ 118 https://arete.ateneo.edu/connect/flattening-the-tv-curve-a-media-researchers-insights-on-the-abs-cbn- shutdown 119 https://www.research-live.com/article/news/kantar-shutters-philippines-tv-ratings/id/5073532 120 https://www.nielsen.com/ie/en/solutions/measurement/television/

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“Using data from set-top boxes, Nielsen delivers a constant, real-time stream of information, revealing tuning behavior during programs and commercials,” the firm added.

Based on the most recent reporting available, AGB Nielsen uses a panel size of 1,980 households based in urban areas, which represent about 60% of the total TV-viewing population.

In spite of ABS-CBN’s ties with Kantar cut, however, the broadcaster’s overseas arm ABS-CBN International partnered with media evaluation company Comscore in a multi-year agreement as the third-party measurement provider for ABS-CBN’s TFC.

Under the agreement, Comscore reported in a statement, TFC will have access to Comscore’s best-in-class national TV measurement to plan, and evaluate their audiences for programming analysis and in driving ad sales.

For ABS-CBN International Managing Director Jun Del Rosario, Comscore’s industry insights will help them get a clearer picture of audience behavior and preferences, and so “design more effective solutions for advertising clients who want to reach out to the Filipino market.”121

Comscore considers itself “a leader in instrumenting change in television measurement” with its adoption of advanced audiences and move to impressions, evaluating audiences based on consumer behaviors, interests, and lifestyles.

When asked on their views on today’s audience measurement practices, FTA player GMA Network said in an e-mail for this report that audience measurement in the country has generally kept up with global practices. In particular, extensive area coverages and flexibilities in viewership data examination have been provided, and the company has been able to effectively use this data for its various purposes.

The network also noticed the inclusion of digital in audience measurement. “Much of the additional audience measurement tools made available to the Philippine industry in recent years have focused on digital ad ratings and its combination with TV ad ratings including new planning/assessment tools for digital campaigns and content in advertising,” GMA Network’s answer read.

The company’s answer also pointed out that industry players like them will find an audience measurement tool that integrates audience measurements and analytics across various devices very useful, especially with more people using multiple devices and new platforms to access content anytime.

Cignal TV, meanwhile, notes that audience measurement needs to catch up with the pace of technology and the changing behavior of viewers.

“There is a lot of convergence that is already happening and yet, viewing measurements are silo-ed according to platform,” it explained. “The reality now is that

121 https://www.comscore.com/Insights/Press-Releases/2021/3/ABS-CBN-TFC-Selects-Comscore-as- First-National-Television-Measurement-Provider

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Technological issues

DTT rollout

The migration to DTTB was solidified by the launch of the Digital Terrestrial Migration Plan122 by the DICT in 2017. Under this plan, the Philippines is targeted to complete the switch to DTTB by 2023.

The Philippines’ migration to DTTB is based on the ISDB-T from Japan, which enables digital set-top boxes with an Emergency Warning Broadcast System (EWBS) function that will be of great help during natural disasters such as earthquakes and typhoons.

The department’s framework for the migration plan laid out the process in three phases, namely the Digital Switch On (DSO), or the initial launch and introduction of DTTB services; Simulcast Period (SP), or the simulcasting of analog and digital TV to allow the public enough time to plan their own migration to DTTB; and the Analog Switch-Off (ASO), or the termination of analog transmission, which should occur after the satisfaction of the set criteria, which DICT’s document notes is at least 95% of TV households in each service area having a DTTB receiver.

Once the migration plan is completed, the DICT expects to free up some very high frequencies (VHF), namely channels 2 to 13, held by TV networks; as they would be reassigned UHF comprising channels 14 to 51.

Figure 3.17: Timeline for migration to digital terrestrial TV broadcast

Source: DICT

122 https://dict.gov.ph/wp-content/uploads/2017/10/PHL-Framework-for-the-DTTB-Migration-Plan_V1-3-1.pdf

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With several different boxes sold to households — mostly ABS-CBN’s TVPlus and GMA’s Affordabox — and channels still present in analog, the migration remains in the Simulcast Period.

DICT said in 2019 that the country is on track with the plan. The department’s then- Acting Secretary Eliseo M. Rio, Jr. said there is no one saying the deadline is not doable, especially as most new TV sets available are now “digital-ready”.123

An executive of one of the country’s broadcasting giants, however, observes that going fully digital is uncertain. GMA Network Chairman and CEO , in a report124, stated that it cannot be said at the moment when DTTB is going to happen, citing affordability and economics as main issues.

“Now in the Philippines, I’m not saying it will take 10 years from now, but because of our economic situation, it’s very hard to anticipate when full digitization of our television business will happen,” Mr. Gozon was quoted as saying. He added that while the future is in digitalization, audience and advertisers are not yet fully ready for a sudden shift. The transition is, thus, going to be gradual, calibrated, and calculated.

ABS-CBN’s TVplus, which comes both in a set-top box and in a portable dongle (TVplus Go), served as a leading digital box brand, with 81% penetration rate in Metro Manila, 75% in Mega Manila, and 57% in the suburbs, according to December 2019 data from Kantar Media. However, the shutdown of the broadcasting giant on terrestrial TV in May 2020 was followed up by the ceasing of transmissions of its digital channels CineMo!, Yey!, TeleRadyo, Jeepney TV, Asianovela Channel, and Kapamilya Box Office on TVplus outside Metro Manila the following July.125 While TVplus can still be used to receive other active digital terrestrial channels, the line-up is now devoid of ABS-CBN’s exclusive channels.

GMA Network, on the other hand, finally launched its DTT receiver, GMA Affordabox, in late June 2020. As shared by the network in its interview for this report, the Affordabox has sold over one million units within eight months from launch. The service offers purely digitally transmitted channels from GMA such as Heart of Asia (HOA), Hallypop, and I Heart Movies.

“We believe that there are viewers who really go for classic dramas, may it be Asian or local titles, and this is our niche market,” the network shared regarding HOA’s intended audience. “HOA’s programming is a very good alternative to the drama viewers of GMA, either they are the 40 up mothers or the trendy 20-30 demographics.”

Hallypop, on the other hand, caters to a niche audience who are fans of Korean and Asian pop music, which the network noted “are very much excited with the channel’s current programming and they are very vocal about it online.”

In February 2021, GMA Network rolled out its portable DTT receiver, GMA Now, with the hopes of influencing the consumption of TV even outside of the home, according

123 https://www.bworldonline.com/philippines-on-track-to-complete-migration-to-dtt-by-2023-dict/ 124 https://www.philstar.com/business/2021/05/24/2100308/gma-taking-gradual-calibrated-approach-its-digital- shift 125 https://www.cnnphilippines.com/news/2020/7/1/TV-Plus-channels-off-air-outside-NCR-.html

81 to GMA New Media, Inc. President and CEO Dennis Augusto L. Caharian. 500,000 to a million units of GMA Now are expected to be sold in its debut year.126

Conditional access systems in pay TV

This section discusses the conditional access systems (CAS) being used by current players, and the use of CAS in relation to the country’s ongoing migration to digital TV. CAS is defined as the means of controlling access to TV content to authorized users through encryption of transmitted programming.

SKYcable

Based on available sources, SKYcable adopts Digital Video Broadcasting for Cable, or DVB-C, a standard for transmitting digital TV signal over cable that is seen as a means to “curb cable piracy and illegitimate connections”.

SKYcable’s set-top Digiboxes allow for digital video compression or distribution and uses the DVB-C broadcast standard to allow subscriber access to the digital infrastructure. The boxes currently come as either an HD Box or the new Sky Evo, which enables subscribers to watch content in clear, widescreen format and cinematic digital sound. Both types of the Digibox are WiFi enabled and have an enhanced TV guide, favorite channels, and parental control options.

SKYcable’s Digibox uses the International Organization for Standardization (ISO) and International Electrotechnical Commission (IEC) 7816 smart cards, which convey digital signals to the receiver in order to decrypt the programming for viewing. Cignal TV and SatLite

Reception of Cignal TV’s broadcast requires a satellite or dish, a remote control, and a satellite receiver or set-top box, a service provider-approved conditional access card (more known as the smart card), and a low noise block (LNB) converter.

In addition to its use of the NSS-11 satellite since 2009, Cignal TV is now using the Ku-band SES-7 satellite at 108.2 degrees East.

For prepaid subscribers, Cignal TV has a prepaid electronic loading system that is supported by the prepaid loading platform of Smart Communications, Inc. 127 Nowadays, prepaid subscribers can reload through load retailers, billers, remittance centers, as well as online through mobile applications.

Cignal adopts the Digital Video Broadcasting-Satellite Second Generation or DVB-S2, a digital TV broadcast standard succeeding the DVB-S system. This standard serves to accommodate both SD and HD TV broadcasts, as well as the interactive services offered on their satellite TV service.

126 https://www.bworldonline.com/gma-hopes-to-sell-at-least-500000-units-of-portable-tv-receiver-amid-limited- mobility/ 127 https://www.philstar.com/business/technology/2009/02/02/436236/mediascape-launches-cignal-digital-tv- service

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For its encryption system, Cignal TV uses Cisco VideoGuard. Also, Cignal is supported by Conax’s cardless content protection technology. Based on a flagship Conax Contego unified security back-end, the cardless solution provides complete protection of Cignal’s SD, HD, and hybrid services.128

Cignal’s other pay TV service, SatLite, uses Koreasat 7, the satellite transponder previously used by Dream Satellite TV, the first DTH satellite operator in the country until it ceased in 2017. It also adopts the DVB-S2 system. Since SatLite is a prepaid service, subscribers can reload through Smart load retailers, Pasaload through a Smart or Sun number, PayMaya, or GCash.

GSat

Receiving GSat also requires a satellite dish, a receiver box (either the GSat Direct or GPinoy box), and a smart card that is inserted into the box (see Figure 3.18). Since GSat is a prepaid service, buying load is done either through dealers, loading merchants, or bank deposit. The loading itself is done through SMS, after which the box gets activated within five minutes.

From using NSS-11, which was the service used when it launched in 2009, GSat transferred its space and capacity usage to the SES-9 satellite.

GSat also adopts the DVB-S2 system, and it also taps into Conax to ensure the security of content, the access system, and the technology utilized by the DTH system.

Figure 3.18 SES’ workflow for GSat

CAS in DTTB

DICT’s DTTB Migration Framework discussed CAS in relation to the migration from analog to digital TV. Among the matters discussed is allowing the operation of CAS for DTTB, which the report stressed must be properly regulated, mainly through the NTC:

128 https://www.digitaltvnews.net/?p=31559

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Subject to stakeholders’ consultation and issuance of the corresponding rules and regulations, the government may allow operation of CAS for DTTB…This supplementary service may be permissible subject to prevailing decrees, acts and laws, as well as rules and regulations set and promulgated by the NTC. (p.20)

The report noted as well that encryption for paid services on digital TV should also be authorized by the commission:

[I]f terrestrial broadcasters will be allowed to encrypt additional contents for pay TV applications, an authority from the National Telecommunications Commission must be obtained pending the deliberation and creation of an Implementing Rules and regulation with the stakeholders and Congress for the pay TV franchise. (p.29)

The policy and regulations for the introduction of pay TV services for DTTB have yet to be formulated, developed, and issued should the regulator allow such operation, the report added.

In early 2020, Solicitor General Jose C. Calida asked the Supreme Court to stop ABS- CBN from operating its pay-per-view channel Kapamilya Box Office, which used to air on TVplus, because the broadcaster was operating the channel without necessary permits from the government, such as from the NTC.129 Mr. Calida added that the broadcaster was “using the FTA frequency granted to it by the State for its operations of a CAS, particularly its KBO Channel.”

Aside from the regulation of CAS, the report also noted that having a common CAS will be more fitting than several systems: If implemented, it is ideal to have a common CAS by all broadcasters so that a single STB may be able to access premium contents from all broadcasters assuming a common ground can be struck among stakeholders. (p.20)

Several means of encryption, if authorized by NTC, “will make the digital tuners in many TVs redundant, as consumers will need to purchase broadcaster [set-top boxes] to watch encrypted content regardless if an integrated DTTB receiver has already been purchased by the viewer.”

Protecting content, especially through copyright, was also noted by the report:

[T]he government shall issue appropriate guidelines, rules and regulations. As measure for example, watermarking can be used to prevent unauthorized copying and viewers are unable to receive or record Digital TV streams unless device permission has been granted. (p.38)

Relationships Between Players

Pay TV and FTA broadcasters

FTA channels are usually included in the line-ups of pay TV operators. This is in compliance with a provision stated in Memorandum Circular No. 04-08-88 of the NTC.

129 https://www.philstar.com/headlines/2020/02/12/1992514/calida-says-abs-cbns-kbo-service-illegal-network- says-it-has-permits

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More known as the “Must Carry Rule,” this provision requires cable TV system companies “operating in a community which is within the Grade A or Grade B contours of an authorized TV broadcast station or stations” (which simply covers FTA channels) to carry the TV signals of such stations.

Nonetheless, aside from this enforced carriage regulation, some of the country’s leading operators are more deeply connected to these FTA broadcasters, since these pay TV companies and FTA TV networks are frequently owned by single entities.

Sky

Sky Cable Corporation is the cable and broadband subsidiary of ABS-CBN Corporation, with 59.4% control, according to the company’s annual report for 2019. While ABS-CBN Channel 2 is currently inactive due to the loss of its franchise in 2020, ABS-CBN still produces programs that are distributed through several channels on terrestrial and cable TV, as well as through online platforms.

Another ABS-CBN subsidiary, , Inc. (CPI), is in the narrowcasting business, creating content and distributing channels for pay TV. Among the channels owned and distributed by CPI are movie channels Cinema One and CineMo!; lifestyle channel Metro Channel; throwback channel Jeepney TV; music channel ; news channels ABS-CBN News Channel and TeleRadyo (formerly known as DZMM TeleRadyo); and the most recent Kapamilya Channel, which appears to replace Channel 2 as the main channel of the broadcasting giant. These channels have been available on SKYcable since their inception and are also marketed for carriage by other cable operators.

Apart from cable, ABS-CBN’s programs are also being aired on the rebranded A2Z terrestrial Channel 11, owned by Zoe Broadcasting Network, after ABS-CBN signed an agreement with the broadcast company. A2Z is also included in SKYcable’s line- up since October 6, 2020.

Through partnerships with international media companies, CPI serves as the main distributor of Kix, an action-oriented channel; Thrill, dedicated to horror, thriller, and suspense programming; Celestial Classic Movies, which features classic Chinese films; tvN, a Korean entertainment channel; and Paramount Network, an American entertainment channel. These channels are included on SKYcable’s line-up, depending on the subscription.

Under ABS-CBN’s Digital Media Division, OTT content platform iWantTFC is a merger of the iWant and TFC Online digital platforms owned by ABS-CBN. Relaunched in September 2020, iWantTFC carries current ABS-CBN shows as well as the network’s full inventory of shows, full library of movies, and some acquired shows from Thailand’s GMMTV. The platform also streams live channels such as Kapamilya Channel, TeleRadyo, ANC, CineMo!, and Knowledge Channel. iWantTFC is made available on SKYcable as an add-on to subscription plans. The operator’s SKY HD Box, in fact, has access to iWantTFC; and the SKY Evo box includes iWantTFC as one of its built-in apps.

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Cignal

Cignal TV, Inc. and TV5 Network, another major broadcaster in the country, are both under MediaQuest Holdings, a owned by the PLDT Beneficial Trust Fund.

In 2018, Cignal TV launched One News, a news channel that brings together the resources of TV5’s news division, News5, and newspapers and BusinessWorld — all of which are also under MediaQuest Holdings.130

As 2020 witnessed disruptions in Philippine TV, a multi-year partnership between Cignal TV and TV5 was formed, with the former serving as the network’s main content provider. In particular, Cignal TV handles TV5’s blocktime entertainment programming through its collaboration with production companies such as , Brightlight Productions, and APT Entertainment, among others.

As early as June 2020, talks between Cignal TV and ABS-CBN were reportedly ongoing. The following October, Kapamilya Channel and A2Z Channel were made available on Cignal. Jeepney TV, CineMo!, and Knowledge Channel can also be viewed on the pay TV service.131 Nonetheless, the broadcasting giant said on February 2021 that it is open to a partnership with Cignal TV for the inclusion of TeleRadyo, Cinema One, and ANC in its channel line-up.132

Meanwhile, a partnership was formed between Cignal TV’s sister company, TV5, and ABS-CBN earlier in 2021. TV5 now carries ABS-CBN shows such as ASAP Natin ‘To, FPJ: Da King movie block, FPJ’s Ang Probinsyano, and Walang Hanggang Paalam, among others.

Telcos and content providers

This subsection discusses the relationship of current telecommunications players with pay TV operators and content providers such as broadcasters and OTT platforms.

PLDT

While (in keeping with government licensing rules) PLDT, Inc. does not directly own any media property, Cignal TV, Inc. is under MediaQuest Holdings, Inc., which is owned by PLDT Beneficial Trust Fund.

Moreover, Cignal’s pay TV service is bundled in PLDT’s services under the PLDT Home suite. Back in 2017, PLDT made the TVolution streaming box available to its customers. Launched out of PLDT’s partnership with streaming pioneer Inc., TVolution is bundled with PLDT’s fiber broadband service for an additional monthly service fee. Cignal is one of the services that can be availed on TVolution.133

130 https://www.philstar.com/headlines/2018/05/30/1819983/cignal-tv-launches-one-news 131 https://news.abs-cbn.com/entertainment/10/22/20/kapamilya-channel-is-now-available-on-cignal 132 https://www.bworldonline.com/abs-cbn-open-to-inclusion-of-teleradyo-cinema-one-and-anc-in-cignal-lineup/ 133 https://pldthome.com/news-media/2017/04/26/pldt-announces-next-generation-tvolution-streaming-box

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Currently, PLDT Home Fibr Plus directly offers four postpaid plans that have Cignal HD TV bundled with PLDT’s Wi-Fi and services.

Smart

Smart Communications, Inc., PLDT’s wireless arm, has joint partnerships with Cignal TV. One of these, announced in July 2020, is the NBA’s multiyear partnership with Cignal and multiyear expansion with Smart.134,135 Out of this partnership, Cignal — along with Smart — acquire the rights to broadcast NBA games through FTA, satellite TV, and OTT streaming. Cignal subscribers have access to NBA TV Philippines, while Smart subscribers can avail postpaid and prepaid offerings that will enable them to livestream NBA TV Philippines on Smart’s streaming platform, as well as the NBA League Pass app.

Cignal TV and Smart also have a partnership with the University Athletic Association of the Philippines (UAAP), which was inked in December 2020. 136 As the new broadcast partner of the UAAP, Cignal TV will broadcast the games on the media company’s One Sports channel, while Smart will stream the games live through a platform exclusive to Smart prepaid and postpaid subscribers.

Furthermore, also in the same month, Smart partnered with Cignal TV to provide satellite broadband services for areas without land-based networks. According to Cignal TV, Smart will be using satellite terminals using very small aperture terminal (VSAT) to offer broadband services for subscribers with low to no terrestrial network data coverage.137 In terms of OTT services, Smart offers access to international platforms such as Netflix and NBA League Pass, as well as local platforms like iflix, iWantTFC, and Cignal Play.138 Viu, meanwhile, is offered via a new prepaid offer called Giga K-Video, with bundled inclusion of open access data, 1 GB daily data for Viu and YouTube, and a premium subscription to Viu.139

Globe

Globe currently offers access to OTT platforms through its various postpaid and prepaid plans. Under its prepaid lines, its GoWATCH promo allows subscribers to stream content from platforms such as iWantTFC, iflix, Viu, Netflix, HBO GO, and NBA League Pass.140 Access to these platforms can also be availed on postpaid plans, while Amazon Prime Video is only available for Globe subscribers via postpaid plans. Globe At Home Prepaid WiFi also offers access to these channels

134 https://manilastandard.net/mobile/article/329711 135 https://www.bworldonline.com/cignal-starts-role-as-new-home-of-nba-in-the-phl/ 136 https://www.bworldonline.com/cignal-tv-smart-formally-sign-five-year-partnership-with-uaap/ 137 https://www.bworldonline.com/smart-taps-cignal-to-provide-satellite-broadband-services/ 138 https://smart.com.ph/Pages/netflix; https://smart.com.ph/About/newsroom/full-news/2018/11/19/smart-boosts- gigasurf-packages-with-new-video-every-day-promo 139 https://smart.com.ph/Pages/giga-kvideo 140 https://www.globe.com.ph/prepaid/gowatch.html

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Radius Telecoms

Radius Telecoms, Inc., a wholly owned subsidiary of Manila Electric Co. (Meralco), partnered with Cignal TV, Inc. in rolling out a new fiber broadband service, RED Broadband, that also bundles the pay TV operator’s service. RED Broadband offers users plans which include a broadband connection delivered from Radius’ end-to-end fiber optic platform bundled with IPTV from Cignal that carries 54 SD channels and 7 HD channels.

Satellite charting pay TV’s future

Among the pay TV platforms available in the country, satellite is expected to grow the most. DTH, along with IPTV, is expected to drive the growth of revenues in pay TV services in the Philippines for the next five years, according to GlobalData’s Philippines Telecom Operators Country Intelligence Report. While DTH is seen to be the leading platform, IPTV subscriber penetration is forecast to increase with the help of an improved fixed broadband infrastructure. On the other hand, while it is still expected to experience marginal growth from 2022 to 2023, cable TV subscriptions are projected “to continue their decline, as is the case for most of the world” 141, particularly in the subsequent two years.

This anticipated growth in satellite TV is supported by the findings of the first TV market reception survey of SES in the Philippines, which gathered data from 3,000 residential households across the Philippines. The results from the survey, which were released by SES in a statement in the middle of 2020, revealed that satellite TV ranked highest (76%) in terms of the satisfaction of the respondents with their TV service. This was followed by cable TV (70%), digital terrestrial (69%), analog terrestrial (59%) and broadband TV (54%).

Also, satellite TV is next to terrestrial TV as the most popular mode of TV reception in the country, having received 17% of respondents, although notably terrestrial TV attracts 66% of the audience. This makes satellite TV the most popular pay TV platform. Cable TV, meanwhile, garnered 15%, while IPTV has 2%.

Outside satellite TV, SES’ survey showed that the Philippines stands as “one of the most dynamic and highly-penetrated TV markets in Asia Pacific” with over 20.8 million TV households tallied and a TV penetration rate of 86.8%.

‘Mid-revolution’ led by OTT

OTT platforms, nonetheless, were further appreciated by consumers as the pandemic caused many consumers to spend more time at home than outdoors. Results from recent research by The Trade Desk, which were announced on February 2021, show that 55% of Filipino viewers are streaming more OTT video content due to the pandemic.

The research also revealed that the average Filipino OTT viewer watches 3.3 hours of content per day, compared to an average of just 2.5 hours across Southeast Asia.

141 https://www.digitaltveurope.com/2020/10/28/dth-and-iptv-to-emerge-strongest-post-covid-in-the-philippines/

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The country also logs the highest percentage of heavy users across the region, with nearly one in three OTT viewers (32%) watching four or more hours per day.

Furthermore, 22% of OTT viewers had not watched traditional TV at all in the three months prior to the survey; while 62% are found to tune in to OTT to watch their favorite programming, in contrast to 54% preferring traditional broadcast.

Figure 3.19: Timeslots for viewing OTT in a day, Philippines

Weekday Weekend

52% 48%

37% 35%

28% 26% % of OTT viewers 16% 17%

8% 6% 5% 3%

12am - 4am 4am - 8am 8am-12 pm 12pm - 4pm 4pm - 8pm 8pm - 12am

Source: The Trade Desk

Another recent study, conducted by analyst and consultancy firm Ovum on behalf of multinational corporation Amdocs, highlighted that 72% of Filipinos are more likely to pay for short-term access or specific content.142 In addition, 52% are found to prefer having their OTT media services bundled with their mobile or fixed internet subscriptions.

Finally, 65% of respondents said they plan to maintain or increase OTT consumption after the pandemic ends.

Moreover, a report released in January 2021 by Juniper Research predicts that VOD subscriptions will grow by 65% to nearly two billion by 2025. The foray of traditional broadcasters into the launch of streaming services to extend their reach and the consequent adoption of a combination subscription- and advertising-supported business model, is expected to drive growth in VOD subscriptions.

142 https://mb.com.ph/2020/08/20/ph-media-consumption-reflects-filipino-sari-sari-store-culture-amdocs-study- reveals/

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Disruption among major players

Ad spend moving to digital

Kantar’s recent State of Philippine Media report revealed that ad spend initially dropped when the ECQ started on March 16, 2020. Episodes of rebound and decline were then seen as Philippine TV witnessed the shutdown of ABS-CBN, the relaxing of quarantine measures, the shutdown of TVplus exclusive channels and SKYdirect, and the denial of renewing ABS-CBN’s franchise. With the launch of Kapamilya Channel, however, ad spend on pay TV started to grow the following August.

Along with these trends, however, TV advertising is seen to follow consumers on digital platforms as they move to OTT platforms. Video advertising platform SpotX, in its 2021 Global Video Advertising Trends report, also noted that ad spend is following consumers who are getting pulled by OTT and what it calls “connected TV.”143 This gives rise to an opportunity for programmatic ad buying and accelerates the shift of traditional TV budgets to digital channels.

Indeed, The Trade Desk survey found that the Philippines is the most ad tolerant Southeast Asian country surveyed, with 88% of viewers saying they are open to viewing ads in exchange for free content. 42% of Filipino OTT viewers, meanwhile, expressed their willingness to watch four or more ads per hour of free content. The report also hinted that more than 20 million consumers in the Philippines can be reached by advertisers on ad-supported platforms.

“As more young, engaged, and active Filipinos shift to OTT and are willing to view more ads, advertisers have an enormous opportunity in front of them,” Mitch Waters, SVP of Southeast Asia, Australia, and New Zealand at The Trade Desk, said in his comments on the study’s findings.144 “This provides an opening for advertisers to employ a data-driven approach with an improved advertising experience in a way that’s not possible with traditional TV.”

Chapter 3.1: Impact of ABS-CBN’s Shutdown

The shutdown of a single significant broadcaster in 2020, has shaken the Philippine TV landscape. Not only has the decision of Congress not to renew the congressional franchise that allows ABS-CBN to broadcast in the country caused a massive shift in the Philippines TV industry landscape, it also created considerable shockwaves both locally and abroad.145 Proponents of the license denial cited the alleged illegalities of the network’s operations, while critics of the shutdown decried it as a systemic attack designed to create a chilling effect on press freedom.146

143 https://www.prnewswire.com/news-releases/spotx-releases-2021-global-trends-report-for-video-advertising- 301185825.html 144 https://en.prnasia.com/releases/apac/new-research-shows-55-percent-of-filipino-viewers-are-streaming-more- ott-video-content-because-of-covid-19-308408.shtml 145 https://www.nytimes.com/2020/07/10/world/asia/philippines-congress-media-duterte-abs-cbn.html 146 https://www.rappler.com/hustle/work/rolando-tolentino-media-culture-effects-abs-cbn-shutdown

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One of the most notable effects of the shutdown were the alleged information gaps during the typhoons147 that occurred in the final quarter of 2020, particularly during Typhoon Goni (Rolly)148 and Typhoon Vamco (Ulysses),149 that left some parts of the country including Cagayan Valley and Bicol Region without news as these areas heavily relied on the network — an allegation that the Duterte administration denies150.

The impact of the shutdown on the country’s TV landscape is palpable, particularly as ABS-CBN had been the market leader before it was forced off the air, according to data from Kantar Group, commanding a 39.6% share of the market prior to the ECQ in March 2020. Its rival network GMA at the time commanded a close 32.6% of the market pre-quarantine. When the community quarantine was implemented, other networks began taking up a bigger portion of the pie, but ABS-CBN and GMA kept a steady lead at 35.7% and 32.4% respectively.

Prior to its shutdown, ABS-CBN held some of the highest-rated program spots for both daytime and primetime during weekdays, including comedy-drama series Got to Believe and action drama FPJ’s Ang Probinsyano. On weekends, the network shared more or less equal top programs with GMA, with programs like legal drama Ipaglaban Mo! and anthology Wansapanataym. This trend continued until the shutdown took effect in the middle of the second quarter, and resulted in GMA mostly dominating the top program spots for the rest of the year (see Annex A).

The remaining players on air suddenly took over to fill the gap ABS-CBN left, with GMA launching Affordabox and GMA Now and TV5 enhancing its programming through its partnership with Cignal TV and opening its doors to the talents affected by the loss of ABS-CBN’s franchise.

“The decision to pivot back to entertainment in 2020 was very timely as TV5 was able to fill a void in the FTA market,” Cignal TV shared about the collaborations. “With the opportunity to strengthen our FTA play, we opened ourselves to partnerships & collaborations with different content groups who have a good history of developing the kind of content that we aim to put on our channel and were able to react quickly to developments in the market.”

GMA’s immediate dominance of the FTA airwaves can easily be seen by comparing the top programs of the first quarter of 2020, when ABS-CBN was still on the air with the top programs of the third and fourth quarter. In fact, GMA’s takeover of the top- ranking programs in the country was only temporarily interrupted with the start of the basketball season, when TV5 began airing live broadcasts of the NBA and Philippine Basketball Association (PBA) finals. In the third and fourth quarter of 2020, the network had virtually all of the top-rated programs airing in the country.

Despite no longer airing in the latter half of Q2 onwards, ABS-CBN remained in the of its audience at least on , according to Kantar Group’s Social TV Ratings. The network’s shows still received significant engagement on Twitter, with

147 https://newsinfo.inquirer.net/1360703/after-abs-cbn-shutdown-lack-of-ulysses-warning-made-cagayan- residents-suffer-robredo 148 https://newsinfo.inquirer.net/1355206/abs-cbn-shutdown-and-the-information-gap-amid-super-typhoon-rolly 149 https://www.rappler.com/nation/philippines-faces-super-typhoon-rolly-without-abs-cbn-news-regional-news 150 https://www.pna.gov.ph/articles/1120451

91 programs like ASAP Natin ‘To and TV Patrol garnering 177,224 and 74,555 tweets respectively during the period (Figure 3.1.1). The former bears noting as the program reclaimed the top rating spot in the latter half of the year when it started airing on both Kapamilya and A2Z channels, despite both networks having much less reach on TV.

Figure 3.1.1: Top 10 TV programs based on total tweets in 2020 (Q1 to Q4)

Q1 Top Programs Channel No. Tweets Q2 Top Programs Channel No. Tweets ASAP Natin 'To ABS-CBN 420,455 Eat… Bulaga! GMA 188,225 Make It with You ABS-CBN 396,655 Press Briefing ni GMA 183,460 Pangulong Duterte Eat… Bulaga! GMA 224,463 ASAP Natin 'To ABS-CBN 177,224 All-Out Sundays GMA 164,376 GMA 101,626 It's Showtime ABS-CBN 148,890 TV Patrol ABS-CBN 74,555 The Gift GMA 134,401 All-Out Sundays GMA 69,134 MMK Maalaala ABS-CBN 119,489 It's Showtime ABS-CBN 60,096 Mo kaya Prima Donnas GMA 103,314 Kapuso Mo Jessica GMA 56,715 Daddy's Gurl GMA 94,907 Daddy's Gurl GMA 49,392 Breaking News CNN 93,060 Breaking News CNN 42,353 Philippines Philippines

Source: Kantar Social TV Ratings

Q3 Top Programs Channel No. Tweets Q4 Top Programs Channel No. Tweets ASAP Natin 'To Kapamilya 178,349 ASAP Natin 'To A2Z 305,556 Channel Channel 11 Eat… Bulaga! GMA 160,664 ASAP Natin 'To Kapamilya 288,295 Channel It's Showtime Kapamilya 149,339 It's Showtime Kapamilya 265,774 Channel Channel All-Out Sundays GMA 63,711 It's Showtime A2Z 228,727 Channel 11 Press Briefing ni GMA 47,701 Sunday Noontime TV 5 128,038 Pangulong Live! Duterte TV Patrol Kapamilya 41,656 Eat… Bulaga! GMA 104,249 Channel Kapuso Mo Jessica GMA 36,650 GMA 52,006 Soho Daddy’s Gurl GMA 32,436 The Good Sun Kapamilya 44,203 Channel Teens Kapamilya 29,622 All-Out Sundays GMA 43,420 Channel The World Of A Kapamilya 25,238 Kapuso Mo Jessica GMA 40,526 Married Couple Channel Soho

Source: Kantar Social TV Ratings

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On the other hand, GMA shows have the most presence on Facebook, with programs Eat… Bulaga!, Kapuso Mo Jessica Soho, and Wowowin consistently claiming the most interactions (Figure 3.1.2).

Figure 3.1.2: Top 10 TV programs based on total Facebook interactions in 2020 (Q1 to Q4)

Q1 Top Programs Channel FB No. Q2 Top Programs Channel FB No. Tweets Tweets Eat… Bulaga! GMA 18,512,985 Eat… Bulaga! GMA 29,606,052 Kapuso Mo GMA 17,262,463 Wowowin GMA 28,491,133 Jessica Soho It's Showtime ABS-CBN 12,182,451 Kapuso Mo Jessica GMA 15,902,257 Soho TV Patrol ABS-CBN 10,633,829 TV Patrol ABS-CBN 9,809,524 Wanted sa Radyo TV 5 7,832,063 It's Showtime ABS-CBN 7,911,076 GMA 7,563,111 24 Oras ABS-CBN 4,622,695 The Gift GMA 3,812,043 ASAP Natin 'To ABS-CBN 648,412 Prima Donnas GMA 3,812,043 ABS-CBN 494,325 Magkaagaw GMA 3,812,043 S.O.C.O. (A Scene of ABS-CBN 382,901 the Crime Operatives) GMA 3,421,881 I-Witness The GMA GMA 378,113 Documentaries Source: Kantar Social TV Ratings

Q3 Top Programs Channel FB No. Q4 Top Programs Channel FB No. Tweets Tweets Kapuso Mo Jessica GMA 48,859,242 Kapuso Mo Jessica GMA 47,650,987 Soho Soho Eat… Bulaga! GMA 36,628,820 Eat… Bulaga! GMA 27,865,754 Wowowin GMA 28,775,220 Wowowin GMA 15,006,926 TV Patrol Kapamilya 15,468,187 It's Showtime Kapamilya 13,440,505 Channel Channel It's Showtime Kapamilya 10,808,529 TV Patrol Kapamilya 10,567,119 Channel Channel 24 Oras GMA 9,801,844 24 Oras GMA 10,482,950 Unang Hirit GMA 9,287,825 It's Showtime A2Z 9,850,839 Channel 11 Wish Ko Lang! GMA 3,947,552 Unang Hirit GMA 7,335,881 ASAP Natin 'To Kapamilya 1,741,404 Wish Ko Lang! GMA 4,859,362 Channel The Voice Teens Kapamilya 487,153 ASAP Natin 'To Kapamilya 3,839,120 Channel Channel

Source: Kantar Social TV Ratings

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Though ABS-CBN’s programs retained some semblance of their popularity among audiences, this was not reflected in ad spend. Even with the launch of FTA network A2Z, according to Kantar, total ad spend from both Kapamilya and A2Z channels declined by 37% in the last quarter of 2020 compared to spend from ABS-CBN in the comparable period of the previous year (Figure 3.1.3).

Figure 3.1.3: Kapamilya and A2Z Channels TV Ad spend in Q4 (2019 vs. 2020)

60 120

50 100

40 80

30 60

Php Billions Php 20 40

10 (000) NumberSpots of 20

0 0 KapamilyaKapamilya A2Z Q4 ABS-CBN Kapamilya Kapamilya A2Z Q4 ABS-CBN + A2Z Q4 2020 2020 Q4 2019 + A2Z Q4 Q4 2020 2020 Q4 2019 2020

Source: Kantar

Advertising expenditure that would have gone to ABS-CBN was directed to the network’s subsidiary Kapamilya Channel, shifting FTA spend to pay TV. However, the decline could be attributed to the general downward trend of advertising spend in TV signifying volatility in the industry (Figure 3.1.4).

Figure 3.1.4: Shift of ad spend from FTA to pay TV (January to September 2020)

March 16: May 5: Jun 30: DTT and Sky Jun 10: Congress denies Luzon ECQ starts ABS-CBN Shutdown Direct Shutdown ABS-CBN franchise 1800 -5% -36% +32% +10% 1600 1400

1200 1000

Millions Aug 1: 800 Jun 28: AMCARA Pay TV Ad Spends started to grow 600 Jun 1: 400 GCQ; New Apr 9-11: monitored 200 Holy Week holidays channels 0 5 9 6 5 9 6 8 5 9 7 8 5 9 13 17 21 25 29 10 14 18 22 26 13 17 21 25 29 10 14 18 22 26 30 12 16 20 24 28 13 17 21 25 29 11 15 19 23 27 31 12 16 20 24 28 13 17 21 25 29 3-Jul 1-Jan 1-Jun 2-Apr 2-Feb 1-Sep 4-Aug 1-Mar 4-May

Source: Kantar TV Advertising Intelligence

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Nonetheless, ABS-CBN has declared its intent to remain a major player in the TV industry, enhancing its presence on digital platforms and continuing to air its pay TV channels like ANC, TeleRadyo, etc. On October 6th, 2020, ABS-CBN Corporation announced a blocktime deal with ZOE Broadcasting Network to air select ABS-CBN shows from its own TV network on Channel 11’s A2Z (formerly ZOE TV) beginning from October 10th. This year also saw a partnership between ABS-CBN and TV5 through its programming partner Cignal TV which allowed ABS-CBN to air programs like its flagship variety show ASAP Natin ‘To and the long-running FPJ’s Ang Probinsyano on the TV5 network and its regional stations.151

TV5 Network, Inc. and Cignal TV, Inc. President and CEO Robert P. Galang has been quoted as saying that the collaboration between Cignal, TV5, Brightlight Productions, and ABS-CBN “marks the start of greater cooperation among our various industry players and begins a new era of partnership”. Yet it is far too early to be certain of ABS-CBN’s future. TV5 Network, Inc. and Cignal TV, Inc. Chairman Manuel V. Pangilinan said that while TV5 is open to a blocktime deal with ABS-CBN, it is also cautious at the same time due to the political considerations that would follow after such a deal.152

Among the big moves to digital seen from ABS-CBN are the strengthening of its OTT platform, now known as iWantTFC, as well as reinforcing its online presence through airing Kapamilya Channel on YouTube, streaming some of its programs (e.g., TV Patrol) on Facebook, and distributing content on iWantTFC153.

Jay Bautista, managing director of Kantar Media Philippines, sees the potential in ABS-CBN’s digital efforts, which he observed started as early as 2012 when they launched TVplus, coupled thereafter with then iWant TV, and its online presence on platforms such as YouTube.

“This strategy could work and free them from the pressure of being at the mercy of the government. It’s possible for highly urbanized cities where the internet infrastructure is fast and stable,” Mr. Bautista wrote in an article published in Ateneo De Manila University’s Areté Connect portal.

Franchise renewal efforts

The popularity of the ABS-CBN terrestrial programming among Filipinos led to considerable controversy about the end of the franchise. Most recently, a nationwide signature campaign has submitted 20,000 signatures supporting a proposal to bring back the network’s free TV and radio channels to the airwaves to the Commission on Elections, banking on the hope that the network can resume its free TV and radio services if the granting of a franchise wins in a national referendum after gathering at least seven million signatures.154

151 https://news.abs-cbn.com/entertainment/03/05/21/tv5-to-simulcast-abs-cbns-primetime-bida-starting-march-8 152 https://www.philstar.com/business/2021/01/25/2072723/mvp-too-early-expanded-abs-cbn-tv5-partnership 153 https://www.bworldonline.com/abs-cbn-shows-now-on-kumu-livestream/ 154 https://news.abs-cbn.com/news/05/15/21/pirma-kapamilya-submits-1st-batch-of-signatures-for-abs-cbn- franchise-renewal-bid

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Efforts to restore the franchise are also underway in Congress. On January 4 2021, Senate President Tito Sotto filed Senate Bill No. 1967 seeking to grant ABS-CBN’s franchise for another 25 years, with several senators backing it.155 He said that ABS- CBN’s wide reach and the public’s reliance on, and support of the network were clear signs that the franchise be renewed, while also citing the absence of competition and “mediocrity” in the TV industry being outright effects of the shutdown. He further noted that despite its absence from free TV and radio stations, ABS-CBN continued to enjoy high ratings on its A2Z Channel, cable TV and online platforms that carry some Kapamilya shows, citing September 2019 data from Kantar Media showing that ABS- CBN “registered an average audience share of 45% or 14 points higher than GMA’s 31%.”

Batangas 6th District Representative and Deputy Speaker Vilma Santos-Recto refiled House Bill No. 8298 on January 18, seeking to do the same, fulfilling the requirement that all local bills — including franchises — must first be approved by the House of Representatives before the Senate can tackle it in plenary.

President Rodrigo . Duterte, meanwhile, voiced his opposition to the network’s revival, going as far as to say that he will not allow ABS-CBN to operate even should Congress renew its franchise, until the network has settled its alleged tax liability with the government and the issue of the alleged Development Bank of the Philippines condonation of loans from businesses belonging to the Lopezes. This is despite Bureau of Internal Revenue Assistant Commissioner Manuel Mapoy stating in a 2020 House hearing on the ABS-CBN franchise that the network had been regularly paying its corporate taxes for the past years and that “there is no outstanding delinquent account as we speak”.156 Presidential Spokesperson Harry Roque, in a Malacañang virtual press briefing, further said that the President would leave the Office of the Ombudsman to investigate ABS-CBN over the alleged unpaid taxes and condonation of the network’s soured loans.

President Duterte’s stance on the issue raises the question of whether ABS-CBN will be allowed back on the air before the next national election in 2022. Further decreasing the chances of the network’s revival, on February 11th, 2021, House Speaker Lord Allan Velasco said that ABS-CBN’s franchise renewal would have to wait until 2022.157

155 https://news.abs-cbn.com/news/01/04/21/sotto-files-new-bill-to-renew-abs-cbns-franchise 156 https://news.abs-cbn.com/news/02/09/21/duterte-wont-allow-abs-cbn-to-operate-even-if-given-a-franchise-by- congress 157 https://news.abs-cbn.com/news/02/11/21/speaker-says-abs-cbn-franchise-renewal-will-have-to-wait-for-next- congress

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Chapter 4: Piracy in the Philippines: Piracy and Unauthorized Distribution for Online and Traditional TV Media piracy: an overview

Media piracy is acknowledged as a daunting global challenge. In the Philippines, piracy is part of everyday life. Among more than 110 million Filipinos, the unauthorized production, duplication, distribution, sale, and consumption of soft or hard copyrighted materials is a common practice. Research attributes the growth of illegal copyright violations to extensive socio-political, cultural, and economic causes; the concept of content theft is not fully understood by the majority of the population and its implications to the economy seem negligible to the average Filipino. With the proliferation of digital content, piracy has recorded unprecedented increases. 158

AVIA’s Coalition Against Piracy (CAP) commissioned a study on the online content viewing behavior of Filipino consumers and YouGov, an international research and data analytics group, conducted the survey in September 2020. Results revealed a surge in piracy during the pandemic. Among eight East and Southeast Asian countries, the Philippines was in the third spot among the percentage of online consumers accessing illegal sites. The report reveals that 66% visited piracy websites and 47% of this figure cancelled local and international content subscriptions.

A study by consultancy Media Partners Asia estimated US$120 million worth of potential revenue losses to video producers, distributors and aggregators. Moreover, people in the creative industry are losing their jobs, crooks generate large revenues from stolen content, and the creative industry’s growth is compromised.

Over the past few years, there have been serious efforts and campaigns to fight and contain piracy. Individuals, groups, private companies, lawmakers, and government agencies cooperate and advocate counter-piracy programs. There is considerable achievement, but the Philippines remains unable to completely win this battle.

This chapter of this report scans trends in online and television piracy, looks into subscription estimates’ decline or increase in the last few years, investigates recent legal reforms and Intellectual Property enforcements, reviews the battle against piracy, evaluates success and accomplishments, provides information on Copyright Reform, identifies the key players, and looks at their future plans. This is an attempt to assess the state of piracy in the country today, to examine its past, to identify what still needs to be done, to provide an outlook for the future and define its implications for the Philippine video industry.

Trends by platform and region

Across the globe, internet piracy is proliferating in spite of stringent piracy laws. The figures reflect that in North America, Europe, and the Asia-Pacific – roughly 24% of internet bandwidth is utilized for infringement. Illegal streaming accounts for 80% of piracy worldwide.

158 https://datareportal.com/reports/digital-2021-philippines

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In the Philippines, the Intellectual Property Office of the Philippines (IPOPHL) disclosed a surge in piracy in 2020 based on the number of reports and complaints filed in their office. Reports and complaints on suspected counterfeiting and piracy increased to 121 in 2020, up from just 14 for 2019, as the pandemic presented lucrative opportunities for illicit traders. This surpassed the 100 reports and complaints received by IPOPHL’s IP Rights Enforcement Office (IEO) from 2016 to 2020 which took into account all types of infringement.159

Data from IPOPHL’s IEO indicate that 67 of alleged violations done from March to June 2020 concerned counterfeiting, 28 were related to unlawful reproduction of copyrighted content, illegal streaming, and piracy,160 while the remaining 54 were on the illegal sharing and selling of copyrighted works. Movies and shows were the most reported for alleged piracy with 22, accounting for 40% in the category.

There is high probability that the disruption in supply chains as a result of COVID-19 because the pandemic provided counterfeiters the chance to fill the gap with substandard, IP infringing products. The environment was equally tempting for content pirates as people desired free sources of entertainment as they spend most of their time at home.

Given that scenario, the action plan was for the National Committee on Intellectual Property Rights (NCIPR) to focus on five key strategies to deter fakes and piracy throughout the year. The idea is to enhance capacities of NCIPR members on IP enforcement, from screening the online space to building investigative tactics for proven violations to proceed to criminal prosecution; to fortify collaboration with pertinent government partners to raise awareness and ensure government regulations do not hamper but, instead, streamline enforcement action; to help IP right holders develop and efficiently implement an IP rights enforcement strategy that is responsive to the times, including keeping them abreast of the ever-evolving trends in counterfeiting and piracy operations; engage with intermediaries such as e-commerce platforms, payment gateways and internet service providers, among others, to develop a coordinative, proactive mechanism; and help improve border controls. Overall, there is a renewed urgency for a bold fight against counterfeiting and piracy.

The IPOPHL together with the movie industry and the telecommunications sector set out to decry the illicit activities particularly illegal streaming. They denounced the illegal streaming devices that permit access to content streams found on the internet such as live media broadcasts or content on demand. The authorities believe that even if the streaming devices are basically legal, they become tools for “plug and play infringement” when transformed by software that enables the streaming of pirated content from the net.

Online and television piracy

Two prominent ways that grant access to illicit content in the Philippines are online piracy and signal theft. Online piracy involves accessing or viewing content such as movies, TV shows and other proprietary video content from online sources who do not

159 https://www.ipophil.gov.ph/news/reports-complaints-against-piracy-counterfeiting-surge-in-2020-amid-covid- 19-disruption/ 160 https://www.fdcp.ph/notes-from-the-chair/piracy-perennial-problem-philippine-cinema

98 possess the rights to distribute the content. On the other hand, signal theft involves illegally obtaining a pay TV signal, and viewing or distributing that through unofficial channels that are unauthorized by the channel’s rights owner.

In a recent study, AVIA analyzed the viewing behavior of Filipino online consumers and revealed that 49% access streaming piracy websites or torrent sites. Piracy levels soared to 53% within consumers whose age range from 25-34. The survey, conducted by YouGov, revealed that 47% of those who visited unlawful sites stopped subscribing to both local and international content services. The study also showed that Malaysia and Indonesia are doing well in their fight against piracy compared to the Philippines because of the massive reductions in their online piracy in the past year. Over the previous year, Malaysia reported a 64% decline in users who access piracy sites and Indonesia has a 55% reduction. The neighboring countries point to their government’s site blocking initiatives as the reason for the decline in online piracy levels. Locals in both countries have taken note of their government’s proactive stance to solve the problem on piracy. Their viewing habits have changed and 49% declare that they stopped patronizing piracy services and 40% expressed disinterest and reveal they now ‘rarely access’ piracy services as a result of the site blocking.161

Following the same policy direction, the Philippine Senate Bill 497 or Online Infringement Act, filed in January 2019, seeks to create a regulatory site blocking mechanism which would enable authorities to ensure that Internet Service Providers (ISPs) take “reasonable steps to disable access to sites whenever these sites are reported to be infringing copyright or facilitating copyright infringement.” YouGov said that the study also reflects that the majority of Filipinos online understand the effectiveness of site blocking, as 53% of the respondents agreed that a “government order or law for ISPs to block piracy websites” would be the most effective way to curb piracy.

In this connection, the IPOPHL is pooling concerned groups to tackle issues on online piracy involving the Film Development Council of the Philippines (FDCP), Department of Justice (DoJ), DICT, NTC, and National Bureau of Investigation (NBI). There are also representatives from CAP of the Asia Video Industry Association (AVIA), Bureau of Customs (BoC), National Book Development Board (NBDB), Performers’ Rights Society of the Philippines (PRSP), Game Developers Association of the Philippines (GDAP), and Globe Telecom.162

IPOPHL continues to proactively work with these groups, and in April established a working group with the NTC and ISPs, including Globe Telecom, Inc., Smart Communications, Inc., PLDT, Inc., Sky Cable Corp., Converge ICT Solutions Inc., and DITO to establish a coordination mechanism that will enable a more streamlined and rapid blocking of pirated sites. The eventual Memorandum of Understanding (MOU) seeks to implement an inter-coordination protocol for the site blocking process that will take ISPs two hours to implement on receipt of verified complaint from the IPOPHL to the NTC.163

161 https://avia.org/new-survey-shows-philippines-among-highest-in-online-piracy-in-southeast-asia/ 162 https://www.fdcp.ph/notes-from-the-chair/piracy-perennial-problem-philippine-cinema 163 https://www.ipophil.gov.ph/news/ipophl-ntc-and-internet-providers-to-partner-in-blocking-piracy-sites/

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Separately, AVIA and the IPOPHL signed an MOU164 to collaborate and assist in mitigating piracy. Specifically, the MOU promotes cooperation on: 1. the development of mechanisms and channels for the sharing of relevant information that can help prevent and suppress piracy in the Philippines in a timely manner; 2. the development of piracy monitoring and rolling site blocking processes and strategies for their effective implementation; and 3. building the expertise and technical knowledge of local authorities pertinent to the fight against piracy.

Telco giant Globe Telecom, Inc., representing the telecommunications sector, has been committed in its anti-piracy advocacy program called #PlayItRight that educates Filipinos on the ill effects of piracy and encourages the consumption of content from legitimate sources. The #PlayItRight advocacy campaign has partnered with AVIA and other organizations with similar objectives. Both believe that fighting piracy is more than just employing technology to safeguard original creative content, but also legislation to protect copyright and enforcement. Both AVIA and Globe believe that cooperation among stakeholders will help them defeat the long-standing enemy. These two organizations know the perils of digital piracy and agree that with assertive and voluntary commitment from stakeholders and the legislation of the blocking of piracy sites can solve the largest business issue in the content industry.

Another factor that needs to be taken into consideration in the battle against online piracy is consumer awareness. It is imperative that consumers are constantly reminded and made aware of how to tell if an IPTV service is illegal and to skillfully identify piracy websites. Consumers should know the very real malware risks they face when they employ such services. Consumers must be able to tell that they are stealing content when they use such services. There must be a personal commitment and knowledge among users that they should not visit and consume illegal content. The extensive availability, affordability, and ease of use of legal OCC services, both advertising-based and subscription, should make the temptation of piracy less inviting. There are video services that offer quality entertainment content, are reliable, and importantly, are legal. The illegal alternatives put consumers at risk of malware infection and are hurting the economy. Piracy websites and ISDs do not come with a “service guarantee,” no matter what the seller may claim. This message is beginning to resonate with SE Asian consumers declares AVIA.

Meanwhile, the IPOPHL is working on soliciting lawmakers for the power to block websites that infringe on intellectual property rights, marking its latest and perhaps the most aggressive move yet against piracy. The IPOPHL recommended provisions for speedy site-blocking at a congressional committee hearing in February 2021 because the agency currently has neither enforcement mechanisms nor the legal authority to take down websites. The objective is to obtain quick responses for rights owners that will help prevent further harm to their IP rights and protect against revenue losses. The implementation will encourage copyright holders and trademark owners to be assertive in raising complaints against cyberspace IP violators.165

164 https://www.ipophil.gov.ph/news/ipophl-partners-with-avia-to-curb-piracy-help-in-creative-economys-recovery/ 165 https://business.inquirer.net/310514/agency-seeks-power-to-combat-online-piracy

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IPOPHL’s piracy measures and new rules against counterfeiting

On March 3, 2021, the powers of IPOPHL’s IEO were strengthened to empower IPOPHL to effectively fight online counterfeiting and piracy. The IPOPHL’s Memorandum Circular (MC) 2020-049 or the “Revised Rules of Procedure on Administrative Enforcement Intellectual (IP) Rights” have included the electronic, digital or online channels as part of the IEO’s scope in exercising its enforcement functions.

“The exercise of IPOPHL’s enforcement powers shall cover manufacturing, production, importation, exportation, distribution, trading, displaying, broadcasting, streaming and offering for sale, including other preparatory steps necessary to carry out the sale of counterfeit and pirated goods or contents to the public, including electronic, digital or online means provided that there is no pending case before any office, tribunal, quasi-judicial body, or court involving the same issue/s or subject matter,” the MC indicated.

The new rules included IEO’s actions in response to an administrative complaint from a rights holder regarding counterfeiting and piracy. Also, the expanded rules drastically shortened the standard period given to offenders for compliance with IEO decisions — now in 72 hours from the previous 60 days — ensuring faster corrective actions. The IEO can now also conduct motu proprio monitoring in both online and physical marketplaces. “Motu proprio monitoring allows the IEO to take on a more proactive approach and help brand owners screen markets of IP violating listings, with prospects of reporting possible infringements to concerned IP rights holders for their validation and appropriate action,” as quoted from IPOPHL Director General Rowel Barba. The rules are in answer to a heightened counterfeiting and piracy issues online.

As expected, the new rules aim to weed out IP rights violators and help safeguard the interest of the public, be it consumers or brand owners. With the new powers, IEO can better intercept counterfeiting and piracy, especially in the online space. It is a step towards decreasing the economic loss and reputational damage IP right holders, and consequently the Philippine government, suffer from infringements. Nonetheless, legislative amendments remain “immensely needed” for enforcement actions to keep up with the intensification of piracy today. Upon the approval of the IP Code amendments requested from Congress, it will be easier to shut down IP infringing sites.166

Taking all that into consideration, online digital media piracy will remain a daunting challenge as internet connections continue to rise globally. Online internet media piracy, powered by broadband technology and happening on mobile devices such as smartphones or tablets, make the problem even more difficult to contain. The future of media piracy is difficult to tell because it evolves with the development and adoption of new technology. The obstacles that the regulators and stakeholders need to confront in fighting piracy are overwhelming due to the new computing powers provided by nanotechnology and quantum computing which make piracy easier to perform and hide from law enforcement.167

166 https://www.ipophil.gov.ph/news/ipophls-anti-counterfeiting-piracy-measures-strengthened-with-new-rules-in- force/ 167 Ballano, V. O. (2016). Tracing Media Piracy: Current and Future Trends. In Sociological Perspectives on Media Piracy in the Philippines and Vietnam (pp. 227-254).

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Chapter 5: Regulatory Environment for Digital Content

The TV industry in the Philippines also has to work within the framework of laws governing the media — including those dealing with legislative franchises, bandwidth and spectrum allocations for their broadcast signals and channel assignments, and what content they may carry.

The regulatory agencies with purview over the TV industry include the NTC and its mother agency, the DICT, as well as the Movie and Television Review and Classification Board (MTRCB), and the Optical Media Board (OMB), among others.

DICT

Formerly the Commission on ICT, the DICT was elevated to department status under Republic Act (R.A.) 10844 signed by then-President Benigno S.C. Aquino III on May 23, 2016. The DICT is the primary policy, planning, coordinating, implementing, and administrative entity of the Executive Branch of the government mandated to develop and promote the national ICT development agenda.

NTC

The NTC is the traditional regulatory agency; it was created under Executive Order (E.O.) No. 566 on July 23, 1979. It is the sole regulatory agency with jurisdiction over the supervision, adjudication, and control over all telecommunications services and broadcast networks throughout the country.

Formerly attached to the Office of the President, the NTC has since been reassigned to the DICT. The NTC is mandated to regulate the installation, operation, and maintenance of radio stations both for private and public use under the Radio Control Law, Act No. 3846, as amended. It also regulates and supervises the provision of public telecommunications services, under both the Radio Control Law and Public Telecommunications Policy Act of 1995, R.A. No. 7925. It also manages the radio spectrum, as well as regulates and supervises radio and television broadcast stations, cable antenna television (CATV) and , under E.O.s No. 546 and 205.

However, NTC has no legislated authority over internet content and so (apart from legal prohibitions on libel, obscenity and sedition) there is no current regulation of OCC services.

MTRCB

Created under Presidential Decree No. 1986 issued by former President Ferdinand E. Marcos, which was updated in 2004 and 2012, the MTRCB says on its website that it is mandated to “encourage value-based media and entertainment culture, be an enabling and effective partner of the industries toward authentic self-regulation, and uplift the standard and of service of its human resources.”

MTRCB operates a pre-censorship and rating system for cinematic exhibitions, and works with traditional TV operators on a collective self-regulation system for broadcast

102 television. Last year, the MTRCB sought to regulate the content of online content services, something that had netizens across the Philippines up in arms. But media law expert Enrique dela Cruz said that MTRCB had no legal authority to regulate online video streaming sites.168

Mr. dela Cruz said that based on the Presidential decree then-President Marcos issued creating the MTRCB, the Board’s mandate is limited to regulating motion pictures and television programs among others. “Internet streaming services had not yet come to fruition. So it cannot be interpreted to be included in its mandate when at the time of the power was granted, such services were not even available,” he said.

“You cannot just extract movies and television shows from the internet and regulate it separately from the medium,” the report quoted Mr. dela Cruz as saying. “It’s just like saying that online newspapers must be covered by print media regulations?” He added that the MTRCB also “cannot filter the movies and television shows in video streaming services because their source is not in the Philippines.”

OMB

The OMB, formerly the Videogram Regulatory Board (VRB), was created on Oct. 5, 1985 to address the piracy of films and music, beginning with the unauthorized reproduction of Betamax tapes of films by video rental shops where programs from satellite feeds would be copied for redistribution.

The VRB became the OMB by virtue of RA No. 9239, an act regulating optical media, including licensed software, to prevent piracy, and prosecute those who engage in it.

NPC

The National Privacy Commission (NPC) is the country’s privacy watchdog; an independent body mandated to administer and implement the Data Privacy Act of 2012, and to monitor and ensure compliance of the country with international standards set for data protection. This agency’s functions are vital in protecting the netizens’ privacy online, especially when their transactions with government or private sector entities are done using digital means.

KBP

The Kapisanan ng mga Brodkaster ng Pilipinas (KBP) is a non-government, non-profit self-regulatory organization of the broadcast media in the Philippines that seeks to promote an “independent and free broadcast media, responsible broadcasting, enhanced public service by broadcasters, advancement of innovation in broadcasting, and the development of Philippine broadcasting.” It was organized on April 27, 1973, with 19 members, and grew to include almost all radio and television broadcast stations in the country at that time. The KBP still fills the role of council for self- regulation among its members now.

168 https://cnnphilippines.com/news/2020/9/4/Media-law-expert--MTRCB-has-no-legal-authority-in-regulating- online-video-streaming-sites-.html

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HoR

The House of Representatives (HoR), meanwhile, has the power to grant or deny franchises to television and radio networks with nationwide reach, as well as telecommunications companies and ISPs, on the basis that the radio wave spectrum and bandwidth allocations — which also use radio waves to wirelessly transmit internet connectivity — are part of the national patrimony. Decisions on franchises are highly politicized as a result of the requirement for legislative approval.

Digital taxation

Because of the economic slowdown caused by COVID-19 crisis and the restrictive measures the government has implemented in its effort to prevent the spread of the virus, the government has been looking at where else taxes can be levied to make up for revenue shortfalls.

Taxation issues for online services (including but not limited to video services) have arisen in several different contexts. The state think-tank NTRC recommended that LGUs “should consider imposing an amusement tax on video streaming platforms, after the closure of cinemas, concert venues and theaters resulted in nearly P470 million in foregone revenues last year.”169

The NTRC was quoted in that report as saying that amusement tax collections are “relatively insignificant” when compared to other tax sources, like real property taxes and local business taxes, but LGUs can still expand the coverage to generate more revenue.

CNN Philippines reported on July 29, 2020 that the House Committee on Ways and Means approved House Bill 6765 or the “Digital Economy Taxation Act of 2020,” which seeks to impose a 12% value-added tax to online transactions.

Meant as an amendment to the National Internal Revenue Code of 1997, H.B. 6765 defines this specific Value-added Tax (VAT) as an indirect tax on transactions with digital service providers operating on online platforms in the Philippines. It will cover online shopping and video and audio streaming services as well as online accommodations bookings over apps like AirBnB. Under the bill, this is an indirect tax that may be passed on to consumers — and it will mean that online transactions will cost more.

The CNN Philippines report also quoted Finance Assistant Secretary Dakila Napao as saying that the government will earn as much as P10 billion from the measure.

The legislation has not yet been taken up by the full House of Representatives.

169 https://www.bworldonline.com/think-tank-suggests-netflix-tax-as-lgu-collections-slump/

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Digital regulation

Varying degrees of regulation for online content are provided by several pieces of existing legislation:

• Under the Anti-Cybercrime Act of 2012, Revised Penal Code provisions on libel and the distribution and use of child pornography are severely penalized, along with digital crimes like identity theft and other penal code crimes are committed using computers and other digital equipment like smartphones and external digital storage equipment.

• Online content is also regulated by laws like the Data Privacy Act of 2012, which provides penalties for identity theft and makes agencies and organizations that are in possession of the sensitive and personal information of citizens and juridical persons responsible for safeguarding these data.

• R.A. 10176 also provides penalties for digital piracy. Persons caught in possession of unauthorized digital copies of any copyrighted material face fines of between P200,000 and P500,000, plus six to 20 years in prison.

• The intellectual property rights over software, electronically published books, and digital still image, video and audio content, meanwhile, are also protected under R.A. No. 8792 also known as the “Electronic Commerce Act of 2000.”

The Intellectual Property Code and the Anti-Camcording Law were passed to combat piracy in the Philippines — and the Anti-Cybercrime Law adds another layer of legal protection for copyright owners.

The OMB oversees the enforcement of the anti-camcording law, as well as the other laws penalizing digital piracy, and it is given the mandate to gather evidence against and file charges against persons who violate these moral and commercial rights.

The government also makes periodic crackdowns on access to pornography video sites. On May 26, 2020, Techbeat Philippines reported that NTC ordered the blocking of access to the pornography website PornHub by ISPs. 170 “While blocking of pornographic content websites is not new, the NTC seemingly returned its censorship policies on full blast to fight child pornography and sexual exploitation amid the COVID-19 crisis,” the report said. The NTC’s actions last year came on the heels of a reported increase in domestic violence, as well as spikes in reported cases of sexual harassment and sexual exploitation during the early COVID-19 quarantines.

The Philippine National Police (PNP), the NBI and the Armed Forces of the Philippines (AFP) all have cybercrime divisions that may be tapped by agencies like the Department of Trade and Industry (DTI), National Privacy Commission (NPC), OMB and NTC to investigate cybercrimes, and to identify and prosecute suspects in these cybercrimes, as may be required under the applicable laws.

170 https://www.techbeat.ph/after-abs-cbn-shutdown-ntc-turns-to-pornhub/

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Need for licensing reforms

The Philippine TV industry is quite tightly tied in with the ICT industry, particularly the telecommunications industry, and reforms in the laws governing both would go a long way towards easing its difficulties and future-proofing this industry in the years to come.

More modern and constantly evolving modes of delivering broadcast content and changing norms and mores demand that legislation, policy frameworks and government responsiveness be calibrated to keep up with the swift turnover of technology. Besides delivering entertainment, TV delivers vital news and information in real time across the spectrum frequencies for broadcast and internet streaming.

Investments in digital transformation, as well as a solid lobby to keep legislative measures at pace with the evolving media landscape are necessary — for the various frameworks and infrastructure that will enable this industry to thrive, as well as to keep the TV audience informed and capable of communicating their needs to both government and the TV industry.

Reforms — especially to the outdated Radio Frequency Law — have to be pushed even as TV industry players upgrade their equipment to keep pace with the developments in their sphere of endeavor.

ReformReform and and the the Radio Radio Frequency Frequency Law Law

TraditionalTraditional radio radio and and television, television, meanwhile, meanwhile, are covered are covered by several by laws, sever includingal laws, thoseincluding on libel, those slander, on libel, public slander, service public by broadcast service by entities, broadcast public entities, decency, public and contentdecency, ratings and content for audiences ratings allfor exist. audiences all exist.

LawsLaws on on granting granting franchises franchises and and licenses licenses to operate based on the the franchise franchise agreementsagreements craftedcrafted byby HoRHoR andand granted to privately-owned broadcastbroadcast networksnetworks alsoalso exist. exist.

AA thoroughly thoroughly outmoded outmoded Commonwealth Commonwealth-era- law,era one law, that one has that not been has notamended, been isamended, the basis is for the the basis legislative for the controllegislative over control the franchises over the franchises granted to granted radio and to televisionradio and television networks, networks, telecommunications telecommunications companies, companies, and ISPs: and Act ISPs: No. Act 3846, No. enacted3846, enacted 1931 and 1931 made and effectivemade effective in 1932, in is1932, also is called also calledthe “Radio the “Radio Control Control Law”, andLaw is”, “the and current is “the governance current governance over radio stations over radio and spectrum stations andmanagement,” spectrum accordingmanagement, to ” according engineer to Pierre engineer Tito Pierre Galla Tito Galla co-founder co-founder of of the the group group Democracy.net.ph.Democracy.net.ph.

OriginallyOriginally meant meant to to provide provide government government control over the UnitUniteded States States and and PPhilippinehilippine navalnaval buoybuoy transmitters,transmitters, ActAct 3846 still contains provisions thatthat enableenable thethe “US“US President” President” toto allocate allocate radio radio spectrum assignments to to specific specific users, users, usuallyusually government government agencies. agencies. It It has has not not been amended, never mind that that the the PhilippinesPhilippines has has been been a sovereign a sovereign country country since since July 4, July 1946, 4, 1946,when the when US thegranted US thegranted country the independence country independence and ceded and control ceded over control the archipelago over the archipelago to the Philippine to the government.Philippine government.

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OnOn MayMay 4,4, 2020,2020, RepublicRepublic Act No. 7966,7966, thethe lawlaw grgrantinganting ABSABS-CBN-CBN aa 25 25-year-year franchisefranchise t oto broadcast broadcast on on television television and and radio, radio, expired. expired .The The following following day, day, May May 5, 2020,5, 2020, the the NTC NTC issued issued a aCease Cease andand DesistDesist OOrderrder stopping stopping ABS ABS--CBNCBN from from operatingoperating its its television television and radio broadcasting broadcasting stations stations absent absent a a valid valid CongressionalCongressional franchise franchise as as required required by by law. law. The The law law cited cited was was Act Act No. No. 3846 3846 or theor 171 Radiothe Radio Control Control Law Lawof 1963. of 1963.”1 ”

Mr.Mr. Galla,Galla, ofof Democracy.net.ph,Democracy.net.ph, says reliance onon thesethese oldold lawslaws is is inappropriate inappropriate andand dangerous. dangerous. HeHe noted that, ““InIn SectionSection 1,1, ActAct 38463846 specif specificallyically says says that that you you cannotcannot use use a a transmitter, transmitter, and and implicitly, implicitly, the the transmitter’s transmitter’s frequency frequency assignment, assignment, if youif you do do not not possess possess a subsistinga subsisting legislative legislative franchise.” franchise. ”

““WhenWhen ABSABS--CBNCBN’s’s franchisefranchise expired, the certificatescertificates ofof publicpublic convenienceconvenience and and necessitynecessity (CPCNs) (CPCNs) and and provisional provisional authorities (PAs)(PAs) of of the the TV, TV, AM, AM, and and FM FM transmitters,transmitters, as as well well as as their their radio station station licenses licenses (RSLs), (RSLs), no no longer longer had had a a franchisefranchise toto leanlean on,on,”” hehe said. This law, Mr. GallaGalla added,added, ““isis anan Act,Act, not not an an R.A. R.A. ThereThere was was nono suchsuch thingthing asas a RepublicRepublic Act atat thethe timetime thethe lawlaw was was made. made .It It even even predatespredates Commonwealth Commonwealth acts. acts.””

“Because“Because thethe paperworkpaperwork waswas nono longer valid, NTCNTC hahadd thethe mandatemandate toto send send its its ceasecease--andand--desistdesist order order to make to make ABS - ABSCBN-CBN stop using stop these using frequencies, these frequencies, implicitly, inimplicitly, the name in theof the name Filipino of the nation, Filipino hence, nation, the hence, CPCNs, the CPCNs,PAs, and PAs, RSLs and were RSLs no longerwere no valid,” longer Mr. valid, Galla” Mr.said. Galla said.

ThatThat law law waswas designeddesigned toto govern radio statstations,ions, whichwhich werewere bigbig brick brick and and mortar mortar structuresstructures with with tall tall antennas, antennas, mostly for maritime maritime navigation navigation —— fewfew were were rich rich enoughenough to to own own a a home home AM AM set set until until after after World World War War II.” II.”

Mr.Mr. Galla Galla continued, continued, “ 88“88 years years went went by, by, and and technology technology advanced, advanced, the the law law was was not amendednot amended despite despite step changes,step changes, like from like coiledfrom coiled wire to wire crystal to crystal to vacuum to vacuum tube to solidtube stateto solid diode state to microchip,diode to microchip, despite step despite changes step fromchanges AM to from TV toAM FM, to analogTV to toFM, dig analogital.” to digital.”

HeHe explainedexplained thatthat thethe ““governancegovernance of radio stationsstations andand spectrumspectrum isis suchsuch that that a a strictstrict implementationimplementation ofof 38463846 will completely makemake 21st21st centurycentury lifestyles lifestyles nearly nearly impossible.impossible.”” Under Under that that law, law, people people would would actually actually “ need“need a alegislative legislative franchise franchise to beto ablebe able to own to own and and operate operate your your cellphone, cellphone, your your laptop, laptop, your your WiFi WiFi router, router, your your car keycar Bluetoothkey Blueto keyoth fob, key your fob, wirelessyour wireless mouse, mouse, your toy your drone, toy drone,your remote your remotebaby IP camerababy IP” camerabecause” becauseall of these all ofuse these radio use frequencies radio frequencies so you canso you use can them use as them they areas theydesigned are designed to be used. to be used.

TheThe NTCNTC implementsimplements governancegovernance guided by thethe RadioRadio FrequencyFrequency LawLaw “ usually“usually eithereither throughthrough contortionismcontortionism of of the law, or through through analogy, analogy, or or by by simply simply not not enforcingenforcing it,” it, ”Mr. Mr. Galla Galla said. said. “When “When cellular cellular tech tech came came into into the thePhilippines, Philippines, the NTCthe wantedNTC wanted each usereach to user get toan get operator’s an operator license,’s license, and each and uniteach to unit have to havean RSL.” an ThenRSL.-”President Then-President Fidel V. Fidel Ramos V. Ramos “threw “ threwa fit: ‘that’sa fit: ‘that a telephone!”’s a telephone! he ” yelled,he yelled, and thusand governancethus governance of cellular of cellular is analogous is analogous to landline to landline governance.” governance. ”

171 https://www.ateneo.edu/ls/soss/political-science/news/research/abs-cbn-shutdown-1972-and-2020-blueboard- millard-o-lim

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“When“When wirelesswireless routersrouters camecame intointo thethe scene,scene, thethe industryindustry playersplayers said ‘do not requirerequire permits permits for for these! these! TheseThese areare CPEsCPEs (customer(customer premises equipment), they dondon’t’ t need need human human intervention! intervention!’ ’ So,So, NTC NTC decided decided to to put approval stickers instead,instead,” ”Mr. Mr. GallaGalla said.said. LaLandlinendline telephones,telephones, hehe added,added, “require franchises by orderorder of of the the public public service service act, act, before. before. Like Like the the telegraph. telegraph.” ”

TheThe “very “very nature” nature ”of of the the Radio Radio ControlControl ActAct isis “outdated“outdated andand [it[it was] written for the wrongwrong objective, objective, meaning meaning thatthat thethe lawlaw hashas toto bebe creativecreativelyly applied, creating unclearunclear governance. governance. WeWe areare oneone ofof thethe fewfew countriescountries whereinwherein the licensing of spectrumspectrum requiresrequires thethe licenseelicensee toto havehave aa franchise.franchise. AA communitycommunity FM radio in NorthNorth Dakota Dakota does does not not requirerequire aa congressionalcongressional franchisefranchise fromfrom the US congrcongress.ess. ItIt s simplyimply gets gets permission permission from from the the USUS Federal Communications Commission (FCC),(FCC), after after showing showing thethe FCCFCC theirtheir technicaltechnical plans,plans, i.e.,i.e., thethe radiation pattern of thethe antenna,antenna, proofproof itit willwill notnot interfereinterfere withwith otherother stationsstations ofof thethe same or near frequencies,frequencies, among among other other things,” things, ”he he said. said.

Here,Here, “ the“the solesole purposepurpose ofof securingsecuring aa franchisefranchise isis toto bebe ableable to use spectrum, thatthat’s’s all all it it is, is,”” Mr. Mr. Galla Galla said.said. ““ItIt doesdoes notnot provideprovide anyany otherother rights and privileges. AA strong strong NTC NTC would would notnot needneed anythinganything butbut aa clearclear governance frameworframeworkk to re- farm,farm, re re-allocate,-allocate, re re--assign,assign, and and recall recall spectrum. spectrum.”” ReRe--farmingfarming refers to repurposingrepurposing spectrum spectrum allocations,allocations, forfor instance,instance, fromfrom TVTV toto communications. To rere-allocate-allocate spectrum spectrum is is to to earmark earmark spectrum spectrum to to a a technology, technology, sector sectors of industry, suchsuch as as the the mil military,itary, space space and and science, science, law law enforcement enforcement or or navigation. navigation.

“We“We assign assign spectrum spectrum administratively,administratively, butbut recallrecall isis aa quasi-judicialjudicial process,”process,” Mr. GallaGalla said. said. “We “We give give away, away, butbut itit isis hardhard toto taketake backback whatwhat is ours. Add more of thethe same same bureaucracy, bureaucracy, bureaucraticbureaucratic inertia,inertia, andand aa flawedflawed framework that needs heavyheavy reforming, reforming, and and this this is whereis where we weare. are. In 2003, In 2003, the Supremethe Supreme Court Court (SC) ruled(SC) onruled what on a whatfranchise a franchise is, what is, a CPCN what a is, CPCN and how is, and these how are these required is required by current by law.current The law.SC then The told SC Congress, then told Congresto fix thes, Radio to fix Freq theuency Radio Law, Frequency to prevent Law, such to problemsprevent such from problemsarising. Seventeen from arising. years Seventeen later? Nothing. years later? There Nothing. are two There bills, oneare pertwo chamber, bills, one one per notchamber, very good, one onenot very80% good,good. oneNeither 80% bill good. has comeNeither out bill of hasthe committeecome out oflevel. the Therecommittee has beenlevel. no There legislative has been progress.” no legislative progress.”

Outmoded Legislation is a root cause of the ABS-CBN debacle

“The root cause of ABS-CBN’s shutdown is not merely the non-passage of the franchise renewal bill,” Mr. Galla said. “The root cause is, really, the 88-year-old law nobody bothered to fix in the legislature. Rep. Victor Yap of Tarlac, chair of the House ICT committee, is particularly active in pushing ICT reforms, even spectrum management reform, but traction is slow. Multi-sectoral laws rarely move, and spectrum has boatloads of stakeholders.”

According to Mr. Galla, Democracy.net.ph, “proposed a spectrum management framework. DICT was receptive, and 80% of it was adopted in the Yap bill, which merely needs technical guidance. The policy is sound.”

The Philippines, Mr. Galla said, “has an advantage: We are located on the globe in such a way that we don’t share land borders with anyone, and are far enough away

108 that the curvature of the earth will prevent us from causing interference to our neighbors. Radio frequencies cross land borders. Mexico’s mariachi stations reach Texas. The most interference we have? The reception of AM radio signals from Taiwan in Batanes, and that’s not even too clear.”

It typically takes between three and six years to get a legislative franchise to operate a broadcast facility, Mr. Galla said, noting that this is a “big barrier to entry” for organizations that want to open up TV or radio stations in the country, “nevermind if all you want as a business model is a community FM station. You still need a franchise law.”

Mr. Galla said that creating an environment that is conducive to the entry of more players in the broadcast sector will go a long way toward making it more competitive and more robust. To do this, he made a list of some authorizations, permits and fees must be abolished:

• Radio Frequency (RF) equipment permit to sell. There is no reason to maintain this commercial barrier to entry created by the former dictator, whose thinking was that radio communications equipment were as dangerous as firearms, if not more dangerous. A small SME selling cellphones shouldn’t be burdened by this additional fee. • RF equipment permit to possess. This permit is absurd in the 21st century, considering that WiFi routers, bluetooth key fobs, tablets, cellphones, and so on are RF equipment. • RF equipment permit to import. • CPCN or PA. CPCNs and PAs are “parent” documents to individual permits listed above, and are merely “child” documents to a legislative franchise (they are a redundant layer). These have no other function than as reference documents for individual permits and can be cut out if a progressive regulatory model is implemented. Industry stakeholders correctly complain that CPCNs and PAs constitute a “tax on operations” additional to existing business taxes.

TheThe politics politics of of media media

PoliticalPolitical scientist scientist Millard Millard O. O .Lim Lim ofof thethe AteneoAteneo de Manila wrotewrote thatthat thisthis shutdownshutdown ofof ABS ABS-CBN-CBN was was “similar” “similar” toto thethe 19721972 closureclosure of the networknetwork underunder MartialMartial Law:Law: “Accused“Accused ofof criminalcriminal conspiracyconspiracy againstagainst the Philippine government, government, ABS ABS--CBNCBN finallyfinally terminated terminated the the servicesservices ofof itsits employeesemployees on Oct. 31,31, 1972.1972. InIn NovemberNovember 1972,1972, its its president, president, Eugenio Eugenio ‘Geny’‘Geny ’ Lopez,Lopez, Jr., wrote to DefenseDefense SecretarySecretary JuanJuan PoncePonce Enrile Enrile expressing expressing his his desire desire to tosell sell his hiscompany company to the to thegovernment. government. The gGovernmentovernment responded responded by b yarresting arresting him him and and detainingdetaining himhim in FortFort Bonifacio.Bonifacio. HeHe waswas kept kept for for almost almost five five years years until until his his escape escape on on Sept. Sept. 30, 30, 1977.” 1977. ”

Mr.Mr. Lim Lim also also wrote wrote about about what what followed followed the the 1972 1972 closure closure of ABSof ABS-CBN,-CBN, notin notingg that “thethat government “government took took over overthe management the management and operation and operation of some of of the some sequestered of the broadcastsequestered stations broadcast and facilities. stations The and Banahaw facilities. Broadcasting The Banahaw Corporation Broadcasting (BBC), ownedCorporation by Roberto (BBC), Benedicto, owned by a Robertoclose FM Be associate,nedicto, atook close over FM TV associate, Channel Two.took over TV Channel Two. The National Media Production Center (NMPC) under the

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TheMinistry National of Media Information Production took Center over TV(NMPC) Channel under Four, the Ministry which of became Informa thetion tookgovernment over TV’ sChannel official Four, TV station. which became The Kanlaon the government Broadcasting’s official System TV (KBS),station. Theanother Kanlaon Benedicto Broadcasting-owned television System (KBS),station, another took over Benedicto the provincial-owned stations television to station,serve as took platforms over the for provincial government stations’s mass to media serve peaceas platforms-and-order for campaigns.government”’ s mass media peace-and-order campaigns.” He added that former President Marcos used the Department of National HeDefense, added that“in theformer context President of an Marcos emergency, used the and Department extraordinary of National measures Defense, were “inused, the ”context as well of as an the emergency, “traditional and tactics extraordinary of an autocrat measures who iswere getting used, rid” as of wellan asenemy. the “traditional” tactics of an autocrat who is getting rid of an enemy.”

Mr.Mr. Lim Lim wrote, wrote, ““DuterteDuterte used used the Office of of the the Solicitor Solicitor--GeneralGeneral (OSG), (OSG), and and thereforetherefore a a legal legal solution, solution, to to achieve achieve his his aim… aim… The The legal legal solution solution to the to theABS ABS-CBN- problemCBN problem was carried was out carried in a state out of in perfect a state normalcy: of perfect no normalcy:state of emergency no state was of declaredemergency to fight was enemies declared of tothe fight state enemies and threats of the to the state Republic, and threats no one to from the ABSRepublic,-CBN hasno one been from arrested ABS-CBN and itshas broadcast been arrested properties and its remain broadcast unmolested. properties” remain unmolested.” Rather, President Duterte found “fortuitous circumstances,” Mr. Lim wrote, that “allowedRather, himPresident to use Duterte the law found– R.A. “ fortuitous3846 and circumstances,an expired R.A.” 7966Mr. Lim – as wrote, a weapon that against“allowed his him enemy. to use The the lawall- win– R.A. outcome: 3846 and enemy an expired gone, R.A.rule 7966of law – ostentatiouslyas a weapon flauntedagainst ashis ‘upheld,’ enemy. Theand alldiffusible-win outcome: blame withenemy Malacañang gone, rule appearing of law ostentatiously as the least flaunted as ‘upheld,’ and diffusible blame with Malacañang appearing as the least culpable.” Some 70 lawmakers, mostly the President’s allies, denied ABS-CBN’s culpable.” Some 70 lawmakers, mostly the President’s allies, denied ABS-CBN’s franchisefranchise application. application.

Cable TV also affected by archaic licensing restrictions Under Presidential Decree No. 576-A issued by then-President Marcos: “All franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or television broadcasting systems shall terminate on Dec. 31, 1981. Thereafter, irrespective of any franchise, grants, license, permit, certificate or other forms of authority to operate granted by any office, agency or person, no radio or television station shall be authorized to operate [sic] without the authority of the Board of Communications and the Secretary of Public Works and Communications or their successors who have the right and authority to assign to qualified parties frequencies, channels or other means of identifying broadcasting systems; Provided, however, that any conflict over, or disagreement with a decision of the aforementioned authorities may be appealed finally to the Office of the President within 15 days from the date the decision is received by the party in interest.”

E.O. No. 205 Under the tenure of President Corazon C. Aquino, E.O. No. 205 was issued to regulate the operation of cable antenna television (CATV) systems in the country. That E.O. states that, “when the public interest so requires monopolies in commercial mass media shall be regulated or prohibited.”

It also states that the operations of CATV systems in the Philippines “shall be open to all citizens of the Philippines, or to corporations, cooperative or associations wholly owned and managed by such citizens under a Certificate of Authority” granted by the NTC on “a non-exclusive basis and for a period not to exceed 15 years, renewable for

110 another similar period: Provided that such certificate shall be subject to the limitation that the authority to operate shall not infringe on the television and broadcast markets.”

It also grants the President of the Philippines a special right “in times of war, rebellion, public peril or other national emergency and/or when public safety requires, to cause the closure of any grantee’s CATV system or to authorize the use of possession thereof by the government without compensation,” and repeals or modifies Presidential Decree No. 1512 “dated June 11, 1978 and all laws, orders, issuances and rules and regulations or part thereof inconsistent with this E.O.

E.O. No. 436 Former President Aquino’s E.O. on CATV system operations was followed with E.O. No. 436, by her successor, Fidel V. Ramos, which prescribes policy guidelines for CATV operations in the country, and recognizes that “the Filipino people must be given wider access to more sources of news, information, education, sports events and entertainment programs other than those provided for by mass media and afforded television programs to attain a well-informed, well versed and culturally refined citizenry and enhance their socio-economic growth.”

Mr. Ramos, in that E.O., noted that “there is an urgent need to maximize the development of the cable television industry and to provide incentives and afford protection to investments therein,” and that CATV systems operation as a subscriber service undertaking required “a unique technology” and “shall be maintained separate and distinct from telecommunications or broadcast television.”

The order specifies that “only persons, associations, partnerships, corporations or cooperatives granted a PA or Certificate of Authority by the Commission may install, operate and maintain a cable television system or render cable television service within a service area.”

A CATV service, under this E.O., “may carry advertisements and other similar paid segments for which the cable television operator may charge and collect reasonable fees” as long as these cable television operators do not “infringe on broadcast television markets by inserting advertisements in the programs it carries or retransmits without the consent of the program provider concerned.”

The NTC is empowered under this E.O. to grant applicants “an authority to operate a cable television system within the same franchise area covered by any Provisional Authority or Certificate of Authority issued by the Commission two years earlier only upon the determination by the Commission that: • the prior cable television operator has not, without sufficient justification, substantially complied with the terms and condition of his authorization; • the cable television service currently provided by the operator to its subscriber is grossly inadequate; and • the grant of the authority to the applicant will not result in ruinous competition detrimental to the existing operator and incompatible with the investment policies under this Executive Order.

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Under Mr. Ramos’ E.O., “a cable television operator may, with prior approval from the Commission, lease or sub-lease any excess capacity of its cable television system to a third party.”

Cable television definition deemed restrictive in the Philippines As defined in the current legislation, cable television, also known as CATV, can only be owned by Philippine nationals or 100% Filipino-owned corporations, just like other mass media such as radio and television broadcasting.172

This bars any foreign ownership, unlike in telecommunications where at least 60% of the capital must be owned by Philippine citizens, corporations, or associations. Thus, it is seen to prevent small cable companies from getting opportunities to fund upgrades in their infrastructure as well as their overall growth.

The Organisation for Economic Co-operation and Development, in its Competition Issues in Television and Broadcasting report in 2013173, finds that the citizenship limitation in the operation of a media company in the Philippines, cable included, contributes to the inability of the broadcasting industry to truly grow. “In fact, it can be said that the broadcasting industry is controlled by a few Filipino families – who have the money and capital to make the broadcasting industry their personal playground,” it added.

Moves have been sought to redefine cable television beyond a mass media entity, as many players within the industry have been providing broadband internet services together with their cable TV services. In addition, consolidation among existing companies has been observed as a “trend nowadays in an effort to look for new revenues insofar as the big businesses are concerned”.

While apparent moves towards the redefinition of cable television remains scarce, coupled with a threat of the repeal of E.O. 205, which ‘liberalized’ the cable industry174, the possibility of the cable television to go beyond the “mass media” definition, and so avail more channels of revenue growth, remains out of reach.

172 https://www.syciplaw.com/documents/LegalResources/TEL15_Chapter%2024_Philippines.pdf 173 https://www.oecd.org/daf/competition/TV-and-broadcasting2013.pdf 174 https://newsinfo.inquirer.net/1314143/closure-of-cable-tv-firms-scarce-access-to-info-possible-if-eo-on- liberalized-cable-tv-repealed

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Gutierrez, J. (2020). Philippine Congress Officially Shuts Down Leading Broadcaster. From The New York Times: https://www.nytimes.com/2020/07/10/world/asia/philippines- congress-media-duterte-abs-cbn.html Huawei Technologies Co. Ltd. (2020). GCI 2020: Shaping the New Normal with Intelligent Connectivity. From Global Connectivity Index: https://www.huawei.com/minisite/gci/en/ Ibañez, J. P. (2020). Smart taps Cignal to provide satellite broadband services. From BusinessWorld: https://www.bworldonline.com/smart-taps-cignal-to-provide-satellite- broadband-services/ Ibañez, J. P. (2021). Cignal launches satellite broadband service. From BusinessWorld: https://www.bworldonline.com/cignal-launches-satellite-broadband-service/ Ichimura, A. (2021). Could Disney+ Be Coming to the Philippines Soon? From EsquireMag.ph: https://www.esquiremag.ph/culture/movies-and-tv/disneh-plus- philippines-a00304-20210211 Kemp, S. (2021). DIGITAL 2021: THE PHILIPPINES. From Datareportal.com: https://datareportal.com/reports/digital-2021-philippines Laforga, B. M. (2021). Taxation of digital firms seen hindered by policy, lack of infrastructure. From BusinessWorld: https://www.bworldonline.com/taxation-of-digital-firms-seen- hindered-by-policy-lack-of-infrastructure/ Laforga, B. M. (2021). Think tank suggests ‘Netflix tax’ as LGU collections slump. From BusinessWorld: https://www.bworldonline.com/think-tank-suggests-netflix-tax-as-lgu- collections-slump/ Lim, J. (2021). IPOPHL’s anti-counterfeiting, piracy measures strengthened with new rules in force. From IPOPHL.gov.ph: https://www.ipophil.gov.ph/news/ipophls-anti- counterfeiting-piracy-measures-strengthened-with-new-rules-in-force/ Lim, M. K. (2018). From Global Internet TV Consortium: https://global-internet-tv.com/netflix- country-reports/philippines/ Lim, M. O. (2020). ABS-CBN SHUTDOWN: 1972 AND 2020 - BLUEBOARD. From Ateneo.edu: https://www.ateneo.edu/ls/soss/political-science/news/research/abs-cbn- shutdown-1972-and-2020-blueboard-millard-o-lim Macahilig, L. (2020). PH media consumption reflects Filipino sari-sari store culture, Amdocs study reveals. From : https://mb.com.ph/2020/08/20/ph-media- consumption-reflects-filipino-sari-sari-store-culture-amdocs-study-reveals/ Macahilig, L. (2020). PH media consumption reflects Filipino sari-sari store culture, Amdocs study reveals. From Manila Bulletin: https://mb.com.ph/2020/08/20/ph-media- consumption-reflects-filipino-sari-sari-store-culture-amdocs-study-reveals/ Madeiros, J. (2019). From International Telecommunication Union: https://www.itu.int/en/ITU-D/Regional- Presence/AsiaPacific/SiteAssets/Pages/Events/2019/ITU-TRAI-International- Training-on-Emerging-Trends-in-Broadcasting/John_Medeiros_Speech.pdf Manila Standard Sports. (2020). NBA partners with Cignal, Smart to deliver live games to Filipino fans. From Manila Standard: https://manilastandard.net/mobile/article/329711 Marquez, C. (2020). After ABS-CBN shutdown, lack of Ulysses warning made Cagayan residents suffer – Robredo. From Inquirer.net: https://newsinfo.inquirer.net/1360703/after-abs-cbn-shutdown-lack-of-ulysses- warning-made-cagayan-residents-suffer-robredo

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Zhao, S., Lee, Y., & Huang, Z. (2020). Tencent Buys Assets of Struggling Streaming Platform IFlix. From Bloomberg.com: https://www.bloomberg.com/news/articles/2020-06-25/tencent-buys-assets-of- struggling-streaming-platform-iflix Zhao, W. (2019). Asia OTT Leaders Continue To Expand Partnerships With Telcos. From S&P Global Market Intelligence: https://www.spglobal.com/marketintelligence/en/news-insights/blog/asia-ott-leaders- continue-to-expand-partnerships-with-telcos

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Annex A: Top TV Programs (weekdays and weekends) in 2020 (Q1 to Q4)

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Annex B: Glossary of Acronyms

Acronym Definition 5G Fifth Generation

ACCTN Angeles City Cable Television Network

AFP Armed Forces of the Philippines

AI Artificial Intelligence

ARPU Average Revenue Per User

ASO Analog Switch-Off

AVOD Advertising-based Video-On-Demand

BBC Banahaw Broadcasting Corporation

BoC Bureau of Customs

CAGR Compound Annual Growth Rate

CAP Coalition Against Piracy

CAS Conditional Access Systems

CASBAA Cable and Satellite Broadcasting Association of Asia

CATV Cable Antenna Television

CPCNs Certificates of Public Convenience and Necessity

CPEs Customer Premises Equipment

CPI Creative Programs, Inc.

DICT Department of Information and Communications Technology

DITO DITO Telecommunity Corp.

DOCSIS Data Over Cable Service Interface Specification

DoJ Department of Justice

DSO Digital Switch On

DTH Direct-To-Home

DTI Department of Trade and Industry

DTT Digital Terrestrial Television

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DTTB Digital Terrestrial Television Broadcaster

DVB-C Digital Video Broadcasting for Cable

E. O. Executive Order

ECQ Enhanced Community Quarantine

EWBS Emergency Warning Broadcast System

FCC US Federal Communications Commission

FDCP Film Development Council of the Philippines

FICTAP Federation of International Cable TV and Telecommunications Association of the Philippines

FMCGs Fast-Moving Consumer Goods

FTA Free-To-Air

FTTH Fiber-To-The-Home

FUBC First United Broadcasting Corporation

FWA Fixed-Wireless Access

GCI Global Connectivity Index

GCQ General Community Quarantine (GCQ is less strict than ECQ)

GDAP Game Developers Association of the Philippines

GMA GMA Network, Inc.

GSTS Global Satellite Technology Services

HD High Definition

HoA Heart of Asia

HoR House of Representatives

ICT Information and Communication Technology

IEC International Electrotechnical Commission

IEO IP Rights Enforcement Office

IPOPHL Intellectual Property Office of the Philippines

IPTV Internet Protocol Television

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ISDB-T Integrated Services Digital Broadcast - Terrestrial

ISO International Organization for Standardization

KBP Kapisanan ng mga Brodkaster ng Pilipinas

KBS Kanlaon Broadcasting System

LGUs Local Government Units

LNB Low Noise Block

Mbps Megabits Per Second

Meralco Manila Electric Co

MOU Memorandum of Understanding

MPA Media Partners Asia

MTRCB Movie and Television Review and Classification Board

MVNO Mobile Virtual Network Operations

NBDB National Book Development Board

NBI National Bureau of Investigation

NCAA National Collegiate Athletic Association

NCIPR National Committee on Intellectual Property Rights

NCR National Capital Region

NMPC National Media Production Center

NPC National Privacy Commission

NTC National Telecommunications Commission

NTRC National Tax Research Center

NUTAM Nationwide Urban Television Audience Measurement

OCC Online Curated Content

OMB Optical Media Board

OSG Office of the Solicitor-General

OTT Over-The-Top

PAs Provisional Authorities

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PBA Philippine Basketball Association

PCTA Philippine Cable Television Association

PIDS Philippine Institute for Development Studies

PNP Philippine National Police

PRSP Performers’ Rights Society of the Philippines

PSA Philippine Statistics Authority

R.A. Republic Act

RF Radio Frequency

RPN Radio Philippines Network

RSLs Radio Station Licenses

SC Supreme Court

SD Standard Definition

Singtel Singapore Telecom International Pte. Ltd.

SME Small and Medium Enterprise

SP Simulcast Period

SVOD Subscription-based Video-On-Demand

TFC The Filipino Channel

TVOD Transactional Video-On-Demand

UAAP University Athletic Association of the Philippines

UHD Ultra High Definition

VAT Value-Added Tax

VHF Very High Frequencies

VOD Video-On-Demand

VPN Virtual Private Network

VRB Videogram Regulatory Board

VSAT Very Small Aperture Terminal

WB World Bank

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About the Asia Video Industry Association The Asia Video Industry Association (AVIA) is the trade association for the video industry and ecosystem in Asia Pacific. It serves to make the video industry stronger and healthier through promoting the common interests of its members. AVIA is the interlocutor for the industry with governments across the region, leads the fight against video piracy and provides insight into the video industry through reports and conferences aimed to support a vibrant video industry. AVIA evolved from Casbaa in 2018.

Hong Kong Office Singapore Office 20/F Leighton Centre 5008 Ang Mo Kio Avenue 5 77 Leighton Road #04-09 Techplace II Causeway Bay, Hong Kong Singapore 569874 Tel +852 2854 9913 [email protected] www.avia.org

BusinessWorld, the Philippines leading business paper, represents more than five decades of professional economic journalism.

Founded by Awardee for Journalism, Literature and Creative Communication Arts Raul L. Locsin, BusinessWorld traces its roots to BusinessDay, Southeast Asia’s first business daily, which had its maiden issue in February 1967.

BusinessDay made its transition to BusinessWorld in July 27th, 1987. Since then, even as the world of business evolves with the dynamic pace of time, BusinessWorld has remained the best and most trusted business newspaper in the country.

In September 2013, ten years after Locsin’s death, telecommunications giant Philippine Long Distance Telephone Company (PLDT) acquired a minority stake in BusinessWorld through its Beneficial Trust Fund unit, MediaQuest Holdings, Inc. And in July 2015, The Philippine Star acquired 76.63% of BusinessWorld Publishing Corp. from Hastings Holdings, Inc. in a move meant to “strengthen the distribution and operations” of the country’s premier business daily.

Building on its print legacy, BusinessWorld has successfully transformed itself into a multimedia entity by delivering its signature brand of business news and insights to new audiences in different platforms. This has further cemented its position as the most trusted source of news, analysis, and insights by the country’s business community.

© 2021. The Asia Video Industry Association holds all rights to this report, and no part thereof may be reproduced or replicated without prior explicit and written permission.