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Philippines in View Cc 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 Philippines: 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 television (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, advertising 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 free-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. Kantar Group 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 Manila and Batangas, 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 Audience Measurement 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. 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 Sky Cable Corp.’s Sky Direct) 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 Netflix 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 Kapamilya Channel 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 Luzon ECQ starts ABS-CBN Shutdown Direct Shutdown ABS-CBN franchise 1800 1600 1400 illions) 1200 M 1000 800 Jun 28: AMCARA 600 Jun 1: TVAdSpend ( 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 shift 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/iflix, Netflix and Amazon Prime Video, 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.
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