HBO Asia May Expand Ad-Supported Approach

Singapore-HBO Asia's recent move to create an advertising-supported channel in India may be followed by a second, similarly funded service in at least one other Asian market, Taiwan.

The premium-movie mainstay in Asia has been striving to achieve adequate revenue in some areas of the continent. Its new HBO South Asia service-targeting India, Pakistan, Bangladesh and the Maldives Islands-is the first indication of how it intends to solve the problem.

"This is a permanent arrangement for India and these markets," said HBO Asia president and CEO Dan Murrell. "But [it's] experimental with regard to replicating the ad-supported model in other markets within the region."

For quite some time, speculation has been that HBO would launch an advertising-supported channel in Taiwan. Murrell admitted "a lot of research had been conducted" to determine if the ad-supported approach was best for the service.

"HBO Asia is not going regional with advertising-supported feeds," he said. "It has to make sense in terms of numbers, and Taiwan is just such a market."

HBO first launched a premium channel for India in March. The new channel differs from that one not only because it includes ads, but also because it has a separate ownership structure.

The original channel was 100 percent-owned by Time Warner Inc., HBO's corporate parent. The new HBO South Asia channel is owned by four companies, each of which will have a 25 percent stake. They are Time Warner Entertainment, Universal Studios, Sony Pictures Entertainment and Paramount Pictures, all of which could provide it with a rich stable of feature films and other shows.

This equity arrangement shouldn't be confused with HBO Asia's current corporate structure, in which Time Warner has a 40 percent interest and the three other studios each have 20 percent, according to Murrell.

He said HBO has long struggled to get a fair price from operators in the region. The fees operators pay in India for HBO South Asia will be the same as they paid for the previous Indian service. "Advertising revenue makes the channel viable," he added.

While certainly uncommon, this isn't the first time HBO has warmed to advertising. Its Brazilian channel, HBO Brasil, has carried ads for quite some time.