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Study: China to Become Asia's Largest Pay TV Market in 2011

While China has long has the largest number of multichannel subscribers of any market in the world, a new study from SNL Kagan reports it is now on the verge of becoming the largest in Asia in terms of revenue. With 2011 revenue of $7.5 billion, China will rank as the top pay-TV market in Asia, surpassing Japan for the first time, and become the 5th multichannel market in the world.

"China's pay-TV market continues to see exceptional growth as cable digitization and IPTV rollouts invigorate product offerings and boost average-revenue-per user," noted Eva Zhang, media and communications analyst at SNL Kagan in a statement. "Over the coming 5 years we expect cable and IPTV ARPU will grow at 13.7% and 5% CAGR, respectively."

SNL Kagan is also reporting that China's video service revenues grew by 31.1% in 2010 to reach $5.8 billion, with the healthy bounce being powered by cable digitization and a 9.0% increase in pay-TV households.

Nearly half of China's cable subscribers (47.0%) had digital connections by end 2010 and an additional 22.5 million households are expected to adopt digital cable in 2011.

Between 2010 and 2015, SNL Kagan forecasts China's multichannel subscriber base will grow at a 5.8% cumulative average annual growth rate to reach 259.5 million households and that video service revenues will jump by 20.5% a year to $14.7 billion.

Further growth will also be powered by regulatory changes that are allowing telcos and cable operators to expand beyond their traditional businesses and launch double or triple pay packages.

At the same time, the report argues that rising broadband adoption will create significant opportunities for emerging Internet video players.

China remains the world's largest fixed broadband market, with 126.3 million homes, or 31.1 % of all households subscribing to fixed line broadband in 2010, SNL Kagan reports.

IPTV accounted for 3.8 % of China's multichannel subscribers in 2010, with 7.4 million households generating $493.2 million in video service revenues. But cable still accounts for 95.7% of multichannel subscribers and 91.2% of video service revenues in 2010, the study found.

High definition TV is also gaining ground, with 2.5 million cable homes adopting the set-top-boxes and packages needed to access HD programming in 2010. By 2015, SNL Kagan expects that 17.2 million cable households will have HD.

As the market digitizes, the report also notes that a number of major operators have deployed VOD deployments, making that another hot area for vendors.