Make better business decisions. Dominican Republic TV update November 2012 James McDonald, Analyst 2.

Make better business decisions

Dominican Republic

TV update

November 2012

James McDonald, Analyst

2

Dominican Republic TV update, November 2012

1. Highlights

2. Pay-TV landscape

3. Next-generation TV

4. Viewing and programming

5. TV advertising

6. TV forecasts

7. Informa viewpoint

www.informatandm.com © Informa UK Limited 2012. All rights reserved

Highlights• In April 2012, cable MSO Aster - which serves 13 cities and some 40,000 subscribers –

seemed to have been sold to the Punta-Macao Consortium for US$27 million; US$17 million below the original asking price. However, the sale was suspended in July 2012 pending an investigation.

• The pay-TV market will grow some 3 percentage points by 2016, largely due to growth in the DTH sector, while the fragmented cable sector shows signs of stagnation.

• Current pay-TV market leader Tricom expanded its HD bouquet to 50 channels (with two additional 3D channels) in February 2012; the most comprehensive of all the MSOs.

• Claro’s IPTV launched in 1Q09, with Informa putting the total number of homes taking the service at 5,000 by end-2011.

• The first DTT transmissions began in June 2011 using the US ATSC standard. ASO is scheduled for 2015, although reports suggest this date may have to be revised. Informa research found only 5% of signals to be digital at end-2011.

• The Informa viewpoint is that prospects are good for the pay-TV players’ bottom lines as well as for consumers, who will continue to benefit from the fruits of an advancing market.


TV overview


Source: Informa Telecoms & Media

• The economy is closely tied with the US and a free trade agreement between the two became effective in 2007.

• Broadcast and pay-TV piracy is prevalent. However, copyright legislation has been amended under obligations of the free trade agreement and extensions to existing protection measures should see some improvements in the medium-term.

• Informa research found fewer than 10% of signals to be digital at end-2011.

Dominican Republic, split of TV households by platform, 2006-2011

Dominican Republic, split of TV households by platform, 2011

Analog ter-restrial42%

Cable TV53%

DTH4%

5

Year-end data (000s) 2006 2007 2008 2009 2010 2011

Television households 1,667 1,710 1,753 1,798 1,844 1,886

Analog terrestrial 996 877 833 790 759 788

Cable TV 668 824 900 975 1,030 1,000

IPTV 0 0 0 0 3 5

DTH 2 9 21 33 52 84

DTT 0 0 0 0 0 10

DTT1%

Pay-TV landscape

• Pay-TV platforms and operators

• Operator market performance

• Key developments

• Multiplay services and bundling

• Key market dynamics

• Next generation TV


Pay-TV platforms and operators


Source: Informa Telecoms & Media; WBIS

Dominican Republic, subscriber growth by major operator, 2005-2011

Dominican Republic, multichannel market share by major operator, 1H12

2005 2006 2007 2008 2009 2010 20110

200

400

600

800

1,000

1,200

Sky (DTH) TRICOM (cable) Unspecified Operator(s) (cable) Series4

7

Sky (DTH)6%

TRICOM (cable)

8%

Others (cable)85%

• Regulator INDOTEL reported 36 telephony providers in 2008, up from 15 companies in 2004, and recorded 98 legitimate cable TV concession holders at end-2008. There were thought to be more than 100 by 4Q12.

• Leading MSOs include Aster, Wind and Tricom’s Telecable. DTH services are available through DirecTV’s Sky Republica Dominicana as well as from America Movil’s Claro TV unit. Claro also launched an IPTV platform in 1Q09.

Operators: Subscriber performance


Year-end data 2006 2007 2008 2009 2010 2011 1H12

Sky (DTH) - 6,00 18,000 30,000 38,000 50,000 60,000

Tricom (cable) - 70,000 70,000 70,000 76,000 71,140 80,000

Unspecified Operator(s) (cable)

668,000 754,000 830,000 905,00 954,000 928,860 811,000

Source: Informa Telecoms & Media; WBIS

Dominican Republic, subscriber total by major operator, 2006-1H12

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• Claro stated in September 2011 that subscribers to its DTH and IPTV services combined to make it the largest pay-TV operator (Informa believed there to be some 5,000 homes taking Claro’s IPTV service at end-2011). Tricom contested, stating it had over 700,000 subscribers across its sectors (CATV, telephony and broadband) at that time.

• Aster operates in 13 cities, and reportedly held some 40,000 cable subscribers at end 1Q12.

• Regulator INDOTEL reported 414,515 subscribers to either a cable, IPTV or DTH service at end-August 2012; a 12.5% rise year on year. There are instances, however, of chronic underreporting from some players, while many of the smaller cable operators are not included at all. Subscriptions to DTH services abroad - which can be received in the Dominican Republic - are also omitted from this figure.

Key developments – operatorsDate Development

July 2012 TV Globo secures carriage of its programming on CanalSat’s DTH platform across the Caribbean.

July 2012 Wind Telecom adds MovieCity’s 1,200-title VOD service as a premium option, or for free to those subscribing to the MovieCity package.

July 2012 The sale of MSO Aster to the Punta-Macao Consortium is suspended pending further investigation.

June 2012 The authorities launch an investigation into the sale of Aster - over why the asking price was not met.

April 2012 Aster’s assets are sold in full to the Punta-Macao Consortium for US$27 million; US$17 million below the original asking price. Other bidders included Compañía Dominicana de Teléfonos (bidding US$25 million) and Wind Telecom (US$21.5 million).

February 2012 Tricom adds 11 new HD channels, including MTV HD, VH1 HD, Comedy Central HD, Nick HD and MGM HD, taking its bouquet to 50 channels.


Multiplay services and bundling

10www.informatandm.com ©All rights reserved

Provider Fixed broadband

Fixed telephony

TV Mobile broadband

Mobile telephony

Wi-FI hot spots

Tricom FTTx- up to 100Mbps

VoIP Cable No No No

Claro FTTx - up to 100Mbps

VoIP DTHIPTV

Yes – 3G Yes No

Sky No No DTH No No No

Wind No VoIP MMDS Yes – 4G No No

Aster Cable- up to 2Mbps

No Cable No No No

Multiplay services and bundling: TV componentProvider TV service

(technology)Channels (SD/HD)

Other details (DVR, technology suppliers, pricing…etc)

Tricom Cable Up to 159 SD, 50 HD and 2 3Dchannels

Standard STBs provided by MotorolaHD DVRS supplied by Pace- First DVR is US$7 p/m, while a second

is US$8 p/m- HD DVR also priced at US$8 p/m- MovieCity/HBO VOD services availableBasic digital package US$15 p/mPremium HD package US$40 p/m

Sky DTH Up to 171 SD and 39 HD channels

Basic 97 digital package costs US$7.83Top-tier ‘Universe’ package costs US$18.60HD DVRs with 500GB capacity (100 HD and 400 SD hours recording)MovieCity/HBO VOD services availableA la carte (30 + 12 channels) packages start at US$5.73 p/m‘Sky Premier’ HD/SD PPV movie rentals


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Claro DTH Up to 64 SDchannels

Basic 46 channel plan priced at US$14Basic ‘Extra’ (64 channels) is US$17.60MovieCity/HBO VOD services available

Claro IPTV 195 SD and 43 HD channels

181 channel ‘Superior’ plan: US$22.69195 channel ‘Advanced’ plan is US$37.90Social TV apps including Facebook/Twitter and SMS serviceMovieCity/HBO VOD services availableMLB add-on available‘Advanced’ HD option is an extra US$2.5040 channel ‘Superior’ HD option: US$8.87

Wind MMDS Up to 192 SD and 15 HD channels

Basic ‘Eco’ 117 channel pack: US$14 p/mTop-tier 192 channel pack is at US$38 p/mHBO/MovieCity available (US$9 each)MBL premium pack costs US$17.60 p/mHD-DVR priced at US$8.87


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Aster Cable (analog)

Up to 103 SDchannels

‘Light’ 63 channel pack is US$39.5‘Basic’ 103 channel pack is US$18.255 channel HBO pack costs US$7.22 p/m8 channel MovieCity pack costs US$8.59 p/mCombination of the two is US$13 p/m

Aster Cable (digital)

152 SD channels

Basic 52 channel pack priced at US$6.4070 channel pack priced at US$9.25 p/m‘Full’ 130 channel pack costs US$18‘Extreme’ 152 channel pack with DVR priced at US$22.81p/mHBO/MovieCity services availableMBL ‘Extra Innings’ priced at US$17.61 p/m


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Key market/competitive dynamics• Bundling is a key part of many player’s strategies. Claro is the only operator able to offer

quad-play, with an entry-level bundle incorporating fixed telephony, fiber optic Internet (20Mbps), IPTV (210 SD and 34 HD channels) and mobile telephony starting at US$152 p/m

• By comparison, Wind’s triple-play bundle (mobile internet, TV and telephony) starts at US$31, rising to US$61 for the top tier package. Tricom’s pricing is aligned similarly. Aster’s dual-play package is priced at US$22 (256kbps Internet and 36 channel TV).

• Tricom is investing heavily in fiber infrastructure to expand capacity for the delivery of next generation services. It already has the most comprehensive HD bouquet of all the MSOs, with an expanding 3D catalog also available. This will prove important in the short-to-mid term as Claro’s IPTV platform gains momentum, offering unique social and connected elements in the process.

• Aster focuses largely on lower income households, with analog packages still very much at the fore of its current strategy. A full takeover – if given the green light – could help the cabler compete directly with Tricom in the future, although this is unlikely to be the case any time soon.


Next-generation TV - market developments

Date Development

August 2012 BBC Worldwide HD is added to Wind’s HD bouquet.

July 2012 Wind Telecom adds Moviecity’s 1,200-title VOD service as a premium option, or for free to those subscribing to the MovieCity package.

February 2012 Tricom launches the first 3D channel in the Dominican Republic; ‘Wild Earth 3D’.

February 2012 Tricom adds 11 new HD channels, including MTV HD, VH1 HD, Comedy Central HD, Nick HD and MGM HD, taking its bouquet to 50 channels.

July 2011 Tricom adds 15 new channels to its HD bouquet, taking the total to 40.


Viewing and programming

• DTT

• TV viewing and programming


• Regulator INDOTEL established a public consultation on digital switchover in August 2008. It followed this with trials of the DVB-T, ATSC and ISDB-T digital terrestrial standards in November 2008 - as per CITEL (Inter-American Telecommunication Commission) implementation guidelines. In August 2010 the ATSC standard was chosen for DTT rollout.

• Initial tests were carried out by government-owned terrestrial channel CERTV, although private channels Telecentro and Red Nacional de Noticias (RNN) also began producing a digital signal by December 2008.

• The government anticipated a 4-channel DTT service launch in mid-2011, with analog switch-off scheduled for 2015. However, recent reports suggest the initial 2015 deadline for ASO may have to be revised.

• The first DTT transmissions began in June 2011. Four channels were indeed available at launch; Quisqueya TV, Canal Educativo Dominicano, Canal Legislativo Dominicano and Canal Época de Oro (Televisión Dominicana). Informa research found some 10,000 households to be utilizing the DTT platform as their primary source of viewing at end-2011.

• The government requested support in both production and broadcasting from equipment manufacturers in April 2011.

DTT


TV viewing and programmingBroadcast group

Channels Audience Key content Imports

Color Visión HIMQ-TV(Canal 9)

General 18-49 InfotainmentNews/Current AffairsFormula One racingGameshowsTelenovelas

Corporación Estatal de Radio y Televisión

CERTV(Canal 4)Antena Latina

General 18-54

General 18-49

InfortainmentTelenovelasWWE WrestlingNBA

CSI: MiamiNip/TuckThe SimpsonsSpongebob Squarepants

RTV Dominicana HISD-TV(Canal 12)

General 18-54 News/Current Affairs

Grupo de Comunicaciones Corripio

Telesistema 11(Canal 11)Tele Antillas(Canal 2)

General 18-54 InfotainmentNews/Current AffairsTelenovelas;

SOS Mi VidaSabor a Ti

LostTwo And A Half MenBig Bang TheoryWorld’s Most Amazing

Telemicro Canal 5 General 18-54 Telenovelas;

Amorcito CorazonAmor BravioLa Traicionera


Viewing and programming• There are 22 main channels. Most are based in Santo Domingo, although the provinces

also have their own radio and TV stations. Many channels can be viewed online. Cable companies provide access to numerous international channels.

• Color Visión has 98% household penetration. It showcases national talent and events through its schedule, of which 98% is locally-produced. Aqui Estoy is a particularly popular weekday morning show.

• Telenovelas are the leading genre, claiming the highest ratings in the ‘A’ and ‘D’ audience demographics and taking up nearly 50% of TV programming schedules.

• Reports suggest the total ad market was worth US$390 million in 2010, up from US$368 million in 2009. The government is the leading advertiser, with the National Dominican Brewery, Banco Popular, Colgate Palmolive and Grupo Corripio also big spenders.


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TV advertising

TV forecasts



Analog terres-trial42%

Other1%

Cable TV53%

2011

Cable TV

52%

DTH8%

DTT39%

2016

IPTV 1%

• Analog signals dominate at present. Although ASO is scheduled for 2015, Informa anticipates this will be delayed and forecasts some 10,000 homes to still be taking an analog terrestrial service in 2016, down from 788,000 at end-2011.

• The majority of households taking analog terrestrial signals at present will remain in the FTA sector over the coming years, favoring the developing DTT platform instead. Informa forecasts 810,000 households will take DTT as their primary viewing source in 2016. However, this will mark a contraction of the FTA sector by some 3 percentage points over the next five years.

TV forecasts• The fragmented cable sector will continue to prevail over the forecast period,

with 1.1 million homes taking a CATV subscription in 2016. This marks a stagnation against present-day rates, although subscriptions will peak in 2014 at 1.4 million. Overall, the market share for the platform will decline by around one percentage point.

• It is, instead, the satellite players that will see the most gains in the pay-TV market over the next five years. DTH homes will number 162,000 in 2016; almost double those in 2011.

• Claro’s IPTV platform is nascent, with some 5,000 homes utilizing the service at end-2011. Informa expects this total to rise to 20,000 by 2016, equating to a 1% market share overall.

• Broadband subscriptions will number 798,200 in 2016; - a rise of 67% against end-2011 – with FTTx accounting for 10% of the total at that time. This denotes good prospects for OTT players in the future.


Pay TV

Cable

Digital

DTH

DTT

Broadband

IPTV

Multiscreen

Advertising

Piracy

0

1

2

3

4

5

Informa viewpoint


Dominican Republic, television market scorecard


• The Dominican Republic demonstrates a TV market progressing steadily, with advanced services such as HD, 3D and VOD becoming a staple of the MSO’s service offerings.

• Claro’s IPTV service is limited by the reach of its FTTx network at present, although the capital Santo Domingo is covered. It has the financial support of America Movil behind it, which places it in good stead to face coming challenges.

• As is common elsewhere in the region, Claro have been shrewd in a dual-platform approach to put it on an even keel with the MSOs. The nationwide coverage DTH can give allows Claro to provide an accessible platform as it develops its IPTV infrastructure.

Informa viewpoint


• Informa notes that the cable sector is fragmented, with over 100 registered operators by end-1H12. Tricom dominates the field, with the most comprehensive HD bouquet of all the pay-TV players, as well as an expanding 3D range. It too is investing heavily in the development of its FTTx network, which can offer broadband speeds of up to 100Mbps in Santo Domingo at present. The extra capacity this infrastructure can provide will prove crucial in the delivery of additional HD and 3D services in future, especially when competing with Claro’s IPTV platform, which can offer social elements atop other ‘connected’ benefits.

• None of the major players break down subscriber numbers, let alone how many take a premium option, but expansion of these advanced/value-added services will prove important moving forward, as DTT establishes itself as a solid digital FTA platform in a nation largely used to FTA analog transmissions and its associated signal quality.

• Conversely, another method for pay-TV players to combat the threat of DTT will be to continue offering low pricing on their basic digital packages, most of which provide around 50 channels for as little as US$6 per month. Bundling too will aid customer gains and retention.

• The Informa viewpoint is that prospects are good for the pay-TV players’ bottom lines as well as for consumers, who will continue to benefit from the fruits of an advancing market.

James McDonaldAnalyst, Informa Telecoms & Media

E-mail: [email protected]

24

Make better business decisions

Make better business decisions. Dominican Republic TV update November 2012 James McDonald, Analyst 2.

Documents

informa uk limited

informa viewpoint

informa research

tv households

dominican republic tv

generation tv

tv overview

tv globo