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Viewers and advertisers flock to cable television
Since subscription television arrived in Vietnam in 1992, cable TV has boomed, generating substantial profits for providers.
The first cable TV provider in the country was a joint venture between a Ho Chi Minh City-based tourism company and the national broadcaster, Vietnam Television.
However, Saigontourist Cable Television Company, commonly known as SCTV, was not an instant success. Local viewers were slow to change their TV-is-free mindset and, at first, few people were willing to pay for better transmission quality and more channels, including foreign channels.
It took SCTV many years to attract subscribers, mainly in HCMC and some neighboring provinces.
Nguyen Tan Khoa, deputy head of SCTV’s planning and investment division, said the company now had about 300,000 subscribers, which means the company earns VND20 billion to VND26 billion (US$1.14 million-$1.48 million) from monthly subscription fees, not counting earnings from advertisements.
After SCTV, several other pay-TV providers appeared on the scene, including offshoots of two leading networks in Vietnam, Vietnam Television and Ho Chi Minh City Television. Since the government allowed state media organizations to do business independently three years ago, almost all networks have set up their own cable TV arms.
TV stations are not the only ones seeking a share of the pay -TV market. The state-owned Vietnam Posts and Telecommunications Group, which invested $200 million in Vietnam’s first satellite VINASAT-1, has cooperated with Vietnam Multimedia Corporation to provide digital and satellite TV services. The latter started broadcasting its three high-definition channels on Tuesday.
Attracting more subscribers is certainly the priority but selling more advertising is equally important.
Luu Vu Hai, a senior official of the Ministry of Information and Communications, said there were about 100 channels in Vietnam, with three stations owning more than eight channels each.
Analysts said the appearance of many cable channels, especially entertainment and leisure channels, had helped meet a high demand for advertising of businesses.
A report of a market research firm in HCMC said in October 2007, when the economy was growing at a fast pace, all television networks in Hanoi, HCMC, Can Tho and Da Nang earned $33.8 million from advertising. Vietnam Television alone received $11.6 million.
Many cable channels allow program producers to buy air time from the network and onsell it to advertisers. This has created a rush of media companies wanting the right to sell advertising spots on the channels.
For instance, a manager of a media company, who wished to be unnamed, said since November last year the company had been allotted 60 percent of the air time on VCTV12, a lifestyle cable television of Vietnam Television. In exchange, the company needs to generate an annual profit of around VND6 billion ($344,000) for the network, he said.
SuperStar Corporation has worked together with both SCTV and Vietnam Television to develop Yeah1, a cable channel for teenagers. SuperStar said it would expand the project and provide more services under the name Yeah1, including a website, a theme park and a magazine for teens. DFJ VinaCapital L.P., a $25 million venture capital fund managed jointly by Draper Fisher Jervetson and VinaCapital, has recently announced that it would invest in the project.
“TV is the fastest medium to help us approach our customers,” said Dao Phuc Tri, managing director of SuperStar.
Tri said his company has set aside reserve funds in case earnings from advertisement are affected by the economic downturn.
“At this point we are only focusing on building the brand by improving the quality of the channel. After that we will start thinking about earning money.”
TBKTSG
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