Astro on 5% ad spend fall, embracing AI tech and scaling up regionally

Astro’s total ad spend (Adex) fell 5% year-on-year for its first quarter of its financial year, ending January 2018 (Q12018), against the backdrop of a broader market decline of 10%.In a statement, Astro said its currently operating in a very challenging environment. This has also impacted revenues which fell 3% on-year to RM1.33billion in 1Q2018, due to lower licensing income with its B2B sports channel sub-licensing also ended. This was on top of lower subscription and home shopping revenue. However, Astro added that the decline in revenue has been partially mitigated by higher contribution from its satellite television service, NJOI with more activation of prepaid vouchers compared to the previous quarter.Going forward, Astro said it expects revenue growth in the immediate term to be underpinned by home shopping, Adex, production revenues and NJOI, despite subscription revenue is expected to be flat.Astro said, it will continue to invest for future revenue growth by embracing three key imperatives under its digital transformation programme namely. These are digitalising its dominant legacy businesses, scaling  digital start-ups and deepening its strength in verticals and building a robust innovation pipeline.The company said its making “good progress” to grow the depth and breadth of its customer engagement, and will adopt a multi-prong approach to further grow its individual reach with mobile-first propositions such as Astro GO, Tribe and NJOI Now offering across all screens. Overall, it hopes this will build and deepen its content verticals via its regional partnerships and scale up to reach an ASEAN audience. It added:We are aggressively re-configuring our entire business to serve consumers whose lifestyle choices are increasingly digital, mobile and personalised."The end state of our digital and business transformation programme is to see a mobile-first, analytics driven and customer-focused Astro delivering industry-leading innovations, achieving optimal monetisation model for our content verticals and start-ups,” the statement continued.Dato’ Rohana Rozhan, group CEO of Astro added that the company will implement strategies that underpin its growth plans. "We are increasing investment into premium and signature vernacular Intellectual Property (IPs), accelerating digitalisation of our core business and growing reach of our connected customers both in Malaysia, and the region."She added that utilising digital platforms help in expanding reach to a greater number of customers by serving individuals, as well as households, and thus lowers our unit cost to serve."During the quarter, we have achieved growth across key customer metrics including content viewership, and on demand consumption," she said.Meanwhile, Astro said it saw a record viewership in 1Q2018, particularly in its signature vernacular IPs, "which continue to grow from strength to strength." Maharaja Lawak Mega 2017 has garnered a record 4.9 million viewership and doubled its digital views and social media reach to 28 million and 58 million respectively.The company is also expanding its original digital content offerings to capture the Malay digital community. Its diverse content offering also drove its share of TV viewership to 76%, with viewers tuning in close to four hours daily. With our increasing reach on TV, Radio and digital, we saw TV Adex and Radex shares increased to 39% and 76% respectively.Content partnershipsTo further capture the Malay audience - just this week, Astro partnered with Kumpulan Media Karangkraf to pursue co-creation of a comprehensive line up of content IPs across Malay and Islamic verticals from theatrical, to TV, to digital and commerce as well as to create Nusantara IPs that can travel not only in Malaysia but regionally on Tribe, Boo and Warner TV platforms.Ownership of these IPs allows Astro to maximise monetisation potential from licensing, Adex, subscriptions and commerce, while at the same time anchor a long-term sustainable role for itself in the media value chain.In April, it also entered into a strategic partnership with Turner Asia Pacific to co-develop and own verticals in Asian content for global distribution of quality Asian content. The new venture is said to enable Astro to participate in the revenue distribution generated from Warner TV in the region.The two collaboration is part of the company's strategy to become a key content player in ASEAN, with its increasing annual content spend in signature vernacular and ASEAN IPs to be more relevant to a regional audience and to gain greater monetisation opportunity.Digital start-ups gaining scale regionallyOn its digital front - Tribe, a regional online video streaming service has expanded to Singapore via SingTel’s Cast platform and is now in three countries including Indonesia and the Philippines. Tribe now has a user base of 1.3 million who are watching an average of 125 minutes per week.Besides that, its eGG Network has expanded distribution to six countries with three new partnerships in its first year; in Singapore with Singtel, in the Philippines with Globe’s BEAM TV and in Indonesia with Orange TV and Genflix, and have plans to enter more new markets this year.Astro said its ecommerce business, Go Shop has served a total of 1.04 million customers in Malaysia and Singapore. In 1Q2018, Go Shop sold 350,000 products and generated revenue of RM62 million.Rozhan said, "We are on track to digitalise 75% of our end to end processes and infrastructure, as well as nurture a culture of innovation to enable cost optimisation, operational efficiencies, higher competitive edge and faster speed to market.""As part of our digital transformation journey, we embedded Artificial Intelligence and machine learning into our next generation omni-channel customer engagement platform to enable seamless and holistic customer care across all relevant communication channels," she said.  Similar technology is also powering personalised content and product recommendation on Astro Go, NJOI Now, Go Shop and astro.com.my.Building an immersive customer relationshipAstro said it continues to build on its customer relationship with 71% of Malaysian households comprising 5.2 million households and some 21 million family members, and "we are on track to achieve 75% household penetration by year-end. Its nine radio stations remain the most popular network in Malaysia, with 15.6 million weekly listeners while our digital properties attracted 7.5mn unique visitors and 66mn page views."Keeping up with consumer trends towards digitalisation, Astro GO  is said to achieve 1.2 million registered users, with users now spending an average of 162 minutes per week on it. It will leverage on the sizable NJOI customer base of 1.7 million and an addressable audience size of 12 million to push take-up of NJOI Now (the latest free video streaming platform) as a mobile extension to their TV viewing experience and to provide a wider individual marketing reach for advertisers, products and services.During this quarter, Astro households have also seen 63% year-on-year growth in connected PVRs to 572,000 and they have cumulatively watched 2.5 million on demand videos.Tun Zaki Azmi, chairman of Astro said, “In a challenging market, Astro is focused on delivering sustainable revenue and profit growth over the long term. Our businesses continued to be cash generative and the Board is pleased to declare a first interim dividend of three sen per share.”