Indovision cuts rates in hope of more sales

Indovision cuts rates in hope of more sales

JAKARTA (JP): Does pay TV have a future in Indonesia?

The answer is vague, but one thing is certain: PT Malicak
Lintas Cakrawala, the sole authorized pay TV agency in Indonesia
and better known as Indovision, has struggled to survive over the
past year.

It changed marketing strategies several times before finally
increasing the number of subscribers. When Indovision was
launched in November, 1994, the firm first set the price of a
decoder at Rp 4 million (US$1,733), then lowered it to Rp 2.7
million. In June this year the price was lowered again to Rp
1,485,000, which included a one-year subscription. By September,
the firm charged subscribers Rp 660,000 for the decoder and a Rp
63,250 monthly fee. In addition to the lower fee, subscribers got
a month's subscription as a bonus.

"With the lowered price, we want to reach not only the middle
and upper class people but also those of the slightly lower
category," stated Rudy Lionggo, Indovision's sales manager.

When tallied, the September price almost equals the June fee.
Only the change in the payment system makes the September price
seem lower.

"That's the lowest price we can offer," said Narry Kretarto,
the firm's marketing manager.

The number of household subscribers increased from 6,000 in
September to 11,500 the following month.

Depite what may look as an impressive increase, the number is
still very small compared to other Asian countries. In Brunei
Darussalam, for example, TNT & Cartoon Network alone has netted
15,000 household subscribers since it was launched last year. In
the same period, the channel managed to get 1.5 million household
subscribers in Taiwan, the highest number in the Asia-Pacific.

Indovision blames slow sales on the gratis culture of
Indonesia.

"Our people have yet to get adjusted to pay TV," said Narry
Kretarto, the firm's marketing manager.

Indovision is not the only firm to experience difficulty in
collecting fees from Indonesian viewers. The state-run TVRI,
which imposes a monthly fee of Rp 6,000 ($2.6) on all TV owners,
rarely manages to collect its dues. RCTI was initially setup as
pay television station but had to shift to commercial television
for lack of subscribers.

Indovision also speculates that slow sales stem from their
past strategy of focusing only on the middle and upper classes.
This group can afford alternative entertainment beside
television.

"We now target those who cannot afford to go to pubs on most
nights and depend mostly on television for entertainment," said
Rudy.

Commercial television's interesting programs might also slow
sales, but Indovision believes its programs are more entertaining
and more attractive because they are not crowded with
commercials. They have TNT & Cartoon Network for cartoon and
classic movies, HBO for feature films, ESPN for sports, and
Discovery, a science program. CNN International was once only
available through Indovision, but can now be seen without a
decoder.

"Our market has been affected by CNN I not being in our
package. People still prefer entertainment to news," said Krish
Pribadi, Indovision's sales and distribution manager.

Star TV's management also signed an agreement to distribute
their program through Indovision, but Indovision canceled the
deal due to some technical and pricing problems.

Despite the lackluster market, some businesspeople still
believe there is a big market for pay TV in Indonesia.
International pay TV firms are also pegging Indonesia as a
potential market because of its growing economy.

"We have big expectations about your country," Lisa Prestwich,
deputy vice president, public relations, Asia Pacific CNN
International and TNT & Cartoon Network said.

Indovision will lose its monopoly on pay TV, and Indosat and
Indocitra Grahabawana are planning to run pay-TV programs through
cable. The existence of several Indonesian pay TV companies will
give international pay TV firms more bargaining power with
Indovision. However, it is not certain when the Indosat-Indocitra
joint venture will begin.

"We have only signed an MOU," said Rajamin Nasution, Indosat's
spokesman.

Indovision, meanwhile, has decided to continue broadcasting
their programs through satellite. The broadcasting is now
conducted through the Palapa B2B satellite, but the company will
launch its own Indostar satellite in 1997. The $210 satellite
will allow Indovision's programs to be seen with only a decoder
and a 70 centimeter satellite dish, much smaller than the 2.7
meter dishes required now.

Indovision hopes that with its own satellite they can further
reduce the price and enable more people to enjoy their
service.(jsk)