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The Philippines’ largest TV network bets on streaming—out of necessity

Written by Elyssa Christine Lopez Published on 

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ABS-CBN was denied a new broadcasting license; now the network re-invents itself as a streaming service.

Ever since Netflix hit the mainstream in the mid-2010s, traditional television was destined for extinction. The rise of video streaming created the perfect storm for the classical networks which also faced another challenger—the growing influence and presence of social media platforms.

The announcement of the Philippines’ largest television network ABS-CBN to double down on digital efforts should not have been met with a whimper. After all, it only meant the company was ready to take on the challenge to innovate, and be the pioneer in the local market at that.

Unfortunately, digital platforms were not the only challengers the broadcaster was facing—political monsters were at their fence too.

On July 10, the House of Representatives rejected the franchise bid of the network, forcing the station to go off air. The Congress dragged on its decision, although ABS-CBN filed for renewal as early as 2016. In the Philippines, TV networks have to renew their licenses to operate every 25 years.

When the franchise expired in May without a ruling from Congress, ABS-CBN was granted a provisional authority until a decision was made. In the end, the legislative body denied the broadcaster to go on air again.

“We will continue to face difficult times this 2020,” said president and CEO Carlo Katigbak on September 24 in the first shareholders’ meeting after the blackout. In August, the network had to let go of 5,000 employees, implemented pay cuts, and stripped down programming efforts.

ABS-CBN decided to continue by streaming its shows online. It currently has a presence on all major social media platforms—Twitter, Facebook, and YouTube—with the last two attracting the largest audience. According to data from social media tracking platform Social Blade, the two YouTube channels managed by ABS-CBN already had more than 40 million subscribers at the end of September.

Refocus on streaming

Even more promising has been its streaming platform iWantTFC, a rebranded entity formed by combining its two over-the-top (OTT) products.  “We merged them to cut costs mostly,” said Katigbak in the shareholders’ meeting.

ABS-CBN launched iWant as early as 2015 in a bid to compete in the streaming service game. But it was only in the last two years when the company started funneling more money into this segment. In 2018, iWant rebranded and regularly produced exclusive shows for the platform. By 2019, the company had spent PHP 347 million (USD 7.17 million) for the streaming platform alone, based on data from its annual reports.

The effort seems to be paying off. ABS-CBN recently said that iWant already had 1.6 million monthly active users, although it remained unclear how it defined ‘active users.’ The company previously used different metrics. In 2019, it claimed that iWant had 11.3 million registered users. ABS-CBN declined to be interviewed for this story.

To encourage more sign-ups, the firm introduced a three-tier subscription plan in September: Free, standard—priced at PHP 60 (USD 1.20)—and an ad-free premium plan—at PHP 120 (USD 2.40). But despite higher subscriber numbers, advertisers remain in a wait-and-see mode.

Advertisers are not convinced

“The previous ABS-CBN TV ad spending will not shift to other networks or to digital,” said Hermie de Leon, managing partner at Havas Ortega Media Group.

De Leon believes that consumer brands still prefer traditional TV ad spots, which is where their target audiences tune in more often. Nevertheless, she sees more advertisers explore digital, especially online video, “to make up for the lost reach of the ABS-CBN closure.”

De Leon further said that the industry is closely monitoring ABS-CBN’s performance online and that initial findings are showing that loyal ABS-CBN viewers are following them. “If the company has their [subscriber] data validated, more advertisers will be interested,” she added.

Andre Santiago, senior digital manager at Gobo Creative Philippines and a digital-native, echoes the sentiment. He believes the company may have potential in the long run, especially as the advertising industry is already moving into a ‘digital-first’ direction.

“I think the first thing they have to prove is that they actually draw eyeballs,” he said. “Other platforms like YouTube and Facebook really show stats, so once they have the same capabilities then brands may be more enticed.”

A long way to profitability

ABS-CBN likely has to burn more money before turning in a profit. While revenues were increasing on average 14% year-on-year from 2016 to 2019, the segment has yet to earn a peso. It also only accounts for about a tenth of the company’s total revenues in the last two years.

The performance of iWantTFC’s peers in the region—Viu and iflix—shows few signs of encouragement either. While both have collectively raised around USD 460 million in the last five years, the platforms aren’t profitable yet. This is despite a sizable growth in their subscriber base at 41 million and 15 million respectively.

For iWantTFC to survive, it has to bring more viewers to the platform, quickly.

Looking at the Philippines’ tech-savvy population, there are reasons to be optimistic. The country counts at least 73 million internet users—about 66% of its total population—according to social media agency WeAreSocial. Filipinos are said to spend 9 hours and 45 minutes online every day.

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The biggest challenge to iWant’s success may be the cost of an internet connection. According to the World Bank, the Philippines has the fourth-highest prices in Southeast Asia at USD 6.30 per 500 megabytes of prepaid mobile data. That is a lot for a country with a minimum daily wage of about USD 12. And the majority of ABS-CBN’s viewers come from the lower-income classes.

The company will have to compete for the attention of those who can afford to pay for their shows—a challenge, considering that big-name streamers like Netflix and HBO Go are also dabbling in the market.

Back on air

But the firm might have found a backdoor. In a disclosure statement to the Philippine Stock Exchange on Tuesday, October 6, ABS-CBN announced it will now air some entertainment shows and movies in a newly rebranded A2Z channel 11, after signing an agreement with ZOE Broadcasting Network, the media arm of a local church called Jesus is the Lord. No further details have been shared.

Safe to say, ABS-CBN has to capitalize on what it does best—local entertainment production—to survive. After all, it was the most-watched TV channel just a few months ago.

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