This article first appeared in The Edge Malaysia Weekly on February 25, 2019 - March 3, 2019

ASTRO Malaysia Holdings Bhd CEO Henry Tan speaks highly of South Korean movies but he cannot take too much of their dramas. The highly successful local production, Hantu Kak Limah, or the Lawak comedy series, is also not his cup of tea.

Yet he was the key to Astro becoming the first content and consumer company in Malaysia and among the earliest in Southeast Asia to deliver two 24/7 Korean channels to viewers here as far back as 2010 — two years before Gangnam Style became the first video in the world to reach one billion views in December 2012.

A firm believer in the potential of Malaysian movies and Asian originals, Tan, who spearheaded several content firsts at Astro for Malaysia, has this to say when it comes to what content to invest in.

“It is not about [delivering the things] we like. We always ask ourselves if this is something people want,” he tells The Edge, adding that what most people want or what the market needs “can be very different” in terms of personal preferences.

Astro’s group chief content and consumer officer as well as chief operating officer for just over a decade before assuming the CEO’s post from Feb 1, Tan is credited by Astro as being “instrumental” in a number of its theatrical successes, including The Journey, Ola Bola, Hantu Kak Limah, Paskal, Abang Long Fadil and Polis Evo.

Whatever one’s first impression of the misadventures in Kampung Pisang (Banana Village) may be, Hantu Kak Limah reportedly cost only RM1.02 million to make but went on to collect more than RM38 million in box-office receipts last year.

The film was so popular that Netflix, which probably ate into quite a bit of Astro’s revenue, bought the rights to show the movie after its run in local cinemas and on Astro First.

Netflix also bought from Astro the rights to show Paskal, which raked in RM30 million at the box office last year, making it the third highest grossing Malaysian movie of all time.

“Hantu Kak Limah, Munafik 2 and Paskal did better than Hollywood blockbusters like Deadpool 2 and broke long-held box-office records. We have the talent and skills. Malaysia has tremendous potential,” says Tan, relating how Malaysian animation such as Upin & Ipin, BoBoiBoy and Didi & Friends has found a market in Indonesia and elsewhere in the region.

Other content sold to Netflix includes Astro’s first Hong Kong original drama series, Demon’s Path, Jason’s Market Trails, Jason Can’t Cook and Festive Foods, a heritage showcase of cultural festivals in Malaysia.

In 2017, Amazon, whose Prime service is also a rival to Astro’s bread-and-butter subscription business, paid the latter a licensing fee for Cam & Leon, an animated non-dialogue comedy series.

Some of the creativity may have been forced by how challengingly diverse Malaysia’s 32 million population is. “The Malaysian market is not that big and there are at least four [key] 8% segments … the Chinese market has three 8% — Mandarin, Cantonese and Hokkien. The Indian segment is another 8% ... some of my foreign counterparts say we are crazy when they look at our market and wish us luck,” laughs Tan, who in the course of serving the many segments as Astro’s head of content, pioneered Tutor TV, Malaysia’s first free academic learning channel; eGG Network, the first regional eSports channel; Boo, the first Asian horror channel; and the local Hua Hee Hokkien entertainment channel.

“Our diversity has its challenges but it also puts us in a good position to create a vibrant ecosystem for Malaysian and Asian content. [But] the whole industry needs to come together,” he says, stressing how the right policy direction can give a whole new life to the local content and creative industry.

“The K-pop phenomenon was no accident. There needs to be a concerted effort between industry and government to ensure that content is of export quality … South Korea is reaping the benefits of the virtuous cycle that was created when all parties came together,” he adds, noting the spillover benefit to the country’s economy from tourism, beauty, technology and even the sales of fried chicken and beer.

The popular South Korean romantic comedy, My Love From the Stars, reportedly sparked a chicken and beer craze in China in 2014. More recently, a Netflix film reportedly created a penchant for Korean Yoghurt Smoothie that netizens took no time to recognise as Yakult.

“Television and movies have long proved to be a persuasive platform,” Tan says, adding that Astro is investing in data-driven analytics that will change the way marketing is done.

From where he stands, consumer surveys need to be reworked so that the results can give a wholesome picture of the consumer. “The same consumer watches TV, listens to the radio and reads news. Why have a separate survey for TV and another one for radio?”

Coupled with the data Astro has gathered from the consumption of programmes on its various platforms, successful data analytics will enable the company to know, say, what type of shampoo someone who watches a particular programme is likely to be using.

The fact that Korean musical sensation BTS became the first K-pop group to deliver a speech at the UN General Assembly last September, four months after it became the first K-pop band to top the US album charts, also speaks volumes of the persuasive power of the creative, music and entertainment industry.

Tan admits that Astro is being disrupted on multiple fronts. Not only does it need to come up with more compelling content to keep its customers from cutting the cord in favour of internet-based alternatives like Netflix and Amazon Prime but piracy is stealing more customers away. Some 25% of Malaysians own illegal streaming devices or Android boxes, thus disconnecting legitimate pay-TV services, participants at a recent anti-piracy conference in Kuala Lumpur were told.

“Piracy is essentially theft. We are still standing but the smaller local producers, some of whom borrow money from their family and friends to make their movies ... when their work is pirated, they’re wiped out,” Tan says.

According to him, Astro has sizeable assets and strengths that OTT players and even the likes of Netflix would envy.

Netflix, which, like Astro, is investing in producing compelling original content, in January raised prices for its US customers for the second time in two years as it “continues to invest in great entertainment and the overall Netflix experience for the benefit of our members”. Netflix too loses money when The Game of Thrones is pirated.

“We’re making processes as easy as possible for customers ... It is easier on pirate sites because we have to properly account for how many people paid for the content,” Tan explains.

While Astro’s traditional subscription revenue has fallen, subscription revenue still accounts for more than RM4 billion of annual sales.

Since FY2017 ended Jan 31, Astro has reported its subscription revenue together with other revenue and given a breakdown of how much revenue it gets from advertising and Go Shop, its TV and online retail business.

Go Shop contributed 5.2% (RM290 million) to revenue in FY2018 and 6.7% (RM279 million) for the first nine months of FY2019. Advertising sales account for about 12% to 13% of total revenue.

Tan has big plans to grow the revenue pie, leveraging Astro’s assets, which include not only its rich content, influential artistes and its connection to the who’s who in entertainment but also its subscriber base, many of whom will be introduced to new ways of spending more money with Astro and its partners, once the company knows what makes them tick.

“In theory, it is possible to allow one-click purchases for connected Astro customers,” he says.

Astro Rewards and Astro Golden Club are examples of how Astro is looking to keep subscribers engaged with the group and are an avenue to reward its loyal customers. Tan is working with partners towards making its rewards programme self-sustaining and not a cost centre.

Part of Astro’s subscriber base is a middle and high-income group — which he describes as the premium mass — that advertisers and marketers would be very interested in, he says.

From his years of experience in marketing and advertising, Tan knows exactly what advertisers want. That explains his confidence in turning the perceived dinosaur into a media company that advertisers would not want to miss.

On the other hand, the harsh operating environment will be a test of his plan. If it succeeds, it would transform what critics deem an ancient into a thriving next-generation consumer business that can continue to give more returns to shareholders. The journey will not be plain sailing but Tan is all primed for the challenge.

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