What Will StarHub Ltd Do About the Threat of Amazon Prime Video?

StarHub Ltd ’s (SGX:CC3) pay TV business is under pressure.

In StarHub’s 2016 annual report, StarHub’s Chief Executive Officer, Tan Tong Hai, said that there has been a major shift in the viewing habits of its customers. The availability of alternative video streaming options and pirated content are key challenges to the business.

Over the last two years, StarHub had lost 12.5% of its pay TV subscribers. The rise of video streaming services like Netflix have contributed to the decline. But that is not all.

The big bad wolf at the doorstep

The pay TV space is expected to get even more crowded with the launch of Amazon Prime Video by US-based online retailer . The management team was asked for their view on the competitive landscape as another major player in the space steps in.  

Starhub’s Chief Marketing Officer, Howie Lau, responded:

“One is that when we look at this business we look at what are the ways that we can meet the customers’ requirements, at the same time, commercially viable for StarHub.”

So for example, Netflix.

We work with Netflix as well, so we have Netflix as part of our IPTV offering. We have also partnered with BBC player as well as Cashplay, so that we’re able to offer the breadth of viewing options and content to our customers.”

StarHub could be looking for a similar partnership with Amazon here. Lau explained:

“So with Amazon the – I think as we know, Amazon is more than just the video streaming. So we’re definitely keeping the options open in terms of what are the opportunities, to perhaps even work with different parties in the market so that we can continue bringing you new services.

So for us we don’t see it purely as a – just as an alternative, but potentially as a way so we can collaborate and partner as well, like we did with Netflix.”

StarHub and Netflix are partners, but it has not stopped StarHub from shedding another 21,000 pay TV subscribers in the first-half of 2017. We will have to see what the next quarter brings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.The Motley Fool Singapore has recommended shares of Amazon. Motley Fool Singapore contributor Chin Hui Leong owns shares in Netflix and Amazon.