Question

Write a explanations of esei on the reason why the astro company is in the monopolistic market based on its characteristics with examples.

Answer 1

All-Asian Satellite Television and Radio Operator, which is also well known as Astro, is a Malaysian media and entertainment broadcast company. It was founded by Tan Sri Ananda Krishnan and he started its service in Malaysia and Brunei in 1996 when there is the launch of MEASAT. According to Astro (n.d), the Astro provides satellite broadcast service with 22 television channel and 5 radio stations only when they first started their broadcast service. Astro is a wholly owned subsidiary of Astro All Asia Networks plc and it is operated by MEASAT Broadcast Network Systems Sdn. Bhd.

Astro was very successful in expanding their business to all over the Asia in the past few years. They had introduced 3 types of services to run their business which is Astro B.yond, Astro IPTV, and Astro NJOI. Astro B.yond had launched the first high-definition (HD) television service in the year 2009 December. It had video recording service which obtainable through PVR and a hard disk which connects to the decoder to save the video. Apart from that, Astro IPTV is also one of the services that provided by Astro to run their business. Astro IPTV launched in April 2011. It has some advanced function from the B.yond which consists of HD channels, PVR, video-on-demand, high-speed internet. Apart from that, Astro NJOI had launched on 2012 February. At first, it is started with 18 TV channel and 19 radio stations, and the customer who consumes it need to pay onetime fees to subscribe the package. Later, they had introduced prepaid service which you can top-up to enjoy more paid channels.

Astro IPTV which is also known as Internet Protocol Television is a monopolistic competition market structure. It has many competitors compete with each other around the world. With the launched of IPTV, Astro has a partnership with Maxis and Time to deliver an awesome experience to the user which bundles up pay tv and service internet together. IMoney.my (n.d) states that Astro IPTV offers 3 broadband internet plan to users who are Astro IPTV 10mbps, Astro IPTV 20mbps, and Astro IPTV 30mbps. They offer this 3 type of plans is because they had targeted a different group of people depends on their usage of the quota monthly. The user then can enjoy their favorite television channel through the internet with the quota they had purchased.

With the collaboration of Astro and Maxis, the user can enjoy more service with the affordable prices, and at the same time the firms are also making more profit to their company. According to rightways (2013), The Astro IPTV had collaborated with maxis for the broadband services at the same time to dominate the market in September 2012. In monopolistic competition market, there is low barrier to enter and also exit the market. That is why there are many competitors came in this segment to compete such as Hypp TV, eTv, and ABNxcess. If they are facing economic losses, they can leave the market easily as this is monopolistic competition market.

Astro is a company which under monopolistic competition market structure. Monopolistic competition industry has few characteristic which are many buyers and sellers, low barrier of entry and exit, product differentiation and price maker.

First, product differentiation is marketing strategy used by the firm to make their product unique from other competitors. Product is differentiated based on product quality, services, location, and pricing strategies (Tey, 2012). Astro differentiated their product by using bundle package while consist of internet broadband and IPTV package. For Chinese user, Astro provides them Super Pack plus 3, Super Pack 3 and Wah pack. For India user, Astro also offers Super Pack plus 2, Super Pack 2 and Namma pack. While for Malay user, Astro delivers offers with Super Pack plus 1, Super Pack 1 and Nilai pack. Astro also provides different broadband plan for different level of internet users, which are 10mbps, 20mbps and 30mbps (Astro, 2017). Each of the packages targets on different type of consumer with different preference, income, race and location

In addition, monopolistic competition market has a low barrier to entry and exit the market. Low barrier indicates that firms only need to have capital and they can enter the market to start up business. Internet Protocol Television (IPTV) industry is a low barrier market. IPTV industry is under sector of network service provider, so firms have to apply for a license from the government, and there are two types of license which are individual license and class license (Malaysia Communications and Multimedia Commission, 2017). The requirement to apply these type of license is to pay up for RM50, 000 (Malaysia Communications and Multimedia Commission, 2015). Astro only needs low requirement to enter IPTV industry as they just need to pay for RM50, 000 to get the license. Under this type of market, the firm can earn a supernormal profit in short run but only normal profit in the long run. However, when firms face economic loss, they can leave the market easily. In short run, Astro earns a supernormal profit because it will enter a new market and target new consumers. However, in the long run, it will only earn a normal profit as their new consumer will become normal subscribers. eTV launch on 26 January 2010, ABNxcess was also known as Asian Broadcasting Network (M) Sdn Bhd launched on 8 June 2013, all of these firm enter market easily because of the low barrier of market structure. However, eTV left the industry in July 2012 as they facing loses in this market and ABNxcess also left this market in August 2016.

Next, large amount of buyers and sellers also one of the characteristics of monopolistic competition. Buyers are people who purchase product or services also call as consumer or customer, while sellers are the firms that produce a product or provide services that call as producer or manufacturer. In IPTV industry, several competitors are Hypp TV, Netflix, iflix, Amazon Prime Video, Crunchyroll, Indieflix, Viu, Google Play Movie&TV, Happy IPTV, Family IPTV.According to Communication & Multimedia Fact 2016, the household broadband penetration rate in Malaysia is 77.9% of 7.57million which is 5.89million, and all of these are the potential consumers for the IPTV industry.

Moreover, one of the characteristics of monopolistic competition is a price maker. Price maker means that firm can decide the prices of its goods because there is no close substitute in the market. Monopolistic competition market has more monopoly power on its price than perfect competition market but lower than monopoly market. Astro set their package price based on its package offer. Astro set its Super pack plus range from RM188.68 until RM241.68, Super pack from RM154.76 until RM172.78, Value pack from RM84.80 until RM113.42, Family pack RM42.35.

Furthermore, non-price competition occurs as common circumstances in monopolistic competition market. The non-price competition involves advertising and focuses on a promotion that highlights their feature of products. Astro promoted its company through several ways, such as collaboration with government, foreign multimedia company and sports association. Astro partnered with Ministry of Health, Malaysia Army Forces and Projek Hati Nurani to provide Kampus Astro learning system to 76 pediatric wards, child’s oncology wards and School-In-Hospital classrooms in hospitals around Malaysia with call as Astro Kasih Bersama Wad Pediatrik. Besides, Astro also collaborated with Badminton Association of Malaysia and Fetch TV from Australia to broadcast badminton competition and eGG Network that making it the first eSports and gaming entertainment channel in Malaysia. Other than that, Astro conducted corporate social responsibility such as Astro Scholarship Awards that provide undergraduate students to pursue their study at higher education and Astro Kasih Knowledge Zone that equipped 25 charity homes that affiliated to Welfare Department with a mini library and books. Corporate social responsibility can build a good image for the consumers.