1 April 2015: On 1 January this year, Mongolian DTH platform DDish TV added 30 new channels to its platform, including RTL CBS Entertainment and National Geographic. Then the platform's programmers went on the hunt for a good movie channel. Their caution over how much is sensible to spend on a premium movie line-up highlights one of Mongolia's biggest pay-TV issues: the high costs of programming versus some of the region's lowest subscription revenues.One of the country's major national platforms, DDish offers 60 basic channels for US$35 a year - US$2.92 a month. The premium subscription tier added this year coincided with the mining/economic crisis insiders expect will take two years to resolve. Even so, DDish remains committed. Company execs say the platform has to up its game, regardless.Another major pay-TV player, Unitel/Univision, has significant on-demand ambitions, pointing out, among other things, that VOD opens up the opportunity for Mongolian production companies to access additional revenue. Unitel's base is primarily urban.Privately owned free-TV broadcaster Mongol TV, too, remains committed to a path set before the crisis, adding, for instance, local versions of FremantleMedia's Got Talent and all3media's Gogglebox to its schedule and continuing to fly the flag for legal content.Across the industry though, the economic situation has slashed expectations for advertising growth, and expansion plans in many quarters have been put on hold.From the inside, Mongolian regulators and operators say the industry's biggest challenge is the sheer number of channels available in a market of less than three million people and about 640,000 households. For outsiders looking in, the issues are simple - low pricing and high piracy."Piracy is rampant... We have a lot more work to do," says AmCham Mongolia's Jackson Cox, pointing out that the vast majority of pirated products in Mongolia are American.A stronger legal framework is on regulators' radar. Balgansuren B, the director of Mongolia's Communications Regulatory Commission (CRC), talks about reducing players and creating a "competitive sustainable environment with a proper legal framework". His comments were part of the translated presentations made during the second annual Mongolian TV Forum in Ulaanbaatar in February this year.Mongolia has more than 100 TV channels, including 56 local channels delivered via satellite, cable and IPTV. International brands in the market include HBO, Outdoor Channel, History, Deutsche Welle, Universal and Food Network, plus a local version of Bloomberg TV Mongolia. Along with a mixed local/international news and business slate, Bloomberg Mongolia licenses factual titles such as A+E Networks' Mankind Decoded, The Men Who Built America and Modern Marvels.Other international distributors active in the market are ITV Studios Global Entertainment, which sold about 150 hours into Mongolia last year, including Mr Selfridge; CBS Studios International; Deutsche Welle; and HBO.Licensing fees can be as low as a few hundred dollars an hour. At the high end, drama goes for US$5,000 an hour. And even then, there's a call from some local players for local buyers to work together to "suppress" the cost of foreign content and spend instead on local programming.Advertising on the top five most-watched channels can cost US$5 a second; channels are trying to push this to US$10+. The next five charge US$3+. The average is US$1/second.The big five most-watched channels spend the most on content and production. The second tier spend effectively on taped content. Local research company Maxima Media shows that 40% of audiences watch the top five channels, 20% watch the top 10 and 40% watch the others.Insiders say a lot more needs to happen to improve production standards and quality if the balance is to shift. "Viewers are becoming more sophisticated," Maxima Media chief executive, Gombojav O, says.Like the rest of the world, Mongolian platforms and programmers are grappling with audience migration to device-based viewing. "A new era of content has begun," Unitel Group vice president, Bold G, says.The country has 2.6 million mobile phone users; 50% are on smartphones. Most TV viewing still takes place on traditional TV sets within the home. Mobile device-based viewing was the lowest segment last year but the fastest growing over the past two years, Unitel says. "Content viewing on mobile devices increased by 25% in 2014 compared to 2012," says Bars G, Unitel's head of content and development.Maxima Media lists three things that need to happen to move the market in a positive direction: international standards, advertising rate increases, and clarifying the relationship between TV stations and platforms. His last point is a sore one for local advertising-supported channels, which currently receive no subscription fees from platforms.He has lots of support. "This market is distorted," says Mongol TV head Nomin Chinbat, adding: "If we don't eliminate the distortion, we will be in the same position five years from now".ContentAsia Issue 1, 2015