New research from SNL Kagan has shown that China is now turning its lead in pay-TV subscribers into hard cash with $7.5 billion 2011 revenues by the end of 2011.

Not only will this surge in sales make China the leading pay-TV market in Asia, surpassing traditional leader Japan, it will also make the country the fifth largest in the world.

According to the SNL Kagan report, a 9.0% increase in China’s pay-TV households in 2010 translated into a growth in video service revenues of 31.1% in 2010 to reach $5.8 billion with growth driven by cable TV digitisation. Going forward, SNL Kagan forecasts China’s multichannel subscriber base will grow between 2010 and 2015 at a 5.8% CAGR to reach 259.5 million households as video service revenues grow at a 20.5% CAGR to $14.7 billion.

Drilling deeper into the analysis, SNL Kagan says that cable will continues to dominate China’s pay-TV landscape accounting for 95.7% of multichannel subscribers and 91.2% of video service revenues in 2010. Nearly half (47%) of China’s cable subscribers had migrated to digital connections by end 2010 and the analyst expects that in 2011 a further 22.5 million households will adopt digital cable service.

The research also expects growing momentum in IPTV services. IPTV accounted for 3.8 % of China’s multichannel subscribers in 2010, with 7.4 million households generating $493.2 million in video service revenues. Video-on-demand (VOD) is also gaining steam with deployments in place at major operators including: Jiangsu BC&TV Network, Shenzhen Topway, Hebei TV Network, Oriental Cable Network, Wasu Digital TV, Shaanxi BC&TV Network, Chongqing Cable Network, and Beijing Gehua.

Looking at the data and predicting a bright future ahead for the region, Eva Zhang, Media and Communications Analyst at SNL Kagan commented: “China’s pay-TV market continues to see exceptional growth as cable digitisation and IPTV rollouts invigorate product offerings and boost average-revenue-per user. Over the coming 5 years we expect cable and IPTV ARPU will grow at 13.7% and 5% CAGR, respectively.”