Big Shift

Mansha Daswani explores the major trends in the AsiaPac video sector, from rising content investments to the emergence of telcos as new power players.

China’s leading online video operator, iQiyi, recorded a surge in memberships in 2018. It added a whopping 36.6 million users to reach a total of 87.4 million—for reference, as of the start of this year, Netflix had 139.9 million globally. And about 98 percent of those iQiyi customers—in a market where audiences are used to getting content for free—actually pay for subscriptions. It’s an impressive leap for the Baidu-owned service, but the platform also saw its loss balloon last year on the heels of significant expenditures on original content. In the über-competitive streaming-video space, growth comes at a cost, and acquiring customers is not cheap or easy.

But digital players, operating across a range of business models, are indeed adding value to the overall media ecosystem in Asia, creating new opportunities for producers, distributors, channels and brands.

“Over the past three years, SVOD services have helped boost the overall subscription pie across much of AsiaPac, especially in China, where pay-TV ARPUs are relatively small,” observes Vivek Couto, executive director of research firm and consultancy Media Partners Asia (MPA). “However, SVOD remains in its infancy in many markets, making recent developments an unreliable indicator for the future.”

Amid digital disruptions, Jonathan Spink, CEO of HBO Asia, expects it to be a “very tough market for the traditional linear TV channels. A lot of the operators are facing pressures. You might see a couple of casualties in the SVOD world. It’s not an easy business. We’re in a fortunate position. We have a strong brand and a strong product line. HBO U.S. is producing more and more shows. If we supplement and complement [the U.S. content] with all the things we do locally, I think we’re in a really strong position.”

ON THE GO
One of Spink’s priorities this year is the rollout of the OTT service HBO GO. “The biggest thing we had to do was sort out all the studio rights so we could start launching HBO GO properly,” Spink explains. “The business had long-term studio deals and the rights in those deals didn’t foresee the OTT and SVOD world. It took us a while but we managed to get all the studios on board and that’s allowing us to focus on HBO GO.”

Of note, the company, after years of exclusivity on StarHub, sealed a major deal with Singtel that includes a suite of channels plus the OTT service. Singtel recently unveiled a postpaid mobile plan that includes HBO GO. HBO GO also launched on Mediacorp’s OTT service, Toggle.

Singtel is just one of many telco players across Asia that are using video to drive their mobile-broadband services.

“With over 100 million smartphone users on our network, it’s strategically imperative to us that we are an active player in the online-video space,” reports Alistair Johnston, the marketing director at Indonesian telco giant Telkomsel.

For its MAXstream VOD app, Telkomsel is inking deals with a range of linear channels, investing in original content and offering access to the HOOQ OTT service.

“The app is a gateway and discovery tool for all of our partners with great VOD content,” Johnston says. “We also use MAXstream to create partnerships with OTT VOD services and serve their content to our customer base. So far we have 20 premium international linear channels, 12 local TV free-to-air channels, over 150 hours of MAXstream original scripted content, live music performances weekly by Indonesian stars here at our Telkomsel studio and access to over 10,000 hours of HOOQ embedded content.”

According to Johnston, the app has had more than 11 million downloads to date. “We want MAXstream to be seen as an open-source platform that content providers can easily utilize to reach Telkomsel’s 90 million-plus active mobile video users,” he notes. “We also don’t limit MAXstream to just Telkomsel. The platform is accessible in Indonesia no matter what network you are on.”

At APOS, Johnston will be stressing to potential partners that in markets like Indonesia, where more people have cell phones than pay-TV services, “mobile broadband access is still the key for VOD content penetration.”

Partnering with a telco also helps OTT operators overcome severe payment obstacles in markets where credit card penetration is low.

OTT AMBITIONS
Payment is just one of many hurdles facing digital players across Asia as they finesse pricing plans, business models, content lineups and partnerships. Southeast Asian operators HOOQ and iflix have both evolved from the SVOD-only proposition they launched with, joining Viu in the freemium space.

HOOQ embarked on the rollout of a skinny bundle in August of last year, delivering to subscribers channels that were previously only accessible to Indonesian consumers with a pay-TV subscription. These joined an array of free-to-air live-streamed channels on the operator.

“If you’re solving for engagement in a 24-hour period, you have to keep experimenting, be agile and be ready to move—fast,” says Vishal Dembla, HOOQ’s new chief commercial officer for Southeast Asia. “Our objective is to be synonymous with video entertainment, regardless of whether it is linear, transactional VOD, SVOD or AVOD,” he says. “We want to work with like-minded partners, whether it’s rights-sharing, telcos or channels.”

Rewind Networks is among the operators to have aligned with HOOQ on the skinny bundle, with HITS and HITS Movies included in the package in Indonesia.

“What I love about HOOQ is it’s forward-thinking in its approach and has taken a bet on aggregating linear alongside SVOD to connect with a wider OTT audience,” says CEO Avi Himatsinghani. “They’ve been very successful in integrating the free-to-air channels too. Early indications are that it’s been a good start. The way you have to promote linear on OTT is very different. On a traditional platform, we’d give the partner a promo and say, please run it across your networks. That approach becomes less relevant on an OTT service, where it’s all about discoverability and getting people to click and watch. There is a lot of learning for them and us. It’s early days, but I’m excited.”

Himatsinghani is also enthusiastic about continued opportunities with legacy pay-TV players and telcos across Asia for his two channels.

The recently launched HITS Movies is Himatsinghani’s primary focus right now, on the heels of a strong launch on StarHub. “We put together 40 years of the best movies on a single service to see how powerful that would become in terms of viewer stickiness. We actioned our plan and it has beaten my wildest expectations. The ratings and numbers in Singapore prove it. Every month since launch, we have been in the top three out of 15 international general-entertainment channels in the basic group.”

In the case of the flagship HITS, Rewind expanded carriage in Taiwan, with distribution on both CNS and Chunghwa Telecom’s MOD, rolled out in Vietnam with K+ and VTVcab and launched in Myanmar and the Maldives. “There are pockets [available]—we’re still not on True or AIS in Thailand. We want to get onto platforms like myTV SUPER, Now TV and i-Cable in Hong Kong. So there’s still work to be done on the flagship channel as well.”

Himatsinghani says he’s also looking further afield. “I’d love to see how we can explore additional feeds of the service in markets like India, Korea and even Africa and Eastern Europe. I think it’s a good time to start exploring.”

He attributes the success of both services to his “curated playlist” strategy. “Their clear propositions have allowed a very loyal, consistent base of followers to keep coming in and out of the playlist, recommending and requesting shows and movies they love. The more fans that come in, and the more time they spend, the better our ratings.”

Plus, Himatsinghani adds, these classic movies and TV shows “haven’t worked on the pure SVOD plays. If they’re available they are scattered—some on one SVOD service, some on others. And they are so deep down on the pages, even if a thumbnail pops up, people will say, I’ll watch that later, [for now] I want to watch Narcos or House of Cards or Bodyguard. On-demand works best for the latest top-of-mind content. Our curation works best on a linear playlist.”

FOREIGN FARE
Alexandre Muller, managing director of TV5MONDE Asia-Pacific, has also seen his business grow over the last year. “During the course of 2018, our distribution in the region has increased by an additional 12 million subscribers on traditional pay-TV platforms,” Muller notes. “The Indian sub-continent alone represents 50 percent of this growth, the other half coming mostly from mature markets (South Korea and Japan), traditional pay-TV markets (Taiwan) and emerging markets (the Philippines and Indonesia).”

Via pay-TV platforms, TV5MONDE reaches 102 million subscribers in the region, Muller says, plus another 250 million via mobile TV services.

“Unlike most players in Asia, we did start our digital journey a long time ago, back in 2002,” Muller says of what has contributed to the company’s success. “A lot has already been done to meet the evolving ecosystem’s requirements and needs. It is mandatory for us to build and maintain our relevance with the different business models available. Having a strong SVOD catalog and regularly reinforcing it is a way for us to close the loop and make our global offering even more relevant to our partners and subscribers.”

A first-time attendee at APOS this year, Canada-based Gusto Worldwide Media is eager to expand its Gusto TV service in the region following a launch in Singapore on StarHub. Chris Knight, president and CEO of the company, recognizes the challenges of the linear channel space globally, but sees more opportunities than obstacles.

“We’ve had great conversations with people who understand the subtleties and the intricacies, whether it’s in Korea or Vietnam or China,” Knight says. “We’re looking to create partnerships with people in all the different markets we want to get into.”

The company is being open-minded in its expansion plans, opting for a variety of different routes to market, well beyond just a traditional carriage deal with a pay-TV platform. “We have branded blocks that we’re talking to people about,” Knight says. “There are conventional content sales, which we’re always keen to do. We would like to embed our content on telephones. We would like to have our content seen on refrigerator doors as they start rolling out 4K screens, as they have now in Korea.”

CONTENT WAVE
Knight is also looking to produce within the region, given the rising importance of locally produced fare for both pay-TV and OTT players. And everyone is acutely aware of Netflix and Amazon’s regional ambitions. Netflix has been spending across the region, including in India, Korea and Japan. Amazon has focused its efforts on India and Japan, in both scripted and entertainment.

“It’s increasingly clear and obvious how important locally produced programming is,” says HBO Asia’s Spink. “We made four or five series last year; we’re doing five, six, seven this year. We have great plans to increase the number we do. They get good audiences and have the beauty of never being pirated. And they’re working across the region. A Taiwanese one will work in the Philippines.”

WarnerMedia’s Turner channels are also producing more in the region, recently expanding into the scripted space with titles like The Haunted Heart, a Taiwanese co-production.

Indonesia’s MAXstream has set its sights on more original content after releasing the horror series Nawangsih, in partnership with Malaysia’s Astro, earlier this year. “We have a lot more planned that are already in production,” says Johnston. “We aim to offer digital video content for our customers, as well as empower Indonesian creatives to hone their craft by using our platform to amplify the reach of their work to the wider public.”

Korean content behemoth CJ ENM picked up a majority stake in European distributor Eccho Rights at the end of last year to further its global ambitions.

“We always hope our IP will travel worldwide, even beyond Asia, where our presence is now quite strong,” says Chul-Yeon Kim, senior VP of the global business at CJ ENM. “Our distribution strategy will remain quite unchanged. However, working with Eccho Rights, we are anticipating wider global distribution. We worked together in the past numerous times, most famously licensing the remake rights for our scripted format Tears of Heaven to Turkey. We hope to come up with new strategies thanks to their abundant network in Turkey and the MENA region.”

Within Asia, meanwhile, CJ ENM will build on its “express drama” strategy, delivering shows for broadcast within 24 hours of the original telecast. “It is vital to air Korean dramas within 24 hours on Asian OTT platforms,” Kim says. “Another critical factor that cannot be overlooked is illegal streaming sites—to minimize these platforms it is becoming more important for us to legally distribute our content within a [shorter] time period.”

Distributing to OTT platforms has been a major success story at CJ, with brisk trade with Netflix, Viu and HOOQ, Kim says. “Viu especially has been working with CJ ENM for a long time and is now a very powerful platform in the region. Starting last year, we embarked on a tighter partnership with Netflix, and they are increasing their Korean drama acquisitions.”

Sabrina Duguet, the executive VP for the Asia Pacific at all3media international, observes that the “influence of SVOD in the region cannot be underestimated. The AsiaPac audience is now willing to leave their comfort zone, especially when it comes to drama, and enjoy more edgy and diverse content via the VOD services.”

Indeed, Duguet reports a boom in the company’s scripted distribution business in the region, building on all3media’s strong trade in entertainment formats in Asia.

“Historically, lifestyle programming has been the driver for us. However, we have seen a move towards broader genres, especially within drama. We have also seen an increase in regional and second-window deals in specific territories, as well as a surge of deals for our scripted formats.”

NEXT STEPS
There remains a significant degree of uncertainty hanging over the Asian video business at present, largely because of the consolidation happening on a global level. The big mergers—Time Warner and AT&T, Disney and Fox—have yet to play out on the local leadership front (at least, at the time of writing). There are many questions about how the direct-to-consumer landscape will take shape, should Disney, WarnerMedia and NBCUniversal decide to bring their upcoming platforms to Asia. Amazon and Netflix are spending a lot of money on originals in Asia, which is likely to drive up the costs for everyone.

Ultimately, some basics of the business are still strong, despite the parade of disruption.

“Affordable pay-TV continues to win over new customers in India and the Philippines, while the sector remains resilient in Japan and Korea, largely through telcos that have been buying cable and DTH assets and driving IPTV growth,” MPA’s Couto explains. “In all markets, however, the battlefield is now broadband, either as a complement or replacement for existing services, contested by incumbents and new entrants alike.”