Key trends to watch in the AsiaPac media sector include a booming addressable market for streaming, the rising prominence of platforms that champion local content and the continued interest in Korean, Japanese and North American shows, Media Partners Asia’s Vivek Couto revealed in his opening remarks at APOS.
The total addressable market for streaming in the region, composed of fixed broadband, mobile broadband and IPTV, is expected to grow significantly, Couto said, with mobile broadband out front at 3.5 billion subs by 2025.
OTT partnerships with telcos and some pay-TV operators will be key, Couto observed. “They are vital for reach and billing, particularly in markets with limited online payment mechanisms. Telcos’ marketing clout and knowledge of user behavior can be very influential. In India and Indonesia, telco partnerships account for a big chunk of subscribers, more than 50 percent. Japan is heading towards 40 percent. Korea is close to 35 percent.”
The video ad market took a hit amid Covid-19, down by more than 13 percent last year, with television down between 16 and 17 percent region-wide, with sharper falls in India (25 percent) and Indonesia (20 percent). Online video advertising, however, inched up by 3 percent in 2020. “We are seeing some green shoots of recovery, particularly in the fourth quarter,” Couto said. “But with a second or third wave of the pandemic hitting some of the emerging markets, it’s hard to project with certainty the timing of the recovery this year.”
As online video advertising continues to expand, television’s share of the video ad pie will drop from about 75 percent to 60 percent, Couto said.
China will remain AsiaPac’s biggest AVOD market, contributing 49 percent of AVOD revenues in 2020, falling to 40 percent by 2025. In most markets, YouTube is dominant. In Australia, the BVOD platforms are seeing increasing success, with an 11-percent share of online video advertising last year and on track to rise to 16 to 17 percent by 2025.
On the SVOD side, India is increasingly competitive, while the Indonesian market has seen a significant expansion with the launch of Disney+ through Telkomsel. Japan is the second-largest online video market in the Asia Pacific, generating almost $3 billion in subscription revenue last year, Couto said. “It had a record amount of customer additions, about 9 million last year.” It is also highly fragmented, with some 20 SVOD players. “Netflix, Prime Video, Disney+, U-Next and Hulu contributed 75 percent of net new subs in 2020. There is a lot of growth for Netflix and Amazon, but there’s fragmentation in market share because you have a lot of local broadcasters anchoring offerings among tier one and tier two OTT operators. You’re likely to see some level of consolidation.”
Across the region, competition for market share among global, regional and local players remains intense. “Netflix leads in terms of subscribers and revenues in a number of markets, but competition is increasing.”
Of note, in Australia, “With the addition of Star, our numbers show that Disney+ is now the second-largest SVOD in Australia in Q1—it’s narrowly overtaking Stan, and Prime Video is also growing rapidly.”
In terms of revenue market share, Netflix leads in Australia, Korea, Thailand and Philippines. “Competition from local, regional and global players is especially fierce in India, Indonesia and Thailand.”
Couto also showcased new insights from sister company AMPD Research, noting that online streaming across Indonesia, Thailand, Philippines, South Korea, Malaysia, Singapore and Australia, including gaming, accounted for more than 1.5 billion hours of consumption in Q1. “YouTube dominates with shares ranging from 64 to 83 percent of content streamed. TikTok is second largest, around 8 to 15 percent share of total time streaming, excluding Korea. In many markets, Netflix is now the third-largest in this group, though it lags in Indonesia and Thailand.”
Exploring content trends, Couto said that Korean, North America and Japanese content “typically drive at least 75 percent of consumption” in most markets. Local content is becoming more popular in Thailand and the expansion of iQIYI and WeTV is driving growing interest in Chinese-language shows. Series are more popular than movies, usually capturing more than 80 percent plus of video consumed, Couto reported. “In terms of genres, romcoms lead with 25 to 40 percent of video streamed. Sci-fi and fantasy, plus drama and anime, are generally the most popular genres, accounting for two-thirds of viewership. Horror is a significant source, particularly in Singapore, the Philippines and Malaysia. Game, talk and variety are growing but are underdeveloped in comparison to what we’ve seen on television.”
On how to win in the direct-to-consumer space, Couto said that platforms need to be “all in on customers, content, data and technology.” Television should not be counted out, remaining “profitable and scalable” in some markets. Television “often helps key companies fund and anchor their products,” Couto added. “It helps them scale their investments in OTT. This is especially true in India. It’s partially true in Australia. And also for some of the big local players in Indonesia and Japan. In a lot of other markets, TV is going through significant headwinds.”
Having signature hit shows matters, Couto added. “They drive acquisition, and library depth drives engagement.”
The premium AVOD opportunity is significant, Couto added, “particularly as TV broadcasters move online.” Consolidation is also expected, Couto said, especially as broadcaster-owned platforms “come together and create local OTT champions.”