China Continues to Lead AsiaPac OTT Revenues

HONG KONG/SINGAPORE/MUMBAI: Asia-Pacific online video revenues are expected to hit $35 billion by 2021, up from $13 billion this year, with China accounting for 76 percent and four markets—Japan, Australia, Korea and India—taking in 17 percent of the total pie, according to new research from Media Partners Asia (MPA).

Asia Pacific Online Video Distribution covers 14 markets in the region, looking at both advertising and subscription revenues for online, mobile and fixed broadband platforms. “The growth of broadband, combined with slow but progressive change in content licensing, is driving demand for online video services,” said Vivek Couto, MPA’s executive director. “However, the distribution of driver local content online is modest, especially outside of China, India and Korea. This is evident in Southeast Asia, where broadband penetration is growing rapidly but from a low base in most markets. Telecom operators in these markets are investing in broadband networks and integrating with online video platforms to help drive subscriptions. This allows online video operators to utilize carrier billing, overcoming market limitations in payment infrastructure. It’s a bet to drive online video consumption in the short term and ARPUs in the long term.”

Online video advertising will account for 22 percent of Asia Pacific digital ad spend in 2021, up from under 15 percent last year. Online video ad sales will reach about $22 billion by 2021, compared with $9 billion in 2016. China will continue to dominate, generating 70 percent of the online video advertising pie in five years’ time.

“Outside of China, online video advertising is just starting to get going,” Couto told World Screen today. Gains are being seen in Korea, led by a deal between online search giant Naver and SmartRep, an alliance between Korea’s biggest content producers, including CJ; and India, where platforms like HotStar are starting to see traction.

The number of paying SVOD customers is expected to hit 360 million in 2021, up from 177 million this year, again the bulk in China. SVOD revenues will grow from $3.7 billion this year to $13 billion, 80 percent of which will come from China. Southeast Asia will grow rapidly from a low base, hitting about $200 million in SVOD revenues in 2021.

“There are close to 35 streaming platforms in Southeast Asia,” Couto tells World Screen. “There are 140 major OTT platforms [region wide] and 80 are offering subscriptions.”

Fixed broadband subs will reach 345 million this year, rising to 425 million by 2021. Average broadband household penetration will grow to 41 percent in 2021. Mobile broadband will reach 79 percent of the Asia Pacific population by 2021, versus 46 percent in 2016.

Couto notes that the local production sector in AsiaPac is expected to see a boost from the gains in online video. “We’re seeing a lot of interest in production for the first time,” Couto notes, highlighting Japan, Australia and Southeast Asia as markets where online platforms are investing in originals.

Platforms are also licensing local content, mostly library fare, as they build their slates. The greatest competition, since the arrival of iflix, HOOQ and Netflix, has been in U.S. series licensing, with prices beginning to inch up, Couto observes. Demand will also be led by the Chinese platforms that have started expanding to other markets, among them iQIYI and LeEcO. Couto believes that in addition to the Hollywood studios, other content providers will benefit from the gains in online video usage, notably those in the niche spaces like kids, factual and sports.

Couto also highlights the role of social-media platforms in the content business. “The social platforms see a long-term business in video. They will vie for a space at the content distribution table in Asia.”

In addition, “the telcos are getting much more involved and powerful in the picture. The key thing is, How does the hard bundling of content with broadband work?”

Those subjects and more will be on the agenda at MPA’s upcoming Asia Pacific Video Operators Summit (APOS) in Bali later this month.