May 2, 2016 11:45 pm JST

Southeast Asian telecoms star in video streaming war

Wataru Suzuki, Nikkei staff writer

HOOQ is forming partnerships with mobile operators across Southeast Asia (Photo by Wataru Suzuki)

JAKARTA -- More than three months after launching its video streaming service in Indonesia, U.S. based Netflix is still unable to access more than 150 million mobile phone subscribers of Telekomunikasi Indonesia, or Telkom, the state-owned telecommunications company.

"Fortunately, there is only one [internet service provider] in Indonesia blocking us," Netflix CEO Reed Hastings recently said during the Asia Pacific Pay-TV Operators summit in Bali, referring to Telekom, which has cut off access to Netflix since late January due to alleged violations on content and regulatory standards. "Unfortunately, it's the largest."

Netflix CEO Reed Hastings talked about the difficulties of the Southeast Asian market at a conference in Bali on April 27. (Photo by Wataru Suzuki)

Southeast Asia, where a third of the population is under 20 and internet users are growing thanks to cheap smartphones, has become a major market for social media companies like Facebook and Twitter. But in a region where everything from credit card use and high-speed internet to censorship rules differ widely by country, video streaming services can be a hard sell. Many players are starting to see local telecommunication companies as the key to tackling these bottlenecks.

"You take a model that worked overseas and you start with that model. And then you start realizing all the ecosystem challenges that exist, particularly in Southeast Asia," said Peter Bithos, CEO of HOOQ, a joint venture between Singapore Telecommunications, Sony Pictures and Warner Bros. "So the telecoms' role in payments, distribution, marketing is a vital part of the equation."

Established in 2014, HOOQ recently partnered with Globe Telecom, the second largest telecommunications company in the Philippines, to co-produce HOOQ's first original drama series based on a well-known local movie "On the Job." Production is expected to start in May.

HOOQ and Tribe, the video streaming service of Malaysia-based pay TV operator Astro Malaysia Holdings, have also partnered with local mobile operators to enable subscribers to pay with phone credit. Malaysia-based iFlix enlists operators as "sponsors" that pay for the service under a bundle plan for a certain period of time.

Netflix, which already has partnerships with telecommunication companies Optus and Telstra in Australia and SoftBank in Japan, may be seeking similar deals in Southeast Asia. "[Telecoms] are helping us understand the content landscape," Hastings said, which have led to the production of original programs in these countries.

Video streaming, which eat up more data than text and pictures, is an important driver for telecoms looking to boost data revenue. XL Axiata's Chief Financial Officer Mohamed Adlan bin Ahmad Tajudin said video streaming is partly why the company is aggressively expanding its fast fourth-generation LTE network across the archipelago. "We are not so bullish about 3G, because the experience [of watching online videos] is not the same," he said.

Industry observers agree that it will take some time before video streaming becomes a major profit generator in Southeast Asia. Paying for content in the Philippines is still a fairly novel idea because pirated DVDs are widespread, said Globe Telecom's CEO Ernest Cu.

Still, Cu said video will be "the killer app" that will drive demand for high-speed internet over the longer term. "And we are the gateway to being able to build the consumer service."

Vivek Couto, executive director at Media Partners Asia, a consultancy, said "Southeast Asia is experiencing the first wave of online video platforms."

"We are already starting to see the bundling of content and subscription plans...the role of telecom companies will grow and grow in a lot of these markets," he said.

Asia300

PT Telekomunikasi Indonesia Tbk

Indonesia

Market(Ticker): JKT(TLKM)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 34,813.42M
Shares: 100,800.00M
Asia300

Singapore Telecommunications Ltd.

Singapore

Market(Ticker): SES(Z74)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 46,782.60M
Shares: 16,329.15M
Asia300

Astro Malaysia Holdings Bhd.

Malaysia

Market(Ticker): KLS(6399)
Sector:
Industry:
Consumer Services
Broadcasting
Market cap(USD): 3,111.25M
Shares: 5,209.52M

SoftBank Group Corp.

Japan

Market(Ticker): TKS(9984)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 91,452.36M
Shares: 1,100.66M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access (5 articles per month without subscription)
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access (5 articles per month without subscription)
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.