May 14, 2017 12:00 pm JST
Companies in focus

Asian streaming services stand strong against US rivals

HOOQ, iflix, Hotstar have the content, capital to edge Netflix, Amazon

KEN KOYANAGI, Editor-at-large, Nikkei Asian Review

BALI, Indonesia -- Asian TV has long been known for its rice porridge programming. Public broadcasters reigned over the region, but their shows rarely wavered from the monotonous.

As internet connectivity improved, though, online video services blossomed and the situation rapidly improved.

Now these services are fighting pitched turf wars -- among themselves, with regional players and against the big U.S. pioneers.

Among Asia's video-streaming services, iflix, HOOQ and Hotstar seem to be edging ahead of others. They are even proving tough competitors that the U.S. biggies are having trouble pushing around.

Every year in late April, media industry VIPs, content creators and online media executives gather on Indonesia's resort island of Bali for the Asia-Pacific Video Operators' Summit (APOS).

Last year, the focus was on Netflix CEO Reed Hastings; the conference convened shortly after the company announced its global launch in 130 markets, including some in Asia. This year, as neither Netflix nor Amazon.com sent top leaders, the spotlight was on the chiefs of local players.

The summit's focus reflected reality. Neither Netflix nor Amazon is gaining dominance in any Asian market. Instead, they are facing strong competition from local and regional services.

Add-on bundles

Currently both offer subscription-based video streaming in every Asian market except China, where online media are required to store content data on the mainland and to self-censor. But most other Asian markets are led by strong local and regional providers.

During the APOS gathering, Netflix announced that it has decided to take a back door into China -- it is licensing iQiyi, a video-streaming business run by Baidu, China's search giant, to carry some of its original shows.

Bill Holmes, global head of business development at Netflix, told the Nikkei Asian Review that the company has no intention to launch its streaming service in China "at this moment."

In South Korea, Taiwan and Hong Kong, market leaders are operated by telecom carriers or media companies. This allows the providers to sell bundled services to their customers. Even streaming providers that are operated by startups are as part of a conglomerate often partner with telecom carriers.

Among them, iflix from Malaysia and HOOQ from Singapore seem to be successfully building a visible presence in Southeast Asia and beyond. And Hotstar is becoming the top online streaming service in India, where the numbers of mobile broadband users are rapidly increasing.

All three are backed by global capital. Iflix is funded by Liberty Global of the U.S., Sky of the U.K., Zain of Kuwait, PLDT of the Philippines and a U.S. merchant bank Evolution Media Capital. HOOQ is a joint venture by Singapore Telecommunications, Sony Pictures Entertainment and Warner Brothers. Hotstar is a subsidiary of India's major multichannel TV programmer Star India, which is a 21st Century Fox company.

Being the Android phone

"We are No. 1 in Indonesia, and we believe we are co-leading in the Philippines and in Thailand," said Peter Bithos, chief executive of HOOQ, without disclosing any specifics.

Bithos emphasized the importance of original local content to beat competitors, announcing a launch in Indonesia of "Critical Eleven," a movie that HOOQ jointly produced with PT Kharisma Starvision Plus, a major Indonesian film studio.

Iflix has an abundance of local shows, both originals and purchased, on its shelf. On the other hand, Netflix and Amazon have wide operations across Asia but are not strong in local content. Mark Britt, co-founder and chief executive of iflix, brushed off the U.S. competition. "We don't believe the thesis that Netflix is going to achieve a global monopoly is true," he said. He emphasized iflix's strategy to optimize its service, including pricing, to ordinary consumers in emerging markets.

He said iflix's service requires lower network speeds and allows customers to download content before watching, making it suitable for those in countries with slower networks. And the service is priced in the $2 to $3 range everywhere, far lower than Netflix's monthly fees, which are around $10.

Already, iflix has launched services in Vietnam, Myanmar, Sri Lanka, Pakistan and Saudi Arabia. It is preparing to enter Nigeria and Ghana. "We go to the places nobody else cares about," Britt said. According to Britt, iflix has grown to around 5 million customers since it launched in 2014.

Both Bithos and Britt sounded confident that they are reaching a larger population than Netflix, which they say is aimed at a smaller group of high-income consumers. "Netflix is like a $1,000 iPhone," Britt said, "while iflix is a $200 Android phone."

Where cricket is king

In India, Hotstar is rapidly adding viewers with a hybrid business model combining free, ad-supported content and a subscription-based service for premium content. It added sports programs, cricket matches in particular, to make the subscription option more compelling to Indian viewers.

It charges about $3 per month for live sports matches and new movies, while nonpaying users can watch cricket matches on a five-minute delay.

The cricket matches were the big catalyst. The total number of app downloads on iPhones and Android handsets reached 200 million in February, up from 50 million in March 2016. "Paying subscribers are increasing," said Ajit Mohan, Hotstar chief executive, without disclosing numbers.

Referring to the widespread view that charging for content in India is unfeasible, Mohan said: "I don't believe it. We actually opened up that window in the last two years."

Hotstar kept all its video free of charge until last spring, when it also started streaming cricket matches. "Our first task was to build the category [of mobile online video]," Mohan said.

An industry source in India who recently researched the monthly active users of major video-streaming apps for iOS and Android in India found that Hotstar is leading the pack by a wide margin.

In March, Hotstar's monthly active users totaled 57 million, while the app for Reliance Jio Infocomm's mobile video service attracted 48 million. Other players, including Netflix and Amazon, had fewer than 10 million monthly active users in March. Netflix's numbers that month were about 9% more than in September. Hotstar grew by 89% during the same period.

No easy route

Asia's video streaming industry is expected to grow rapidly over the coming years.

Media Partners Asia, a consultancy that organizes the APOS event, predicts the industry's total Asia-Pacific revenue will grow 2.7-fold from $17.7 billion in 2017 to $48 billion in 2022. That would double its share of the industry from 15% to 30%.

Revenue from free broadcast TV, on the other hand, is expected to remain flat at $44.8 billion through 2022 and be overtaken by online streaming.

Digital TV Research of the U.S. predicts global subscription-based video on-demand service subscribers will reach 428 million across 200 countries in 2021. It sees China accounting for 74 million, second only to the U.S.

Separately, Media Partners Asia expects the number of subscribers in the Asia-Pacific region outside of China to reach 80 million in 2022. Thus the entire number of subscribers in the Asia-Pacific region will likely reach somewhere around 154 million in the early 2020s.

Vivek Couto, co-founder and the head of Media Partners Asia, declared in Bali that the line between traditional TV channels and online video platforms will "dissolve" in the next few years. "Basically," he said, "everything will merge."

With so many players competing in so many markets, it is too early to predict who will eventually prevail. One thing for sure is that no market will be easy to conquer, not even for Netflix or Amazon.

 

 

Ownership of Asian streaming services

REGION

BRAND

OWNER

pan-Asia

Viu

PCCW

 

iflix

Sky (UK), Catcha Group (Malaysia), Evolution Media Capital (US), PLDT (Philippines), Liberty Global (US), Zain (Kuwait), Emtek Group (Indonesia)

 

iQiyi

Baidu 

 

Catchplay

Cher Wang (HTC chairperson), other investors

 

HOOQ

Singapore Telecommunication, Sony Pictures Entertainment, Warner Bros. Entertainment

China

Youku.com

Alibaba Group Holding

 

LeTV

Listed in Shenzhen, controlled by LeEco, which is controlled by founder Jia Yueting

 

Fun.tv

Private

 

Mango TV

Hunan Broadcasting System, China Mobile

 

PPTV

Suning Commerce Group (Owner of Inter Milan)

 

Tudou.com

Alibaba Group Holding

 

Tencent Video

Tencent Holdings

South Korea

oksusu

SK Telecom

 

pooq

KBS, SBS, MBC

 

Tving

Listed on KOSDAQ

 

WATCHA PLAY

Venture capitals

 

Olleh TV

National Pension Service, Listed on Korea Exchange

 

Uflix Movie/U+HDTV

Listed on Korea Exchange

Vietnam

Danet

BHD (local film producer)

 

Fim+

Galaxy Media & Entertainment (local film producer)

 

Clip.vn

Vega

 

FPT Play

FPT Telecom

 

MyTV

VNPT (State-owned telecom)

Thailand

Muvi

Advanced Info Service (AIS)

 

PrimeTime

Private investors

 

Hollywood HDTV

Private investors

 

Doonee

STG Mediaplex

Taiwan

Chunghwa Telecom MOD

Listed on Taiwan Stock Exchange

 

LiTV

Tivo (US), John Hsuan (UMC honorary vice chairman), other investors

 

KK TV

KDDI (Japan), Chunghwa Telecom, HTC, other investors

Japan

Hulu

Nippon Television Network

 

dTV

Listed on Tokyo Stock Exchange

 

U-Next

Listed on Tokyo Stock Exchange

India

Hotstar

21st Century Fox

 

Jio TV/Cinema

Reliance Industries

 

Sony LIV

Sony Pictures Entertainment

Indonesia

Genflix

Sinar Mas Group

 

Tribe

Astro Malaysia

 

Catchplay

Cher Wang (HTC Chairperson), other investors

Philippines

Blink Now

SM Prime Holdings

 

Fox+

21st Century Fox

Malaysia

tonton

Media Prima 

Hong Kong

myTV Super, GOTV

TVB

Asia300

PLDT, Inc.

Philippines

Market(Ticker): PHS(TEL)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 7,572.37M
Shares: 216.05M
Asia300

Singapore Telecommunications Ltd.

Singapore

Market(Ticker): SES(Z74)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 44,069M
Shares: 16,329.2M
Asia300

Baidu, Inc.

China

Market(Ticker): NAS(BIDU)
Sector:
Industry:
Technology Services
Internet Software/Services
Market cap(USD): 66,041.29M
Shares: 34.68M
Asia300

HTC Corp.

Taiwan

Market(Ticker): TAI(2498)
Sector:
Industry:
Electronic Technology
Telecommunications Equipment
Market cap(USD): 1,954.77M
Shares: 821.90M
Asia300

Alibaba Group Holding Ltd.

China

Market(Ticker): NYS(BABA)
Sector:
Industry:
Retail Trade
Internet Retail
Market cap(USD): 301,317.15M
Shares: 2,430.17M
Asia300

China Mobile Ltd.

Hong Kong

Market(Ticker): HKG(941)
Sector:
Industry:
Communications
Wireless Telecommunications
Market cap(USD): 226,310M
Shares: 20,475.5M
Asia300

Suning Commerce Group Co., Ltd.

China

Market(Ticker): SHE(002024)
Sector:
Industry:
Retail Trade
Electronics/Appliance Stores
Market cap(USD): 14,343M
Shares: 9,310.04M
Asia300

Tencent Holdings Ltd.

China

Market(Ticker): HKG(700)
Sector:
Industry:
Technology Services
Internet Software/Services
Market cap(USD): 338,027M
Shares: 9,477.48M
Asia300

SK Telecom Co., Ltd.

South Korea

Market(Ticker): KRX(017670)
Sector:
Industry:
Communications
Wireless Telecommunications
Market cap(USD): 18,334.9M
Shares: 80.74M
Asia300

Advanced Info Service Public Co., Ltd.

Thailand

Market(Ticker): BKK(ADVANC)
Sector:
Industry:
Communications
Wireless Telecommunications
Market cap(USD): 15,548.8M
Shares: 2,973.1M
Asia300

Chunghwa Telecom Co. Ltd.

Taiwan

Market(Ticker): TAI(2412)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 27,571.7M
Shares: 7,757.45M
Asia300

Reliance Industries Ltd.

India

Market(Ticker): BOM(500325)
Sector:
Industry:
Energy Minerals
Oil Refining/Marketing
Market cap(USD): 67,410.62M
Shares: 3,251.43M
Asia300

Astro Malaysia Holdings Bhd.

Malaysia

Market(Ticker): KLS(6399)
Sector:
Industry:
Consumer Services
Broadcasting
Market cap(USD): 3,185.39M
Shares: 5,209.52M
Asia300

SM Prime Holdings, Inc.

Philippines

Market(Ticker): PHS(SMPH)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 19,036.1M
Shares: 28,879.2M
Asia300

PCCW Ltd.

Hong Kong

Market(Ticker): HKG(8)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 4,516.23M
Shares: 7,719.64M

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.