Market Insight

Asian OTT platforms focus on local production

December 05, 2017

Tim Westcott Tim Westcott Director – Research and Analysis, Programming, IHS Markit
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International and local online services are ramping up original production as they roll out to more countries in the Asia-Pacific region. Online services like Hooq, iflix and Viu were high profile at the Asia Television Forum & Market, held in Singapore from 28 November to 1 December last week. Amazon’s head of content for Asia Pacific joined executives from the Asian platforms on a panel session at the event. Executives from Netflix were also in town to negotiate programming deals with local partners.

Hong Kong’s PCCW Media has made its Viu online service available in 16 markets with a mix of licensed Korean, Japanese and Chinese content which has strong regional appeal. Viu operates with ad-supported and subscription tiers and its offer has been expanded with original content, and management said the company has produced 170 episodes of programming this year and aims to double that amount in 2018.

Hooq, backed by telco Singtel and the US majors Sony and Warner Bros, has also added local productions in Indonesia and the Philippines to its line-up of Hollywood movies. The platform has about 20 projects in development, and has had 400 submissions for a film-makers guild created to encourage young talent in the region. Malaysia-based iflix, backed by Catcha Group among others (including Sky), raised $90 million to fund expansion earlier this year and launched its first original production, an eight-part series based on Indonesian film Magic Hour, in March.

Amazon, meanwhile, launched its first original production in India, the cricket-themed drama Inside Edge, this year and is producing 18 series in the country. Amazon has also been highly active in Japan in animation, entertainment and drama production, though it has more recently reined back local production there. Analysis by IHS Markit reveals that Amazon and Netflix have to date focused most of their local origination in the APAC region in South Korea, Japan and Australia – the most developed TV markets in the region. 

Our analysis

Accounting for more than half of the world’s TV households and almost 60% of 4G subscriptions, the Asia Pacific region has obvious potential for entertainment services. However, limited fixed broadband connectivity and low credit card ownership have been important roadblocks in the way of growth  for over-the-top services (see also our recent insight report, .iflix breaks into emerging markets with innovative operator partnerships). 

Outside China - a market where local platforms led by Baidu, Alibaba and Tencent hold sway - the online platforms have forged partnerships with local telcos in which access to their services is bundled in with the operators' data plans. They have also lowered prices in line with local economies and the pricing of local pay TV packages. Netflix has, however, opted for a relatively high price structure in the region. Analysis of pricing in the region by IHS Markit shows that Netflix costs an average of $7.77 a month in the region, compared to $5.22 for Amazon Video, $3.64 for Hooq, $2.74 for Viu and $2.72 for iflix.

Outside the largest APAC countries, Amazon and Netflix have done no local-language production, leaving the field clear for local platforms to become established. It seems likely that the international platforms will increase their localisation efforts in the years to come. For now, IHS Markit estimates that Netflix is the market leader of in the region (excluding China), with an estimated 8.5 million subscribers at the end of the year, ahead of Amazon with three million and iflix with 6.5 million subscribers , Viu around five million and Hooq with over two million paying subscribers.

Organization
Amazon Netflix PCCW SingTel
Research by Market
Media & Advertising
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