Study: APAC premium OTT gaining traction

Premium online video services have started to gain traction in Asia Pacific but have a long way to go before achieving mass adoption, according to a new report from independent consulting and research provider Media Partners Asia (MPA). MPA, in partnership with consumer research specialist BDRC Continental, has surveyed more than 15,000 Internet users across eight markets for the latest edition of its Asia Pacific Video Consumer Study, which is published twice a year. The July 2017 report covers Australia, Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Taiwan and Thailand.

Take-up of premium online video services, including ad-supported and subscription-based offerings, remains relatively low, the survey suggested, reflecting the early stages of transition for user behaviour as well as business development in both developed and emerging markets. Global platforms such as YouTube, now joined by Facebook, are establishing domestic online video strongholds, reaping the rewards of marketplaces that are still largely geared towards ad-supported services. However, the report points to encouraging momentum for subscription and freemium-based offerings in Australia and Hong Kong in particular, as well as early signs of momentum in markets such as the Philippines.

“Premium content providers with ad-supported and freemium online video services have much to do if they want to cater to mass audiences,” advised Aravind Venugopal, MPA vice president. “Netflix is putting in a strong performance in Australia, and has started to show deeper usage patterns in niche segments across Southeast Asia and Taiwan. iQiyi has also enjoyed a good start in Taiwan. Freemium offerings from local broadcasters are also showing promise. MyTV Super from Hong Kong broadcaster TVB has momentum, while Toggle, from Singapore broadcaster Mediacorp, has attracted a respectable audience. PCCW has managed to scale usage and adoption across its OTT offerings in Hong Kong. In Southeast Asia’s growth markets, actual engagement and usage of ad-supported and subscription-based premium video services is low among internet users, although watch time among engaged users is growing in certain markets. Online video is at an early stage of development in Indonesia, the Philippines and Thailand. While reach has substantially grown for some OTT platforms through wholesale telco partnerships, usage is low, although there is positive momentum in markets like Indonesia.”

MPA’s Asia Pacific Video Consumer Study explored a variety of areas shaping uptake of premium online video services, such as: online video content and genre preferences; net promoter scores for specific services; awareness and use of pirated alternatives; uptake of broadband (fixed and mobile; prepaid and postpaid) and pay-TV subscription plans; device usage and streaming behaviours; reasons behind churn; attitudes towards online video advertising; and a deep dive into individual OTT players in each market.

Other key findings:

  • Take-Up and Usage. Take-up of premium online video services was highest in Hong Kong among the eight markets covered by MPA’s Asia Pacific Video Consumer Study. This was thanks to the popularity of catch-up and freemium pay services from the territory’s two leading players: telecoms leader PCCW, which runs a free-to-air and a pay-TV service as well as OTT offerings including Viu and ViuTV, and terrestrial leader TVB, which operates OTT offerings MyTV and MyTV Super.

Individual services also proved to be popular in other developed markets, notably including Netflix in Australia, Toggle in Singapore and iQiyi in Taiwan. In general, engagement time among Internet users is relatively low, especially on mobile, reflecting widespread growth potential across developed and emerging markets, especially for premium ad-supported services. Most ad-supported services, including those backed by free-to-air broadcasters, were used by no more than of 15 per cent of Internet users on a regular basis, the survey findings indicated.

  • Net Promoter Scores. In general, premium online video services have much to do to win over hearts and minds in Australia, Southeast Asia, Hong Kong and Taiwan. Net promoter scores – a measure of how likely current and past customers are to recommend a service – resided in negative territory for most offerings covered by the Asia Pacific Video Consumer Study. There were some notable exceptions, including Netflix, whose performance has generally improved since the first survey in 2016, as well as local freemium offerings in Hong Kong, the Philippines and Singapore. The NPS score will remain negative for most services in this first phase of OTT development because customer churn is so high, especially across Southeast Asia, Hong Kong and Taiwan. As a result, detractors will inevitably outweigh promoters.

Current and past customers in Malaysia, Singapore and Taiwan tended to regard all or almost all premium online video services in a negative light. User satisfaction was more evident in Australia, Hong Kong and Indonesia and the Philippines, where positive scores were more frequent and most negative scores less pronounced. Thailand stood out as the most enthusiastic market covered in the survey, reflecting in part the diversity of the segment with a good spread of local ad-supported and subscription-based services enjoying positive scores.

  • Overlap between SVoD and pay-TV. In developed markets with high levels of pay-TV penetration, SVoD (subscription video-on-demand) customers are likely to also have access to pay-TV. In Taiwan for example, 94 per cent of SVoD subs also have a pay-TV subscription. The overlap is almost as high in Hong Kong and Singapore.

In emerging markets, with lower levels of pay-TV penetration, a different competitive dynamic is taking shape. In Indonesia and Philippines, less than a third of SVoD subs have a pay-TV subscription. Telcos in both markets are bundling SVoD services with fixed and mobile broadband plans, subsidising subscription payments and data consumption. SVoD subs have access to between two to three paid services on average across the eight markets covered by the survey.

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