The option of choice has expanded exponentially over the past decade, due to one factor: high-speed internet. Allowing massive amounts of data to be pumped through fi breoptic connections in an instant has up-ended the table. Not only can content be streamed through the internet in real-time now, content does not have to be dependent on strict schedules also. TV is now about watching regardless of location and time.
The trio of expanded televised content systems that have spun out of the internet are Video on Demand (VOD), Internet Protocol TV (IPTV) and Over-The-Top (OTT). VOD refers to content that is streamed when the viewer requests it, IPTV being scheduled content streamed over a direct internet connection (as opposed to satellite/cable) and OTT, content streamed on the back of an existing internet connection.
In practice, some of the more popular services are hybrids – the BBC’s iPlayer, Hulu and Netfl ix are all VOD services delivered OTT, while GoogleTV, Boxee, and MeeGo are IPTV services with elements of VOD, some using OTT connections.
The potential and commoditization for such systems is vast. AC Nielson estimates that some 80 per cent of internet-enabled Americans watch videos online, with a similar level for Western Europe. For the fi rst half of 2011, VOD service Netfl ix represented 24.7 per cent of all internet traffi c in America, while Hulu, jointly owned by NBCUniversal, Fox Entertainment and Disney, accounted for almost 20 per cent. And the appeal is manifold – for providers, it is way of diversifying revenue and sparking competition, while for broadcasters, it represents new ways of reaching new markets by leveraging new technology.
While such services are now entrenched in North America and Europe, the situation in Asia is more diverse. The two key factors governing its growth across an economically heterogeneous continent seem to be; one: industry maturity and two: internet infrastructure. Adoption is strongest among the more developed markets – Hong Kong is the birthplace of VOD, where a pay-per-view movie service debuted in 1990, while Japan, Singapore, South Korea and Australia are beginning to take such services more seriously.
Malaysia and Thailand are also developing rapidly, while India is forging ahead on the back of its growing middle-class internet backbone. China and Vietnam are still in their infancy and almost non-existent in the Philippines, as the lack of broadband infrastructure there limits content to a few VOD services via satellite or through internet portals. But growth is there.
“The emergence of such services in Asia points to the growing appeal of convenience, opportunity and accessibility, allowing media owners to build stronger relationships with consumers who are seeking access to our content on TV, online and on mobile, as well as provide the opportunity to increase awareness and revenue on multiple mediums on and beyond the TV screen,” said Nam Ji Hee, the Vice President of Digital Media (South-East Asia, Greater China and Korea) for Viacom International Media Networks.
In other words, the internet has allowed consumers – via TV, smartphones, tablets and even devices such as the Sony PlayStation Portable – to access content at any time. Viacom, for instance, provides its content to cable and telecommunications companies for their VOD and IPTV subscription platforms, the latest including Nick Jnr. and MTV Live HD for the Telekom Malaysia’s HyppTV IPTV service, streamed via its Unifi connection. Turner Broadcasting Systems, not only provides content but actively pursues other devices, streaming its news shows OTT on smartphones and portable computers.
“Non-linear viewing is a clear trend amongst the younger segment of the audience and it is a trend that the entire industry must keep abreast of,” says David Simonsen, Vice President of New Business/ Revenue for HBO Asia (which launched its VOD service in Hong Kong in 2007), referring to the growing trend of the younger, techsavvy generation eschewing viewing programmes on a static television in favour of on-the-go via their Android phones or iPad tablets. But while broadcasters explore and expand in the mobile arena, operators here still see the traditional pay-TV model as their bread and butter.
“These services, in Asia, are an emerging alternative distribution platform for us. However, it is still an alternative at the moment. As we expand into it, we have to ensure that it does not jeopardize or displace our pay-TV market. It has to be a mutually benefi cial revenue model,” says Ringo Chan, Senior Vice President for Syndication, Wireless and Interactive Content Solutions and Distribution, Turner International Asia Pacifi c. “So, we have to do it right by planning it right. In India, for example, where the mobile penetration rate (60%) is higher than the broadband penetration rate (1.5%), it makes sense to invest not only in pay-TV but in catering to the huge mobile population as well. We also want to be able to engage the viewer, not be passive. With our CNN iReporter segments for example, we give anyone with a camera and an opinion a chance to be part of our channel.”
And with that increased interactivity, it is hoped that it will groom a higher visibility – stickiness, in marketing jargon – and respect for the content and brand; a tricky situation in Asia, where legality is an issue. Or as Simonsen puts it – “Copyright and piracy are always concerns in Asia.”
Ricky Ow, Senior Vice President and General Manager, Networks, Asia for Sony Pictures Television, agrees but sanguinely: “We believe that consumers will be less compelled to engage in illegal downloads if we can offer them the right incentive not to do so and there is an opportunity to convert them by offering a more premium viewing experience. With a price point that the market is willing to pay, combined with education, such services may prove to be an opportunity for us to address the leakages issue.”
This could benefi t the industry as a whole, which remains hamstrung by the piracy issue. In North America, it has been estimated that illegal downloads began to fall once broadcasters began providing their content paid-on-demand over iTunes and Hulu. A local example is South Korea, where new viewing VOD technologies has given viewers greater choice but entry cost has been kept low. With this in place, the country has actually seen a decline in illegal consumption.
Other factors that could help spur this trend? “Broadband infrastructure development will be critical,” Simonsen, HBO. “Affordable payment options to encourage demand and acceptance of online commerce/pay services,” Nam, Viacom. “Ease of access and competitive internet/telco data plans to stimulate content consumption,” Chan, Turner.
In other words, good broad-based infrastructure that keeps services affordable. While that is the remit of the government, the technology behind the delivery of VOD/IPTV/ OTT services is also crucial. NDS, which provides solutions enabling secure delivery of digital content to set top boxes (STBs), PCs and mobile devices, for VOD, IPTV and OTT as well as traditional pay-TV, is optimistic about the potential for the region.
“We see that VOD, IPTV and OTT services will complement, but not replace traditional TV viewing,” explains Paul Jackson, Chief Engineer of NDS, Asia-Pacifi c. “These services work best when they are combined to offer a greater choice of content and deliver a higher quality experience – with HD content and technologies, which overcome the challenges of limited bandwidth – to a wider range of devices.”
Pay-TV used to be the bastion of specialized media companies; and while the incumbents are busy enriching their offerings – Malaysia’s Astro launching its B.yond IPTV service, India’s Tata Sky expanding its VOD services, Cartoon Network launching its own on-demand channel – competition is coming from non-traditional players. Across Asia, telecommunications companies, SK Broadband in South Korea, Singtel in Singapore, PCCW in Hong Kong, for example, plus start-ups MyWay and iControl in India, FetchTV and Juno in Australia, Ving in Thailand, are hastily joining the market.
The telco invasion makes sense. So much of VOD/IPTV/OTT services depend on the strength of internet connectivity, the infrastructural domain of telcos.
Groovia TV, Indonesia’s fi rst IPTV service, was launched this June, not by existing satellite pay-TV providers Astro Nusantara or Indovision – but by the State telco, Telkom.
Andrini Novie, the General Manager of Marketing and Communications for TelkomVision states that “To support Groovia, Telkom is rapidly increasing broadband access… The capacity of true broadband access in Indonesia is currently only 21 per cent of the total high-speed internet network. We will increase this to 85 per cent by 2015, which will help us roll out Groovia.”
In such countries where broadband infrastructure is still being developed, this investment entails high costs, a fact that Novie admits. “The penetration rate for even pay TV in Indonesia is low (10%), compared to 30 per cent in Malaysia or 80 per cent in India, so our target market right now is the premium viewer segment. But the potential is there. We see GrooviaTV as being the fi rst step to create a Telkom communications ecosystem, where our broadband and IPTV services support each other.”
As fl edglings like Groovia start out, experience in other more developed markets show that it is achievable. StarHub in Singapore, for example, launched its VOD service; StarHub Demand TV, in 2008.
“We fi nd that our on-demand service acts as a good complement to our linear content offerings,” said Iris Wee, StarHub Vice President of Home Solutions and Content. And in a market where content is already widely available, she acknowledges that customers are now more discerning. “Therefore we see this as an opportunity to collaborate with content partners to provide OTT and on-demand services, as well as deploying broadband internet protocol networks for IPTV, to offer our customers a ‘TV anywhere’ proposition,” she added.
In the past, the television set monopolized commercial delivery of visual content to households; owning a television itself was an asset. This has changed. Today, television screens are delivery terminals (albeit, very high quality ones) and the grand plan is for content to be accessible anywhere and everywhere. Start a movie on the TV from the living room, continue it on a secondary screen in the kitchen and on a mobile device on the train, and cheer at the rousing fi nale on your offi ce desktop. That’s for the future, VOD/IPTV/OTT are the bridge to get consumers there.
While the will is there, the acceleration is uneven. “In places with highly developed broadband infrastructure, services such as IPTV already have a signifi cant market share and contribute to vibrant competition,” shared Paul Jackson. “Over time, as broadband speeds increase, more services will be rolled out complementing the existing pay-TV services rather than replacing them.”
Slowly and steadily, the advent of VOD/IPTV/OTT services will change the way content is consumed across Asia, faster in some and inert in others. But it is coming. And it will be a fascinating glimpse into the future, where the luxury of choice Ringo Chan will be paramount.