The burgeoning interest in on-demand streaming video, driven by OTT service offerings such as Netflix and Amazon Prime Instant Video, together with the rapid proliferation of Internetenabled devices, is one of the major market trends at the moment.
The broadband internet and myriad connected devices are changing the rulers of the game in TV-content development, production, licensing, delivery and viewing. By 2012, search engine giant Google, which owns the video-hosting YouTube platform, had already recognised that traditional TV was no longer dominating viewers’ attention. From the days when the key players were terrestrial broadcasters and the upstarts were the cable and satellite services, we are now approaching the next generation of audiovisual content operations.
The latest catch is to use the internet to deliver live and on-demand TV that mirrors the linear broadcast channels. These Over-The-Top (OTT) subscription-funded and/or free ondemand streaming services include Netflix, Hulu, Amazon Instant Video, Canal+’s subsidiary Canalplay and a host of Asian OTTs that have emerged over the last 8 months. Asia is the last frontier for some of these big OTT networks that have monopolised the globe over the last five years.
Netflix got a head start, going ‘live’ in Japan on 2 September after opening an office in Tokyo earlier this year. The Japanese launch marks Netflix’s first foray into Asia. Netflix’s service launched in the country with a selection of Japanese TV series and films, as well as Netflix originals and global hits such as Marco Polo, Sense8, Daredevil and documentary Virunga. Meanwhile, Amazon recently confirmed plans to launch its Prime Instant Video service in the country later last month with a range of content, including U.S. and Japanese movies and TV programmes.
Jim O’Neill, principal analyst at Ooyala, said Amazon enjoys brand recognition in Japan that could make it a serious threat to Netflix as both U.S. companies roll out video offerings almost simultaneously in the country.
Further, with the arrival of the two biggest global OTT players, Japan’s streaming market is entering a new level of competition. “Netflix and Amazon brings more to the fight: deep, deep pockets; experience in expanding to and adapting to new international markets,” O’Neill told SNL Kagan.
U.S.-based Hulu LLC already operates in the country, having launched in Japan in September 2011, and Malaysia-based OTT platform iflix, which mainly caters to Southeast Asia, is rumoured to be looking at a Japanese launch by year’s end.
That leaves Netflix as one of the companies with the most brandbuilding ahead of it as it fights to capture the interest of Japanese consumers. Netflix has already started to reach out to local players, forming partnerships with a diverse range of companies. In August, it inked a deal under which SoftBank Corp. will exclusively offer a fully integrated Netflix experience, for instance. SoftBank customers can sign up for Netflix at SoftBank shops, major electronics retailers and through SoftBank’s website and call centers, and Netflix’s monthly fee will be added to their SoftBank bill.
Nicole McCormick, a principal analyst at Ovum, stressed that paid products have struggled to gain traction in Japan as there is a huge amount of free content available in the country. “The question is, what content has Amazon got that does not already exist in Japan,” McCormick told SNL Kagan. “Western content does not fare well in Japan,” she added.
Netflix appears to be aware of this dilemma. It recently confirmed that Hibana, the company’s first original Japanese series, based on a novel by Naoki Matayoshi, will premiere globally in 2016. Earlier, Japanese broadcaster Fuji Television Network Inc. announced that it had teamed up with Netflix to create original content. Netflix is also rumoured to be working with several Japanese production companies to push out content in Japanese language. Japanese talent agency Yoshimoto Kogyo has agreed to produce a variety of shows and dramas for Netflix, which is also negotiating partnerships with TV channels, movie companies and publishers to provide original programming.
Netflix is moving aggressively to push into other markets in Asia. The company confirmed on 8 September that it will launch in South Korea, Singapore, Hong Kong and Taiwan in early 2016. The Asian expansion is part of an ambitious global rollout that Netflix expects to complete by the end of 2016.
Clement Teo, a senior analyst at Forrester Research in Singapore, said the timing is right for OTT players to consider Asia, especially in countries with solid, reasonably priced mobile broadband and wired infrastructure and a high penetration of PCs, smart TVs and mobile devices.
O’Neill agreed that where Netflix goes, many may soon follow. “The rest of Asia… it’s potentially a treasure trove for any VOD player, [as] there are lots of mobile devices, tremendous connectivity and a broad acceptance of technological change,” he said.
Global OTT TV revenues slated to hit $51b in 2020 Global OTT TV and video revenues covering 64 countries are expected to reach $51.1 billion in 2020, jumping from $4.2 billion in 2010 and an expected $26 billion this year, according to Digital TV Research.
The U.S. will remain the dominant territory, with revenues rising by $16.6 billion between 2010 and 2020 to $19.1 billion. China’s OTT TV and video revenues will rocket from just $40 million in 2010 to $2.8 billion in 2020, pushing China up to fourth place in the world rankings.
SVoD (subscription video on demand) will become the largest revenue source in 2020, overtaking OTT advertising and adding $14 billion between 2014 and 2020, going from $7.6 billion to $21.6 billion. By 2020, there will be some 249 million SVoD homes, up from 20 million in 2010 and an expected 117 million by end-2015, according to Digital TV Research.
The U.S. will contribute 70 million SVoD homes to the 2020 total. In 2010, the U.S. generated SVoD revenues of $753 million, a figure that is expected to climb by 765% to reach $6.5 billion in 2020.
“SVoD has developed even faster than we expected in our last edition a year ago,” said Simon Murray, principal analyst at Digital TV Research. “Some of this growth was spurred by Netflix’s aim to establish operations in 200 countries by end-2016.”
According to Digital TV Research’s Global OTT TV & Video Forecasts report, Netflix is estimated to have 69.90 million paying subscribers by end-2015, up by 28 per cent from 54.48 million at end-2014. International paying subscribers will reach 26.36 million by end-2015 – up by 9.58 million (or by 57 per cent) at end-2014. While the service’s home U.S. market will provide the majority, with 43.5 million, other international markets are set to boost numbers significantly, including the UK with 4.9 million, Canada with 3.9 million and Brazil with 3.4 million.
Why Netflix?
A new brand study of streaming providers seeking to understand how consumers perceive each brand has revealed that some consumers believe Netflix can wholly replace other entertainment options, Hulu is irritating users with its mandatory commercials and Amazon Prime Instant Video isn’t differentiated from Amazon Prime shipping.
The research, carried out by consumer insights firm iModerate, and backed by social data from Luminoso, looked past the numbers to understand how consumers perceive each brand, including where they’re excelling and falling short, and how each is being used.
“Nearly 40 per cent of households now subscribe to a video streaming service, and while the industry has closely tracked their gains and losses, no one has really looked at consumer perceptions of these brands until now,” said iModerate partner Adam Rossow.
iModerate’s study of 2,500 consumers nationwide found that Netflix is the resounding favourite out of the three dominant streaming services. The form says this popularity is not surprising, as it’s also reflected in market share, with Nielsen reporting that 36% of U.S. households subscribes to its service, far more than its nearest competitor.
What may come as a surprise is that Netflix was the sole service called out for its potential to supplant cable and satellite TV, and even unseat networks. In fact, 20% of participants said they’re confident Netflix can replace other video entertainment options altogether. Many respondents also predicted that Netflix will force the hand of cable providers by setting a new standard for quality entertainment that’s affordable and on-demand.
The iModerate study reveals that variety is the No. 1 factor, with participants citing it more than any other benefit. Not only does Netflix offer an array of well-loved TV shows and movies, but also a number of newer original series.
Netflix is also known for being addictive and a binger’s delight. Numerous respondents said they like to convene with friends and watch entire seasons of TV shows, and some even referred to having a “Netflix day” or “Netflix binge” when they’re sick, lazy or want to reward themselves.
Overall, consumers are only vaguely familiar with the Hulu brand, and study participants view it primarily as a novel way to stream TV shows, not necessarily movies. The ability to watch a favourite TV show after it airs was cited as a main benefit of Hulu’s service. That said, Hulu seems to be suffering from either a lack of awareness or benefits-oriented positioning, as 14% of participants couldn’t name a single benefit when asked.
Although many indicate they’re eager to try out Hulu, they tend to be most interested in watching a specific show, rather than seeking out content once they’ve arrived. This suggests that Hulu should institute more original programming and a friendlier interface to retain first-time viewers.
Study participants overwhelmingly called out one big downside of Hulu’s service – the compulsory commercials. A large number view the ads with irritation and disdain, and contend that, “once you start paying for Hulu, there really shouldn’t be commercials.” Nielsen suggests that Amazon Prime Instant Video is gaining ground against its rivals with 13% of household penetration, yet iModerate’s research paints a different picture of the brand’s stickiness in the marketplace.
Many iModerate study participants believe Amazon Prime Instant Video lacks defining characteristics or value. Even more grave for the brand is that consumers aren’t differentiating between Amazon’s Prime streaming service and its two-day shipping service. When pressed about the benefits of Amazon Prime Instant Video, 23% of the responses referred to shipping instead.
Those who are familiar with Prime Instant Video described it as slow, annoying, and short on value – something they wouldn’t pay for if it weren’t free. Additionally, many who have the service said they weren’t sure how it works.
“While Netflix is the strongest contender to replace or supplement traditional TV, Hulu and Amazon could threaten its dominance by making a few tweaks, such as communicating a stronger benefits message, offering more original programming and building friendlier interfaces,” said Rossow. “There’s no doubt that cable and satellite companies are planning their counter-moves, so the battle isn’t decided yet.”
Among the key study highlights:
• 20 per cent are confident Netflix can replace other entertainment platforms
• Users talk about “watching Netflix,” rather than watching shows on Netflix, indicating a strong platform brand identity
• Hulu is synonymous with TV, whereas Netflix is known equally for its TV and movie selection
• Hulu lacks brand awareness and is failing to communicate a strong benefits message
• Consumers tend to choose Hulu because they’re interested in certain shows, rather than the platform as a whole
• The Amazon Prime Instant Video brand is oddly entangled with Amazon’s Prime shipping service, and could become even more muddled with the company’s push around Fire TV
• Those with Amazon’s video streaming service don’t know how they have it or how to use it
Even before it was confirmed that Netflix would arrive to this part of the world, incumbent services had already launched in other countries in Southeast Asia. Malaysia’s iflix is currently available in Malaysia and the Philippines, while Singapore’s telco, Singtel-owned Hooq is streaming in Thailand and India. None of these countries are immediate Netflix destinations, but a lot of them will be by the end of 2016, the company says – at which point, it will have to fight them for air time and content licenses.
Everywhere Netflix has gone, there have always been either incumbents who are trying to protect their turf or new people coming in who would like to try a subscription-based streaming business.
As streaming video is not a zero-sum game, it’s not necessary for just one service to rule them all. As TV moves from the traditional linear formats to the web and apps, some sort of consolidation into bundles might not be the craziest thing after all. Think of a possible bundle deal giving you access to Netflix, HOOQ and HBO for example.
StarHub Go
HBO Go, the acclaimed U.S. network’s long-awaited and much ballyhooed online streaming service, is now available in Singapore, according to an announcement by HBO Asia and Singapore telco StarHub. The service will be part of StarHub Go, a video streaming component by StarHub, which will include a mix of HBO and Cinemax Originals as well as the latest Asian entertainment content.
Recognising its customers’ viewing needs have evolved, StarHub started delivering content to personal screens in 2012. About 20% of its customers have been accessing the service regularly since. Hence, earlier this year, StarHub launched a VOD streaming service that’s available to everyone in Singapore. At launch, StarHub Go customers can look forward to titles from content partners such as Discovery Networks, HBO, A+E Networks, Scripps Networks Interactive, Sony Pictures Television and TVB.
“Our offerings have been in response to the evolving needs of our customers. We launched StarHub Go that offers current content at an affordable price point. We will be unveiling more partnerships to bring in more ‘live’ and popular content as well as services for our customers. It is our aim to be the single source of great entertainment delivered through a great experience,” said StarHub’s Lin Shu Fen, Head, Entertainment & SmartLife.
“We were the first to introduce HBO Go in Singapore, and worked with TVB to broadcast their series at the same time they premiered in Hong Kong. Our flagship entertainment event, StarHub TVB Awards was telecasted on StarHub TV,” she added.
That’s not all, StarHub is set to boost its line-up of local content with a fresh round of funding from the Media Development Authority (MDA) under its Public Service Broadcast Contestable Funds Scheme (PCFS) for 2015. With this funding, StarHub will commission over 80 hours of original local productions. To cater to the rising demand for bite-sized content, and to reach a wider audience online, StarHub will be allocating part of this year’s funding to commission shortform content which will be made available on digital platforms. This new batch of content will be aired from the second quarter of 2016.
“Our original productions produced under MDA are broadcast on our in-house channels E City, and SuperSports Arena,” she added. StarHub is focused on integrating its services and offerings in the best possible way for the Home(s). These include curating the most compelling content offerings and delivering quality of experience to customers. Its established relationships with content partners help to ensure that it offers the best entertainment from around the world. Some of the strategies to boost pricing power and subscriber volumes include Hubbing which will continue to drive and define its pricing and bundling strategies.
Subscribing to the StarHub Go’s Go Premium pack will cost you S$19.90 (US$14) per month, and is available to anyone without the need for a StarHub TV subscription. The service is available for streaming on iOS, Android, Windows, and Mac (although note, it seems to require Microsoft’s Silverlight app framework on computers).
In addition, existing subscribers of StarHub’s HBO cable TV offering will be able to stream HBO content in multiple devices at no extra cost.
TVB – more than 25,500 hrs programmes
TVB further expands its OTT broadcast business to provide television entertainment of broader choices.
The largest commercial Chinese programme producer globally and Hong Kong’s terrestrial operator, TVB produces 520 episodes of original drama yearly, reaching over 300 million households worldwide and covering more than 40 countries and 100 cities. With its hands full, the operator wants to explore further by offering its audience a platform of choices. In collaboration with Hutchison Global Communications Limited (HGC) and some sales and distribution partners, TVB’s OTT platform is scheduled to be launched in early 2016. TVB claims it will be a significant milestone in new television experience not only to TVB but to a nationwide audience of Hong Kong.
“It’s the best time for us to strengthen our OTT broadcast service,” said Cheong Shin Keong, Executive Director and General Manager at TVB. Cheong further responded that to ensure a provision of diverse, convenient and high quality personalised TV encounter, entertainment programmes worldwide will be incorporated into the OTT broadcast service platform. Value-added services, such as personal profile with viewing history, video-on-demand and catch up services, will also be included, contributing to a TV encounter without any time constraints. He expressed that TVB is also exploring with other internet and telecommunications service providers.
As a continuation of achievement of the myTV platform, the OTT broadcast business will further enrich both the genre and quantity of the present programme pool in folds. Apart from the existing channels in broadcast (including Jade, Pearl, J2, hdJ and iNEWS ), popular classic dramas and 13 TVB pay channels will also be included, namely, TVB Japanese Drama, TVB Korean Drama, TVB Chinese Drama, TVB Drama Select, TVB Classic, TVB Encore, TVB Window, TVB Food, TVB Classic Movies (will be launched on 4 April), TVB Entertainment News, TVB Sports, TVB News and TVB News 2.
Hence, subscribers will enjoy more than 25,500 hours of programming, comprising 17,700 hours of TVB programmes and 8,500 hours of acquired programmes. Among all, the drama channels will ensure a timely broadcast of more than 1,700 hours of the latest dramas from Japan, Korea, Taiwan and the Mainland. Another 1,700 episodes of traditional dramas from TVB Classic Movies will be presented to the audience again under the empowerment of the new OTT technology.
Viacom18’s VOOT
“There is a rapidly growing internet penetration and data consumption, fast improving networks (with advent of 4G) with better quality device penetration (and at affordable costs) – both aiding video consumption and changing consumer behaviour of watching content across screens and at their convenience/choice of time (read as “on demand”),” declares Gaurav Gandhi, COO, Viacom18 Digital Ventures.
He continued, “We are already on the cusp of becoming the world’s second largest Internet market (in terms of users). Most of the users are now accessing the internet via mobile devices. Seeing this tectonic shift, marketers are fast ramping up their advertising spends on digital media and are looking for quality video assets to deploy these.
“This is as much a technology business as it’s a content business. The challenges to get this right start with building the right product and for which one needs to choose the right partners and ensuring seamless integration. Working on an OTT project of this scale, one has to work with multiple world class partners with knowledge and experience in this still nascent space. Then comes in the content – and since our focus is as much on creating quality original content as on curating the network content, there is a lot of research and effort in deciding the content strategy and its execution. And finally it’s always about finding the right people to run and manage the business and its key functions. Again as it’s a new emerging area, it is not an easy one,” he added.
The OTT platform will have exclusive and original content in addition to pulling content from Viacom 18 network. This will be both scripted and un-scripted. Gandhi explained that the service could take 3 routes: Only Subscription based, Only Advertising based, and Freemium (which has a mix of both models in a way). Given the challenges in the Indian market currently (Low ARPUs for Telco/Cable), inertia to pay significant values for content, issues on mode of payment (low credit card penetration), high cost of data (so consumers don’t want to pay for both data and content) etc, subscription market is currently small and will take time to develop. “So, while we’ll start with an advertising (AVOD) model, we are clear that we want to move to freemium and subscription models as the market evolves.
“Television is here to stay and it’s only going to grow in the Indian context. In India, the video streaming services will happily co-exist with the television market as there is clear opportunities for OTT to grow. When OTT players start creating “original content”, you could see some great quality content from these services even moving to television. The same is true for talent. The whole Digital content creation ecosystem is far wider than TV,” added Gandhi.
Viu OTT debuts in Hong Kong
An innovative new global video platform with premium localised content for viewers.
Hong Kong’s PCCW Media, launched its Viu OTT video service with plans to progressively rollout across Asia, starting with Singapore, Malaysia and Indonesia. Riding on its track record of successfully launching disruptive entertainment solutions such as now TV, Hong Kong’s first IPTV and largest pay-TV service, and Moov, Hong Kong’s first OTT music platform, Viu OTT video service launch is a strategic move to further expand upon PCCW Media’s earlier investment into Vuclip, a leading mobile video platform entertaining over 8 million subscribers across 10 countries, and bears testament to PCCW Media’s commitment to continuous innovation to enhance users’ viewing experience.
PCCW Media’s Managing Director Janice Lee claims, “Viu OTT video service offers Hong Kong users instant access to premium content sourced from Korea, Japan, Mainland China and Taiwan on multi-platforms and devices. Topping the list of enticing content is exclusive first time viewing in Hong Kong of the latest popular Korean drama series and variety shows offered with Traditional Chinese subtitling 8 hours after Korea telecast.”
All the content on the site is exclusive first run content from latest popular Korean drama, variety shows from Korea, dramas from Japan, Taiwan and China and Japanese animation. PCCW has no plan to produce its own drama at the moment but they have produced some short infotainment related to Korean drama e.g. Korean lessons, Watch K Drama and Learn how to love, etc.
Viu OTT adopts a freemium model, free to watch with ad support and premium services available in the future. With her business model established, Janice says in terms of pay- TV channels, it’s not simply a matter of cord cutting, cord shaving; as research interestingly also points to screen stacking. For sure, OTT is here to stay and it answers the needs of the discerning consumers.
Currently, Asia alone accounts for over 48% of world Internet population with the majority accessing through mobile devices. A recent Horowitz Research study on OTT found that nearly half (48%) of millennial spend more than 50% of their viewing time streaming.
“We expect significant interest from users who will become premium subscribers as well as advertisers keen to reach the mass of millennial generation who remain captive engaged audience for Viu OTT video service,” Ms. Lee said.
Toggle – for family entertainment
A total TV experience because many people only play in one state.
MediaCorp’s Toggle was not conceptualised to compete in the great ‘OTT race in Asia’ but rather to service the community with a wide variety of family content via online, mobile and smartTV for a start.
MediaCorp’s Anil Nihalani Head, Connected Media says the site is unique as it provides editorial and video offerings. Toggle’s Over-The-Top service offers entertainment, information and news to viewers online, on smart phones, tablets and smart TV, making content-viewing an uninterrupted and engaging experience. To enjoy this, viewers can choose to subscribe to their favourite channels and movies or simply register at no cost, to watch free local content where MediaCorp has rights to. Toggle is also available as an app on iPhone, iPad, Android devices, Smart TVs and most recently in March 2015, Microsoft Xbox One.
Anil explained that the service now has several channels including Toggle-it-First – that enables viewers to watch MediaCorp dramas ahead of the rest – and also Toggle Prime which offers more content to subscribers including 20 premium channels and over 20,000 on-demand titles. Free content is also available. Toggle KidsZone was created to banish the worry of parents as it filters content to children’s suitability. In May 2015, Toggle launched Toggle Laughs, a platform presenting curated comedic content.
Anil believes Netflix’s arrival to Asia will create more awareness of the OTT platform. “I think there will be greater usage of OTT services and overall, this market will grow. I think there is sufficient space for enough players in Asia. Different players offer different package and programme line up and eventually, consumers will look for their preferred platform.
“What makes us unique is that the MediaCorp way, we have a good video offerings and liner TV offering. Hence, we can offer a total TV experience because many people only play in one state. This continues to be the value we provide,” added Anil.
Toggle has signed a multi-year SVOD licensing agreement with Disney which included the first ABC Studios On Demand offering in Singapore. Toggle now has added onto their service an array of series from ABC Studios On Demand and movies from Walt Disney Studios, including movies from Pixar, Marvel and Disney. The movies from classics like Dead Poet’s Society to Marvel hits like Iron Man can be found at the subscription video on demand service.
