OTT Market Leaping Ahead in Asia Pacific

By Alexandre Muller, Managing Director APAC, TV5MONDE

Alexandre Muller, Managing Director APAC, TV5MONDE

Developments in the APAC media and entertainment landscape show plenty of new opportunities both in traditional Pay TV and over the top market (OTT), a totally different picture compared to the rest of the world.

In Asia Pacific, revenues for traditional Pay TV (subscription-based television service),continue to grow at a regular pace, thanks to a growing middle-class who can now afford subscription costs in emerging markets such as India, China, Indonesia and the Philippines.

Elsewhere in the world, cord-cutting or cord-shaving and consumption of streaming services is booming, hugely impacting operators in the U.S. or Europe. This new trend is also affecting operators in APAC to some extent, but at a much lower rate, thanks to a much more reasonable average revenue per unit (ARPU).

Over-the-Top (OTT) business has disrupted the Asia Pacific media and entertainment market over the last two years, thanks to a broad choice of available content and extensive range of viewing options. OTT services have attracted digital consumers including millennials in their droves, as well as ad-on services to existing pay TV subscribers.

OTT appeals strongly to content owners as it allows them to rapidly reach a large number of viewers, often in countries outside broadcasters’ core audience, thus creating new licensing opportunities. In Europe and the U.S., for instance, OTT viewing is slowly replacing traditional viewing. In comparison, in APAC, OTT brings content to viewers who have never been able to access content via traditional means.

Overcoming the Intricacies of Media and Entertainment Landscape

As OTT brings plenty of opportunities to reach new audiences in APAC, including a younger generation that traditionally does not subscribe to Pay TV, it also comes with a major challenge: piracy.

The number of illegal ways to access Pay content is booming in the region due to a lack of robust regulation in many Asian countries, and increasing access to high speed internet: from virtual private network (VPN) or a fake location app to access content abroad (for free or at a lower cost), to streaming websites or Illegal Streaming Devices (ISD). Legitimate OTT services and Internet Service Providers (ISP) are experiencing difficulties blocking millions of people gaining unauthorized access to their content.

While it is essential to work with Regulators and to educate consumers to overcome these challenges, the OTT content providers, and the Entertainment and Media Industry in general, must also introduce more innovative and personalized new business models that meet the role of advertising or full subscription services.

Traditional business models that work for players such as Netflix, Amazon, Iflix or Hook, based on a full subscription service or advertising driven service (with pre-roll, mid-roll and/ or post-roll ad within the video), or a mix of both as a freemium service, indicate there is still room for a new business model specific to OTT.

And the answer might just lie in the video game industry.

The video gaming industry faces similar challenges to the media and entertainment industry with their audience eager to access content for free, or at the lowest price point possible. Thanks to innovative advertising ways, built-in currency and reward schemes, as well as micro-payment, the video gaming industry is building a highly lucrative ecosystem. And at the same time, they are tackling piracy.

In a world where everyone (operators, content suppliers, and brands) is massively investing in content and battling for eyeballs, I truly believe that adapting the gaming industry strategy to the OTT Ecosystem is worthwhile. Simply put, rewarding viewers for the number of video advertisements viewed, would create a virtual ecosystem where targeted advertising is seen as a real plus from viewers, and content owners would get paid based on their viewership rate.

Meeting Customer Demand

Working on tight resources forced TV5MONDE to become a pioneer in many ways along our journey. We were the first TV channel to broadcast in Digital, back in 1992, when we first launched in Latin America, and in 2002, we launched our first stand-alone online direct to consumers in Korea. This approach led to a partnership with SoftBank in Japan in 2005, and consequently led us to become one of the first broadcasters to launch a global OTT service in APAC.

Technology is without a doubt key in today’s world to tackle the challenges we are facing, but without content and innovation, it will achieve nothing. The answers we are all looking for are patently obvious, so let’s open our minds, listen to consumers and focus on solutions. When we do so the future will be awesome!