One of the things that has been really fun about working with Astro in Malaysia has been getting to grips with that country’s - and to an extent the whole South Eastern Asian region’s – rather unique market dynamics. It looks like SE Asia will be the world’s highest growth region for pay TV in general and OTT in particular over the next five years. Naturally operators with international ambitions of whatever category, whether legacy or pure play OTT, are keen to exploit this growth but to do so they must take account of the region’s distinctive market dynamics and consumer behaviors.
The first obvious point to note is the great disparity between the various countries, so that any operator targeting the region as a whole must avoid a one size fits all approach and give each country separate consideration. There is also a broad difference between the richer nations such as Japan, Singapore and South Korea, which have advanced broadband infrastructures along with high smartphone penetration, and developing nations like Indonesia and the Philippines that do not. In the developing nations, lack of widespread broadband infrastructure and unaffordability of smartphones combined with limited availability of 3G or 4G mobile networks has held back OTT so far. But now the brakes are really coming off as infrastructure improves and with the arrival of Netflix as well as various local pure play OTT operators such as Hooq.
But despite the significant differences between countries there are some common themes that operators need to take account of in formulating a more regional strategy. The most evident one is the continuing prevalence of censorship and the impact this has on consumer behavior. Censorship restricts certain content containing scenes deemed explicit or violent from pay TV operators, but in some cases this is available on OTT services, and to certain sectors such as ex-patriates of other countries. Desire to watch such censored content is one factor that has driven consumers towards pirated services and also in some cases OTT as that can fall outside the jurisdiction of regulators.
Netflix has run up against this in Indonesia and with similar confusion reigning in other leading Asian markets, prospective operators need to keep abreast of developments and meanwhile there may be opportunities for OTT providers to score by giving subscribers content they can’t get elsewhere.
There are some other aspects regarding OTT that may not be unique to the region but are amplified there. One is the fact that many of the markets, especially developing ones, tend to be split into two tiers, one centered around more affluent consumers in areas with good broadband connectivity, where OTT is posing a more direct challenge to premium pay TV packages.
The other sector, the one at a nascent stage in many countries, is focused on mobile broadband as the medium. This serves viewers who until now have received TV either Free-To-Air or over those very low ARPU pay TV services costing just a few dollars a month that are widespread in India for example and to an extent China as well.
Alongside these trends seems to be a voracious appetite for OTT across the region, helping to make up for lost time in terms of traction and demand. This factor is clearly helping drive the current surge in connected video consumption across those huge markets. A compounding factor is that live video programming holds strong appeal in those countries too. These two findings together strongly suggest premium live OTT services would prove almost universally popular in the region.
Another finding from various surveys is the desire for personalization, which points towards intelligent use of data analytics to identify individual preferences and sift populations into demographic segments for broader targeting of recommendations as well as ads. There is also a stronger desire for local content than in some regions, which is why the more astute broadcasters have already invested both in localization of existing content and original production when that is economically viable. BBC Worldwide for example has produced Asian versions of shows including Strictly Come Dancing. Astro has completely different program lineups for Chinese, Indian and Malaysian audiences, as well as for various ex-patriate groups
The clear message is that the prizes for getting SE Asia right are considerable but only for operators that have taken the trouble to address the region’s singularities and also differences between countries. OTT must be at the heart of the strategy even for traditional pay TV operators.