New Delhi: The online video industry in the Asia-Pacific region will grow by 24% in 2019 over 2018, according to a new report, Asia Pacific Online Video & Broadband Distribution 2020, published by Media Partners Asia (MPA), an independent provider of research, advisory and consulting services across the media, entertainment, sports, telecommunications and technology industries in Asia Pacific.
The report reviews the drivers and dynamics shaping the online video and telecom industries across 14 Asia-Pacific markets with analysis of factors like online video subscribers and ARPUs (average revenue per user); advertising and subscription revenues; content costs, among others.
Overall, the industry will generate $27 billion in advertising and subscription revenue this year and will expand at a CAGR of 13% to $50 billion by 2024, propelled by rising investment and competition, widening broadband access and ongoing development of local content, payment infrastructure and IP (intellectual property) protection, the report added.
Consumers are still learning to pay for content. Overall, the Asia Pacific pie will remain fairly evenly split between advertising and subscription according to MPA, with advertising’s share decreasing slightly from 56% in 2019 to 54% in 2024, as subscription increases its share from 44% in 2019 to 46% in 2024.
In India, SVoD (subscription video-on-demand) will account for about one-third of online video sector revenues by 2024, although local players are also making inroads into online video advertising alongside dominant player YouTube. Walt Disney’s streaming service Hotstar (Walt Disney had acquired Rupert Murdoch’s 21st Century Fox Inc. in a $71 billion cash and stock deal in June 2018, making Star India, Fox Star Studios and Hotstar in India, a part of Walt Disney) is a strong and fast-growing number two platform across both advertising and subscription, lifted by access to sports league like the IPL. Hotstar has also benefited from demand for catch-up content from Star India as well as access to premium Hollywood entertainment. MPA estimates that Hotstar will account for more than 20% of online video advertising in India this year, while its low-ARPU (average revenue per user) subscription model has also attracted a critical mass of customers.
According to MPA analysis, 15 operators will account for almost 70% of Asia Pacific online video revenues in 2019. YouTube ranks number one on the list, followed by China’s iQiyi, Tencent Video, Youku and ByteDance, then global players Netflix and Amazon. India’s Hotstar is eighth on the list.
Outside China, global platforms have established strong positions in the online video landscape. Between them, Amazon, Netflix and YouTube are on way to representing 54% of online video advertising and subscription revenues in Asia Pacific (excluding China) this year. YouTube continues to grow consumption and advertising, benefiting from a formidable blend of data and technology, although competition is increasing in key markets such as Australia and India. Netflix is an effective proxy for SVoD in much of Asia Pacific outside China with an estimated 13.2 million paying subscribers as of end of 2019, according to MPA. At the same time, Amazon has made significant progress in India and Japan where it has invested in local content for its Prime Video service, complementing the growth of other Amazon services.
“The online video industry is evolving and growing rapidly across Asia Pacific. This is especially true in countries with a significant addressable broadband market, developed payment infrastructure and a dynamic local content ecosystem," MPA executive director Vivek Couto said in a statement. “At the same time, deep investments in content and technology have helped a handful of homegrown and global players to scale and dominate market share. Some of these players have access to abundant capital, with content and video distribution forming part of larger ecosystems in some cases, subsidizing costs and investment. Standalone OTT video remains loss-making in Asia Pacific on the whole, although some operators should start to see profits over the next three to five years, either in large domestic markets or as part of an expanding global and regional footprint."