Asia Pacific Premium OTT Market Will Experience Exponential Growth Despite Challenges

Redwood City, Calif., May 3, 2016–Vindicia, the leader in enterprise-class subscription billing, and Ooyala, a leading video, analytics and advertising technology provider, today announced key findings from a study that explores the Asia Pacific (APAC) market opportunity for premium over-the-top (OTT) services. Conducted by top research and strategy consultancy, MTM, the findings reveal significant challenges to expansion due to broadband infrastructure and content localization, revenues are expected to grow strongly between now and 2019.

The report explores the evolution of premium OTT in APAC, focusing on three key territories: Australia, Indonesia and Thailand. Over 80 participants, including a broad range of senior industry professionals, provided their perspectives on current and future market trends and developments.

The study’s central finding was that despite challenges, APAC’s premium OTT market will undergo rapid growth by 2019: from around $85M in 2015 to $230M in Australia; from $7M to $40M in Indonesia; and from $8M to $45M in Thailand. Local service providers will own a significant portion of the market and will dominate in Indonesia and Thailand, while Netflix will be the dominant player in Australia.

The study highlights three main challenges to premium OTT market expansion:

  • Broadband infrastructure. Industry executives believe broadband infrastructure challenges and limited access to affordable fixed-line services are significant barriers to growth. In Australia, the average connection speed is 2 MBps, about half that of the UK and US. Thailand has a similar average of 9.2 MBps, but only 9 percent of consumers subscribe. In Indonesia, there is only 1 percent broadband penetration with an average speed of 3.9 MBps. Participants view APAC as a mobile-first market.
  • Content localization. Despite the appeal of international content, respondents believe local-language programming is essential to the proliferation of premium OTT services in Indonesia and Thailand. Furthermore, they expect stiff competition among local pay-TV providers over licensing of existing local content libraries.
  • The Netflix Factor. While the presence of Netflix will drive OTT market expansion in general, consumers will struggle with Netflix’s one-size-fits-all offering. Because of this, there will be a period of uncertainty as consumers choose between standalone Netflix and competing offerings from local content providers, whose multiplatform and bundled packages ultimately may prove more appealing.

“There’s no doubt that Asia Pacific is a hotbed of premium OTT service expansion that will evolve based on regional nuances, tastes and economics,” said Bryta Schulz, Vindicia senior vice president of marketing. “The next 12 to 24 months will function less as a test of whether or not premium OTT will take off, but more as a measure of how it will penetrate popular appetites. Among the creative and flexible approaches to generating reliable revenue, service providers will need platforms that can accommodate a range of content delivery and payment preferences. This is where solutions from Ooyala and Vindicia become vital.”

“Intensifying OTT competition and major market consolidation, like what we’re seeing in Australia, are key identifiers of an industry on the crux of a massive opportunity,” said Vice President and General Manager of APAC for Ooyala, Keith Budge. “APAC OTT providers must build a rich, personalized user experience with unique content offerings that are competitively priced, and further, have a data-driven approach to understand audience behavior and preferences. Having analytics and insights will be a major differentiator to drive revenue and reduce churn as new OTT services launch into the market.”

“The study provides a snapshot of industry perspectives about the prospects for premium OTT across the region. Local executives are positive and excited about future market prospects – and expect local players to perform strongly, especially in Thailand and Indonesia,” said Jon Watts, managing partner and co-founder at MTM. “International providers will need to find ways to partner with local pay-TV providers, telcos and ISPs to gain traction with local customers.”

Please join us on Wednesday, May 4 at 2:00PM (SGT) for the Prospects for Subscription OTT in Asia Pacific live webinar where Jon Watts, MTM’s Director and Co-Founder, together with Bryta Schulz, SVP Marketing, Vindicia, and Mongchee Chang, Head of Marketing Asia Pacific Ooyala will discuss research results. Register here to join the for this live webinar

Click here to download the full report.