MPA report Projects Asia Pacific Online Video revenues at US$12 bil. by 2020

Hong Kong, January 13, 2015--A research report published by Media Partners Asia (MPA) indicates that the total market for online video services across 13 countries in Asia Pacific will grow from US$ 3.5 billion in net revenues in 2014 to reach US$12.4 billion by 2020, representing a average annual growth of close to 23.5%. Advertising will contribute more than 80% to the online video pie by 2020 with the subscription revenue opportunity, largely driven by subscription video-on-demand (SVOD) platforms, growing from less than US$700 mil. in 2014 to more than US$2.3 bil. by 2020.

The report, entititled ASIA PACIFIC ONLINE VIDEO DISTRIBUTION 2015, evaluates the commercial distribution of legal over-the-top (OTT) video services in 13 markets with historical data and forecasts plus profiles of key OTT platforms. Commenting on the report, MPA executive director Vivek Couto said: "The market for the legal consumption of OTT services in Asia Pacific is at an early stage with monetization models nascent in most countries. As barriers to entry reduce and broadband penetration increases, more disruptors are emerging and host of new platforms are proliferating, though business models are not always scalable and issues such as piracy; content; and platform operation remain problematic. This is especially true in a number of Asian markets where piracy is significant and the limited scale of OTT video revenues are not commensurate with content costs."

Meanwhile, large scale global digital brands (from YouTube through to Netflix) are expanding rapidly in a number of Asian markets or readying to launch in key territories over 2015 and 2016. Major local and regional television companies are also in the early stages of launching a number of large scale advertising and subscription based OTT platforms, anchored to local, Asian and Hollywood content while telecom operators are either moving upstream into content and OTT services or providing a crucial link for the ecosystem.

Highlights from the report include:

Infrastructure. Fixed broadband subscribers reached 325.3 million in 2014 across Asia Pacific, equivalent to an average household penetration rate of 36%. By 2020, MPA projections indicate that this penetration level will reach 40% as fixed broadband subs grow to 403.5 mil. Mobile broadband will grow rapidly, expanding at CAGR of 15% over 2014 and 2020 to reach almost 2 bil. subs by 2020 (58% penetration of population) versus 866 mil. (26% penetration) in 2014.

OTT Video Consumption. Active Asia Pacific OTT video subscribers reached 494 mil. in 2014, according to MPA. China accounted for more 85% of the market size in 2014 and will represent 80% by 2020. Ex-China, the largest markets in 2014 were Korea; India; Japan; and Hong Kong. By 2020, MPA projections indicate that active OTT video customers will reach 977 mil. By 2020, in Asia ex-China, India will emerge as the second largest market, followed by Korea, Japan and Hong Kong. In Southeast Asia, Malaysia will be joined by Indonesia and the Philippines as market leaders. The market for subscription-based OTT video reached 75.3 mil. active subs in 2014 and is
expected to reach 225 mil. by 2020. China will be the largest contributor, driven by internet-enabled TV and set-top box platforms and online video companies offering premium services.

Japan, Korea, India and Australia will emerge as material opportunities, powered by SVOD but India will trend towards more a freemium-oriented model.

Industry economics. MPA divides industry monetization models into distinct segments: SVOD. In terms of SVOD revenue across OTT platforms, the largest markets in Asia Pacific by 2020 will be Japan; China; Korea; and Australia. New Zealand and India will lead the next best placed group of geographies. MPA projections indicate that total SVOD-based OTT revenues in Asia Pacific will grow at a CAGR of 16% between 2014 and 2020, growing from US$953 mil. in 2014 to more than US$2.3 bil. by 2020.

Online video and OTT advertising. Asia Pacific online video advertising exceeded US$3.7 bil. in net terms in 2014, up 35% year-on-year. The largest markets for online video advertising in 2014 were, by far, China and Japan, followed by Australia, India and Korea. By 2020, the total Asia Pacific online vide advertising pie is expected to grow to US$10 bil., a CAGR of 18% from 2014, with China dominant, followed by Japan. India will gain increasing scale and overtake Korea while Indonesia will be the clear leader in Southeast Asia.

OTT video advertising revenue, a subset of the online video advertising pie, reached US$2.1 bil. in 2014, up 43% year-on-year from a low base, and almost entirely driven by China. This pie, is projected by MPA to expand to US$5.5 bil. by 2020 at a CAGR of ~18%. China will be the largest contributor with India, Korea and Indonesia starting to become gradually significant over time.