APAC OTT industry seeking sustainable growth beyond pandemic boom

As over-the-top's pandemic-fueled expansion slows, sustainable growth has become a major concern for industry executives who attended the 2022 Asia Video Industry Association, or AVIA, OTT Summit, held virtually March 30-31. Unlike in recent years, when attendees tended to be very confident about the industry's progress, operators are now more focused on refining the quality and delivery of their service and addressing issues that could hinder further growth.

Executives at the conference believe that super aggregation and a seamless single user interface could be the solution to the subscription fatigue caused by an abundance of streaming services. Most subscription video-on-demand households subscribe to multiple services and sometimes even forget the subscriptions for which they are paying. While duplication of content across different platforms is common, it may be difficult for consumers to find a specific program among numerous services. Frustrated consumers are therefore dropping subscriptions.

Despite ongoing efforts of telcos and pay TV operators in the region, OTT aggregation is still at a "very basic level," according to Ho Hock Doong, head of content at UniFi HyppTV and CEO of TM Net. Stephane Le Dreau, senior vice president and regional general manager of APAC for Nagra Media UK Ltd., added that most SVOD service providers are still unwilling to share their metadata, which is essential for enabling the deep linking, search and content recommendation functionalities that make a seamless experience feasible. That said, panelists are optimistic that this commercial hurdle could be resolved, and technology will eventually evolve to improve the integration of various services and discoverability for users.

For now, bundling seems to be more relevant as telcos and multichannel service providers repurpose an old trick of traditional linear pay TV. Consumers who prefer not to subscribe to individual services can easily subscribe through flexible bundles. Executives of PCCW Ltd.'s Now TV, TM Net and StarHub Ltd. agreed that the sophisticated packaging strategy that once worked for the pay TV business tends to frustrate subscribers, and they all aim to simplify pricing with flexible options and contractual periods. Convenience is also a goal for telcos seeking to differentiate themselves different from stand-alone OTT services. Recognizing that the appeal of streaming services has spread beyond the younger generations, StarHub will be launching a new integrated set-top box that replicates the old interface from IPTV.

Content is still king, and the success of Walt Disney Co.'s Disney+ Hotstar in India proves the market has massive opportunities for growth and illustrates how much consumers are willing to pay for live sports content in a price-sensitive market. Gourav Rakshit, chief operating officer of digital ventures for Viacom 18 Media Private Ltd., finds Disney's success in the space inspiring and believes it is important to make general entertainment content as compelling as sports content to hook subscribers.

Turning to monetization, advertising-based video on demand is still predominant in the region. A recent study by Trade Desk Inc. shows that ad-supported services accounted for 60% of streaming hours generated in Southeast Asia, according to Rajesh Sheshadri, Trade Desk's general manager for Southeast Asia. Gavin Buxton, Magnite Inc.'s managing director of Asia, shared a similar result from Magnite's survey in the region, which showed that only 10%-14% of its respondents prefer an ad-free subscription model over a freemium model with ad-supported content. Speaking from the perspective of a streaming service provider, Ranjana Mangla, senior vice president and head of ad revenue of SonyLIV at Sony Pictures Networks India Pvt. Ltd., said "the content acquisition costs are so high that it is technically almost impossible to run it without advertising."

In a poll of conference attendees, over half said subscription will generate more revenue for OTT services in the region than advertising by 2025. Desmond Chan, deputy general manager of Television Broadcasts Ltd., said the subscription model is still the ultimate goal as it is more stable compared to advertising, which tends to be cyclical and depends heavily on the state of the economy. That said, an ad-supported subscription model that Disney+ will be launching seems to be more realistic, particularly in markets with lower income levels. Indeed, both ad-supported subscription tier and freemium models are not new to the region.

More businesses are advertising on streaming platforms as they complement linear channels, allowing advertisers to reach cord cutters and cord nevers, according to Bharat Khatri, Omnicom Group Inc.'s chief digital officer, APAC. It has become very popular for companies that adopt a digital-first approach, including other digital industries, such as gaming. Apart from maximizing reach and engagement, advertisers value the addressable environment and the accuracy of value measurement that streaming services offer. Mangla noted that there are currently more than 500 advertisers on SonyLIV, and 300 of them are new partners that had never advertised on the broadcaster's linear channels before.