Tencent Holdings Ltd.'s purchase of Malaysia-headquartered video on demand service iFlix Sdn Bhd could see it overtake Chinese rival iQiyi and lead to further consolidation between streamers in Southeast Asia, analysts told S&P Global Market Intelligence.

The deal announced June 25 includes iFlix's content, technology and resources and gives Chinese internet conglomerate Tencent a foothold in several new markets — which could pressure rivals Baidu Inc. and Alibaba Group Holding Ltd. to expand geographically via acquisitions, analysts said.

With iFlix's monthly active user base of 25 million in April, Tencent can exceed Baidu-owned iQiyi's numbers and add pressure as the companies compete to expand their streaming businesses outside of China, Ming Lu, analyst at Aequitas Research, said. In the first quarter of 2020, Tencent Video and iQiyi had 112 million and 118.9 million subscribers, respectively.

"Tencent Video tried [expanding in] Thailand and iQiyi tried in Taiwan. However, neither of them have attracted [a sizable] local audience. With iFlix, Tencent can promote its influence in Asia thus putting pressure on iQiyi, or Baidu," Lu said.

IFlix is present in 13 countries: Malaysia, Indonesia, the Philippines, Thailand, Brunei, Sri Lanka, Pakistan, the Maldives, Myanmar, Vietnam, Cambodia, Nepal and Bangladesh.

Expanding outside of China will be vital for local players if the country's State Administration of Press tightens regulations on streaming content to a similar extent seen in the gaming sector, Lu said.

The acquisition could prompt Alibaba Group Holding Ltd.'s Youku Tudou to buy an over-the-top platform outside of China, Angus Mackintosh, founder of CrossASEAN Research, said.

Alibaba may purchase Indonesian streaming platform PT Vidio Dot Com from PT Surya Citra Media Tbk, Mackintosh said. Alibaba has an existing relationship with Surya Citra Media Tbk through its digital payments tie-up with the Indonesian company's major shareholder PT Elang Mahkota Teknologi Tbk and so would be the "natural" acquirer of Vidio.com, Makintosh said, adding that when Tencent makes a move, Alibaba tends to follow.

Indonesia, in particular, has become an e-commerce battleground for Tencent and Alibaba. Tencent-backed ride-hailing company PT Go-Jek Indonesia and Alibaba have participated in several funding rounds for PT. Tokopedia.

Surya Citra Media's share price rose to 1165 Indonesian rupiah on 26 June from 1090 Indonesian rupiah on 25 June, the day the Tencent-iFlix deal broke — suggesting investors expect a stake sale in Vidio.com too, analysts said.

Tencent Video, iQiyi, and Alibaba's Youku Tudou combined hold more than 70% of the Chinese online video market in terms of revenue, according to a June 2019 report by PwC. Competition between the three players has resulted in a price war and prevented them from increasing takings, experts previously told this news service.

Most recently, reports suggested that Tencent was looking to become the largest shareholder of iQiyi. If true, experts said the move would end intensifying rivalry and cut content costs for both players.

Meanwhile, in Southeast Asia, a combination of heavy competition and the effects of the coronavirus outbreak led experts to question the survival of smaller streaming players that are operating without a library of content or a niche target audience.

Singapore-based streaming platform Hooq Digital PTE. Ltd. filed for liquidation March 27 after failing to generate sustainable returns or cover increasing costs, Reuters reported.

As of July 1, US$1 was equivalent to 14,429 Indonesian rupiah.