APAC OTT Trends

APAC’s OTT video segment has been growing tremendously and has been sustaining a whopping CAGR of 18% in the last couple of years. APAC’s OTT market revenues are expected to reach US$48 billion by 2023* through 351 million SVOD subscribers. This is compared to US$21 billion in 2018.

By 2023, China and Japan will be leading the market from a revenue perspective with a share of ~71% of the overall revenue generated from online video in APAC; followed by Australia, India, Korea, and Taiwan.

Besides the growing SVOD market, there is significant growth in other areas of OTT videos in APAC. Here, we’re observing the top five OTT trends in APAC’s online video market:

1.Emerging new business models in APAC

Keeping up with changing market dynamics, the APAC region has been very experimental in testing the market with newer business models – be it sachet pricing, using ad-based revenue models in subscription dominant markets or offering video as a complimentary service by businesses.

• Introduction of sachet pricing

The APAC online video market is very different from the developed markets, such as the US which sees higher user spends. APAC is a vast market with culturally and economically diversified users who have varying content consumption patterns, content & payment demands.

A lot of service providers have been experimenting with payment options to satiate the varying demands of the user segment. A recent move by Netflix was to test sachet pricing in Indian dynamics for a weekly subscription pricing. This was followed by local players with a similar kind of business model to acquire new consumers.

• OTT advertisement growth driving advertisement-driven revenue models

The current positioning of the advertisement spends on online video is only 5% of the overall advertisement revenue. OTT advertising is growing at a rapid rate and brands are shifting focus to online targeted advertising. While broadcast channels are still dominating in terms of ad spends by brands, the positioning for OTT will change in the coming years, with a forecast of attaining US$30 billion by 2023.

The APAC market is seeing many service providers whose revenue models are completely advertisement driven, with the number set to increase in the next couple of years.

• Complimenting service offering by video OTT

In this era of excessive competition, businesses using online platforms are complimenting their services with video OTT, offering to increase the perceived value of their products amongst consumers and improving the user experience. This evolution started with e-commerce giant Amazon when it started offering Prime Video to its subscribed users on the shopping platform – this has spread to other verticals as well. 

2.Lean-back experience is making a comeback

While the small screen device segment is topping the list of most used devices and will continue to do so in APAC region, the lean-back experience provided through the big-screen platforms (smart TVs, consoles, Android TV, dongles, etc.) is also making its comeback.

Lean-back viewing for long-form content consumption is still a preferred choice for many user segments and this segment is expected to grow in the coming years.

Google’s Android TV OS based Operator Tier Launcher has been the focus of Pay TV providers and telcos since the beginning as it enables them to build customized user experiences to bundle their hybrid offerings to cater for a more diversified audience.

3.An emerging era of regionalization

Even though the OTT market today is dominated by single language content, the demand for content regionalization is growing day by day for the APAC market, which is vastly language diversified.

In recent years the local and global players have been investing a lot in generating local programming and providing multiple audio and subtitle translations to tap into the non-English speaking consumer segment which had been vastly ignored until this time. 

This regionalization not only demands the local programming/content in local languages but also regionalized user experience, giving enough power to local service providers to stand tall against the global players.

4.Shifting focus on delivering the right user experience rather than features

A lot of brainstorming is performed in choosing the right technology, acquiring the best content, planning the infrastructure and selecting the right feature-set while trying to keep the cost to a minimum. User experience is one part which often gets overlooked in the whole exercise.

The market focus is slowly shifting towards delivering the best experience for the users by keeping the user at the center of the entire OTT ecosystem and developing a better relationship with them through numerous ways, such as robust support systems, innovations, loyalty programs, and data-driven design approaches. This essentially translates to a way to reduce churn and attain maximum user engagement.

One example of enhancing user experience through innovations is to enable voice interactions.

Voice has been in focus in recent years and is seen as the way forward as the primary route for content discovery and, down the line, as the center of connected smart home experience. Companies such as Google and Amazon have been investing heavily in making voice patterns more recognizable, not just for English, but also focusing on regional dominant languages and their dialects.

Youtube is one popular example of video content discovery through voice, with voice command extending its reach to low-literacy markets as well as to diversified user segments.

5.Telco partnerships

Telcos with their sheer numbers of subscribers are now being looked at as a safe platform for content visibility by various service providers including the streaming giants like Netflix and Amazon Prime. A number of OTT players are joining the bandwagon of riding on the telco aggregated platforms.

Even though there are challenges like content positioning, long tail visibility and discovery for consumers (which stand tall before such service providers) the telco partnerships are booming across mobile-first APAC markets.

Conclusion

All these trends point to a common shift in the industry, which sees video service providers focusing on keeping their solutions, services and business models centered to the needs of their target consumer segment, catering to a range of diversified needs.

Competition in the online video segment is increasing day by day. Existing services are trying to keep up with global and local players, which are providing very specific and targeted programming offerings. This calls for a systematic evolution by OTT service providers to rightly justify their consumer’s needs and deliver a more compelling video experience through innovative technology.

*Asia Pacific Online Video & Broadband Distribution report by MPA