OTT Demand Means An Equal Amount of Threats and Opportunities for Asian Pay-TV Operators

06 December 2017

Market research shows strong growth in Asian OTT (Over-The-Top) and VOD (Video-on-Demand) markets. In Asia and elsewhere, that constitutes both a threat and opportunity for pay-TV operators. Indeed, two-thirds of executives expect competition from subscription OTT services to have a negative impact on the pay-TV industry, according to research from Nagra and MTM[1]. This is prompting service providers in the region to respond by pursuing aggressive pricing strategies, expanding into telecoms services, scaling up investments in content, and developing multiscreen and OTT offerings. It’s a trend that has been confirmed by a recent survey from Technicolor[2], which shows that over half of service providers intend to implement hybrid model strategies in their OTT go-to-market plan.

Mushrooming Demand

OTT and video revenues for the 22 countries in the Asia Pacific (APAC) region will reach $24.1 billion by 2022, up from $8.27 billion in 2016, predicts Digital TV Research[3]. The report suggests that China will account for half of APAC OTT revenues by 2022, while Japan, Korea, India, and Australia will account for nearly 40%. The firm also forecasts 234 million SVOD subscriptions by 2022, up from 91 million in 2016.

Similar forecasts from Media Partners Asia[4] estimate that online video revenues, including net advertising and subscription fees, will grow nearly threefold over the next 5 years to more than $46 billion by 2022. Today, India and Korea represent 77% of pay-TV subs and almost 50% of pay-TV revenue in APAC excluding China.

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Market research shows strong growth in Asian OTT (Over-The-Top) and VOD (Video-on-Demand) markets. In Asia and elsewhere, that constitutes both a threat and opportunity for pay-TV operators. Indeed, two-thirds of executives expect competition from subscription OTT services to have a negative impact on the pay-TV industry, according to research from Nagra and MTM[1]. This is prompting service providers in the region to respond by pursuing aggressive pricing strategies, expanding into telecoms services, scaling up investments in content, and developing multiscreen and OTT offerings. It’s a trend that has been confirmed by a recent survey from Technicolor[2], which shows that over half of service providers intend to implement hybrid model strategies in their OTT go-to-market plan.

Mushrooming Demand

OTT and video revenues for the 22 countries in the Asia Pacific (APAC) region will reach $24.1 billion by 2022, up from $8.27 billion in 2016, predicts Digital TV Research[3]. The report suggests that China will account for half of APAC OTT revenues by 2022, while Japan, Korea, India, and Australia will account for nearly 40%. The firm also forecasts 234 million SVOD subscriptions by 2022, up from 91 million in 2016.

Similar forecasts from Media Partners Asia[4] estimate that online video revenues, including net advertising and subscription fees, will grow nearly threefold over the next 5 years to more than $46 billion by 2022. Today, India and Korea represent 77% of pay-TV subs and almost 50% of pay-TV revenue in APAC excluding China.

Growth Drivers

Increased access and higher broadband speed continue to support growing demand for OTT services in Asia, especially in emerging markets, where direct-to-home (DTH) satellite providers and cable operators had been providing most pay-TV access. Also, many telecom operators have aggressively entered pay-TV markets by bundling or integrating OTT service in their broadband offerings to increase ARPU and reduce churn.

APAC’s relatively young population is hungry for comprehensive video content, creating opportunities for broadband service providers that can provide seamless access to content on-demand, including live, local, and global offerings. To remain competitive, pay-TV operators must get to market quickly and deliver a personalized TV experience that combines both linear and on-demand viewing across all screens.

Android TV is emerging as a leading choice for service providers that want to provide OTT services quickly and efficiently. This is in contrast to traditional proprietary customer premises equipment, which can take up to 18 months to design, manufacture and implement. Android TV enables service providers to benefit from ongoing innovation by Google and tap into a well-established app and developer ecosystem.

With the right technology and the right portfolio of services, pay-TV operators in Asia and elsewhere can hitch their wagons to rising OTT and VOD stars. But all operators must move quickly to remain relevant in the rapidly changing competitive environment.

 

[1]NAGRA and MTM Launch the 2017 Pay-TV Innovation Forum at TV Connect, Expand Scope to Studios and Content Owners, March 23, 2017,https://dtv.nagra.com/nagra-and-mtm-launch-2017-pay-tv-innovation-forum-tv-connect-expand-scope-studios-and-content-owners

[2] Technicolor’s executive summary on the NSP response to OTT http://ott.technicolor.com/article/technicolors-executive-summary-nsp-response-ott/

[3] China drives Asia Pacific’s OTT TV & video boom, July 31st, 2017 https://www.digitaltvresearch.com/press-releases?id=209

[4] MPA Report: Asia Pacific Online Video Market To Scale To US$45.5 Billion By 2022, With China Contributing More Than 75%, July 15, 2017 http://www.media-partners-asia.com/news.php?id=499

*Google and Android TV are trademarks of Google Inc.

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