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Over-the-Top (OTT) Streaming Services in Asia: Opportunities and Challenges for Foreign Investors

By Nishant Dixit
Posted: 18th February 2015 09:31
Over-the-Top (OTT) streaming services are expanding in the Asia-Pacific. Netflix will broaden its customer base by adding online viewers in Australia and New Zealand in March 2015 and Japan later in the fall. At the same time, Singtel, a major Asian telecom player, will be launching its online streaming service called HOOQ in several major Asian markets.
Netflix and Singtel’s Operations in Asia
Netflix has been indicating its plans for Asia expansion since 2011, but has waited until 2015 to launch in three major Asia-Pacific markets. Netflix is already very popular in the region, with many subscribers using Virtual Private Networks (VPNs) to access the U.S. based streaming service. According to one estimate, there are over 200,000 subscribers of U.S. Netflix in Australia alone. Due to the large potential consumer base, broad mobile broadband penetration and developed online payment systems, it is no surprise that Netflix has chosen to launch in Australia and New Zealand. On February 4, 2015, the company also announced the launch of its online service in Japan and establishment of a regional office in Tokyo.
Singtel is one of the largest telecom players in Asia. It is partnering with Sony Pictures Television and Warner Brothers International to offer video services in four major Asian markets: The Philippines, Indonesia, India, and Thailand. Singtel has moved fast. This month HOOQ will launch in The Philippines in partnership with Globe Telecom, in which Singtel has a 47 percent stake.
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Accessing Asia’s OTT Market
Foreign investors planning an OTT venture in Asia should be aware of the region’s underdeveloped online payment systems. For instance, Singtel will be using its own carrier billing capacity to collect subscription payments. The company already has stakes in major telecom players in Asia. It owns a third of the Indian carrier Airtel, has a 23.3 percent stake in Thai carrier AIS, and controls 35 percent of Indonesian Telkomsel.
A streaming service provider launching in Asia’s diverse market would have to deal with challenges beyond billing. Local content would be one of them, as international content alone is not sufficient in large regional markets with their own entertainment culture. In The Philippines, HOOQ will carry local content from producers such as GMA, VIVA communications, Regal Entertainment, and ABS-CBN. It will have to follow the same strategy in markets like India and Indonesia.
Internet Connectivity Across Asia
Broadband penetration varies widely across Asia, with some connections inconsistent and unreliable and many Asian countries unable to provide affordable broadband connectivity. However, there are several markets where online content streaming websites have grown despite unreliable Internet speeds. For instance, China has seen growth in digital home entertainment despite being ranked 79th globally on average internet connection speed. Prices have shot up as demand has grown. In 2011 alone, prices for Chinese TV shows grew from RMB 10,000 (US$602) to RMB 1.85 million (US$3 million).
Domestic Competition and Regulations
Players such as Netflix and Singtel will face stiff competition from domestic players in each Asian market. For instance, in January, Australian Fairfax Media and Nine Entertainment launched their own OTT service Stan, preempting Netflix. In India, a host of video streaming websites such as Spuul, Bigflix, Star India’s Hotstar, and the Times’ Group’s BoxTV are already saturating the market. BoxTV has been operating since 2013, and is a website and subscription service with a focus on India as well as the Indian diaspora overseas.  Hotstar launched in early 2015 and is currently allowing users to view videos for free without registration. Another Indian service,, was introduced in Singapore, Japan, Thailand, Hong Kong, Australia, and New Zealand in February 2015.
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Censorship regulation in Asian markets is another concern for potential foreign investors in online content streaming services. China limits the amount of foreign shows permitted on Chinese television and, starting on March 31, 2015, will also require video streaming websites to obtain licenses for foreign movies and TV shows. As a result of stringent Chinese regulations on foreign content, the biggest online video providers such as Baidu and Alibaba, which jointly spent US$1 billion on foreign content acquisition in 2012 – 2014, are moving into original content creation. On its part, Singtel has said it will follow censorship regulations in all of its markets.
If Singtel’s telecom subscriber-based model proves successful, other large Asian telecom providers are expected to get into the online content streaming space despite infrastructure and regulatory challenges.
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Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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