The Top 9 things that came out of APOS this year

This year’s APOS (Asia Pacific Video Operators Summit) by Media Partners Asia (MPA) wrapped last night with a few clear messages.

1. MGs are Dead. Long Live Rev-share

Talk of minimum guarantees for content is a total passion killer for telcos, most of who are not shy about saying things like “never going to happen”, “think again if that’s your line”, “let’s talk revenue share” and variations of those.

The thread across the two-day event in Bali kicked off with Globe Telecom (Philippines) president and CEO, Ernest Cu. “Everyone wants an MG,” he said, adding: “We said maybe, but nowadays remember that we are all building a market together. We have to work together and educate people on online streaming. We believe the market will turn…. MG [for content] is not the right model”.

Indonesian telco Telkomsel's director/chief marketing officer, Alistair Johnston, echoed the sentiment.

"The traditional model of subscription packages for content with a big MG, I really think this has to be revised," Johnston said, outlining the possibility of co-mingling products to allow subscribers to cherry-pick the content they want no matter where it comes from, and at the same time managing data. "Indonesian subscribers are not going to have multiple subscriptions" to SVOD services, he added. Telkomsel, which invests US$1.2 billion a year in its network, offers monthly, weekly, daily, sachet and pay-per-use payment options. 

Johnston outlined a model "that maximises the value of premium content" rather than one based on free content.  

"Indonesia has 265 million people. Half of them have access to broadband devices in their palm of their hands. The vast majority of them are not paying a penny for content today. They are watching either pirated content or not watching video at all and I think there is an opportunity to bring great content to the market," Johnston said. 

2. Our Blended Future

A blended future of no channels, no platforms, “just great content”, as MPA executive director and co-founder, Vivek Couto, said in his opening. “Everything is dissolving,” Couto said.

Others have already stopped talking about channels. “We see the world moving to a world of apps,” said Andy Bird, Walt Disney International chairman, who has forbidden the use of the word ‘channels’. “Channels of the future are playlists… curated playlists,” he said.

Another kind of blending is happening elsewhere as platforms adopt more efficient two-way delivery technologies.

In Indonesia, MNC Group is merging as much of its Indovision DTH and MNC Play broadband subscriber base as it can, particularly in larger cities. MNC Group founder/president director, Hary Tanoesoedibjo, said he was building up the group's IPTV business, with plans to pass two million broadband homes by the end of 2018, up from today's 1.2 million homes passed.

"Subscribers in big cities want pay-TV and high-speed internet connections," he said.

For all that though, free-to-air in Indonesia isn't expected to give up its lead for the next 10 years at least. "The market is still robust for free-to-air, and will be our main source of revenue for the next 10 years. But for pay TV, we need to combine DTH with broadband," Tanoesoedibjo added.

3. The Local Advantage

A major opportunity for Asian content as focus shifts towards enhancing and balancing the offering on regional SVOD/streaming services, the rise of local language online video platforms, and the effort by international brands to compete for local audiences.

Netflix's global head of business development, Bill Holmes, told delegates that "our goal over the next 10-20 years is how we can get smarter about programming tastes and how we can build the best product. What drives consumption is great content. We are increasingly focused on finding great local story tellers in Asia”.

Even Turner’s die-hard Hollywood general entertainment service, Warner TV, is going local. Has to be done, Turner International president, Gerhard Zeiler, said.

Hollywood content is still important for the region, but it's more important to go into local content,” he told delegates.

Single brands, will still be important in the future, "but they have to be relevant. What is not relevant are channels that you sell to distributors that no one really wants to watch. It's must have or no have," Zeiler said. 

Some who have dabbled in local TV production in the past with varying degrees of success and more than a little frustration are pivoting and trying again.  

Walt Disney International chairman, Andy Bird,said the company's decision to exit movie production in India last year had been "misinterpreted". Rather, he said, Disney saw a greater opportunity to take its story in a different direction.

"The real story was the the economics of the Indian cinema industry weren't catching up. I wanted to pivot the business slightly," Bird said, outlining an aggressive positioning to ride the "explosion of new opportunities". 12 projects are currently in development by Disney's India team. 

Newbies to the world of Asian content are not saying anything local media companies haven't known for years.

MNC Group's Hary Tanoesoedibjo said production across MNC's free-to-air and pay-TV businesses was "almost 100%" local and in-house. This gives MNC a cross-platform rights/IP advantage. 

Further out but not that far behind, are telcos who didn't necessarily envision life as a content creator but who realise the advantages of a more active role in the space. 

"There's no reason Telkomsel can't be the one that's out there producing the compelling TV shows and movies that customers want, so we think there's an opportunity," Alistair Johnston said, adding: "Our future and our core business is data but we are looking at a number of adjacent categories where we can add value". 

4. What's Working... & what's not: The Ongoing Rise of Data Driven Content Decisions

Long-tail content seems to have had its day, although box-sets to back up the latest series are still hot.

"What drives repeat usage is the freshest content and the biggest stars," Telkomsel's Alistair Johnston said. "We see that in Viu, which does a great job of bringing the latest Korean shows to the platform on the same day that they air in Korea". Original content also seems to drive loyalty. Pan-Asian content, on the other hand, doesn't necessarily work in Indonesia. "There is a big opportunity for Indonesian-language and Indonesian-based content, which is very underserved," he said.  

5. The Rise of On-demand Destinations

The emergence of a new generation of branded on-demand destinations where consumers know exactly what they’re getting and can get it easily whenever (or that’s the idea, at least). FOX+ is the new darling in this streaming space, BBC Player remains committed to its journey, and NBCUniversal is the shiny new posterchild for focusing on its strengths and assets in creating on-demand destinations for platforms in Asia.

By the end of this year, NBCUniversal will have launched on-demand products with 10 partners in Asia, said NBCUniversal chairman, global distribution and international, Kevin MacLellan. We know about five of these, including Japan and China, at the moment. Five are yet to be announced.

What none of the established entertainment brands are talking about right now – with the exception of Turner international president, Gerhard Zeiler – is breaking free of existing subscription partner platforms.

Zeiler believes strongly in building direct-to-consumer angles. The direct-to-consumer future, he said, "will not only be for the big streaming players. All of us who come from the curated channels business... we have to balance investment in direct-to-consumer businesses with our core legacy business. We will fail if in two to three years time we don't have a B2C kids business".

6. SVOD - An Unclear Path to Profitability

And talking about the great new sexy stand-alone streamers of our time, another constant refrain through APOS was their unclear path to profitability. Clearly not a problem for them right now, but, say others/rivals under pressure not to decimate legacy businesses, the model is unsustainable and they’re so not going there. Meanwhile, regional players iflix, Netflix, Viu, Amazon Prime Video and HOOQ, along with regional newbie tonton, have found a happy home at APOS on and off stage. And long may it last.

7. Hallyu Alive & Well, despite the China Freeze

Korean programming and production (and on the sidelines talk of Netflix spending a rumoured US$130 million on Korean content). Netflix wouldn’t confirm that, but there’s little doubt anywhere that they’re determined to make Korean shows fly.

Four major Korean content trends led the discussion: Korean dramas for domestic audiences on both free-TV and cable; Korean dramas that appeal to Western audiences but may not do that well in Korea, which is where Warner-owned DramaFever is flourishing; high-concept, potentially breakthrough dramas, such as Astory’s epic historical zombie thriller “Kingdom” for Netflix; and remakes of Korean dramas in various parts of the world. There are also expectations that China’s hardline ban against all things Korean will ease next year and at least some of the mainland business will return.

8. Think Consumer First

Consumer-first thinking (and, on the sidelines of the main stage discussions, how incredibly difficult that is to execute well on multiple levels).

FOX Networks Group's president/COO, digital consumer group, Brian Sullivan, talked about presenting an aggregated content experience, and taking the burden of finding content off the consumer.

"There's never been more content but finding it is a nightmare," Sullivan told APOS delegates, predicting that many of platforms we are seeing now "won't be around in three to five years" but there's a huge amount of experimentation and learning.

"The power has gone to the consumer and it's never coming back," he said.

With the old model broken, the new ecosystem emerging involves digital (or virtual) MVPDs which are "delivering a great digital experience live and on-demand, usually mobile first, at great pricing.... I don't see them disappearing." But, he stressed, getting the commercial balance is critical or there won't be any content…

Telkomsel's Alistair Johnston said the telco had been led in a direction it didn't necessarily anticipate going in order to create a compelling customer experience. "To some extent we feared the technical challenges [of offering an integrated product]. It's not straightforward. But ultimately we are led by the customer experience". 

"The customer experience is better in Indonesia if you view pirate content than if you view official content because trying to find out which provider has the movie or series you want to see, and then trying to find out a way to subscribe to that and manage the subscription is not easy. On the black market, however, there are lots of other solutions. That’s a mistake we’ve all made. Between the telcos and the platforms and the content operators, we have to figure out a way to create a more compelling cusotmer experience," Jennings said. 

Even traditional pay-TV players are angling for the simplest path possible between consumer and product. MNC Group's Hary Tanoesoedibjo said he had slashed pay-TV platform Indovision's basic packages to four or five. "It was too confusing before... Now it's much simpler," Tanoesoedibjo said. 

9. Welcome to the Giant Learning Curve

The giant learning curve involved for everyone, big and small, across every sector and all relationships. 

“We’ve been on a journey of learning and understanding and exploration,” Walt Disney International chairman, Andy Bird, said.