Asia’s SVOD subscriber landgrab is in full swing, playing out against a wild background where, in the words of Media Partners Asia (MPA) executive director and co-founder, Vivek Couto, “everything is dissolving”.
Delivering his signature opening keynote at this year’s Asia Pacific Video Operators Summit (APOS) in Bali at the end of April, Couto outlined a re-tooled video distribution environment of realigned operations and costs. “Fixed cost businesses will have to grow revenues or reduce costs to remain viable,” he said.
The future, he added, was all about replacing today’s content, programming, distribution, acquisition and servicing habits with new practises. The 24/7 content cycle, for instance, would be replaced with an increased emphasis on quality over quantity. Programming would evolve from asking audiences to adapt to pre-set schedules to using recommendations. Distribution would shift from capital intensive fixed costs to variable opex. Acquisition would switch from a customer acquisition team to subscriber acquisition driven by programmatic advertising. And, finally, customer servicing teams would be replaced by chat bots.
MPA expects a full transition to IP-delivered video and the emergence of IP-enabled boxes as an alternative platform. Data presented at APOS showed digital pay-TV subscribers rising from 176 million in 2016 (ex China) to 215 million in 2022. Of these digital subs, IP-enabled box penetration (17% in 2016) is forecast to rise to 32% – 68.8 million subscribers – by 2022. It’s only a question of how soon, Couto said, adding that the traditional ecosystem is being replaced or augmented by a new “ecosystem” witha competitive landscape featuring players with no legacy costs. He also highlighted the rise of local-language online video platforms, which he said had only just begun.
Online video’s share of revenue in the Asia-Pacific region is forecast to double from this year’s 15% (US$1...
Asia’s SVOD subscriber landgrab is in full swing, playing out against a wild background where, in the words of Media Partners Asia (MPA) executive director and co-founder, Vivek Couto, “everything is dissolving”.
Delivering his signature opening keynote at this year’s Asia Pacific Video Operators Summit (APOS) in Bali at the end of April, Couto outlined a re-tooled video distribution environment of realigned operations and costs. “Fixed cost businesses will have to grow revenues or reduce costs to remain viable,” he said.
The future, he added, was all about replacing today’s content, programming, distribution, acquisition and servicing habits with new practises. The 24/7 content cycle, for instance, would be replaced with an increased emphasis on quality over quantity. Programming would evolve from asking audiences to adapt to pre-set schedules to using recommendations. Distribution would shift from capital intensive fixed costs to variable opex. Acquisition would switch from a customer acquisition team to subscriber acquisition driven by programmatic advertising. And, finally, customer servicing teams would be replaced by chat bots.
MPA expects a full transition to IP-delivered video and the emergence of IP-enabled boxes as an alternative platform. Data presented at APOS showed digital pay-TV subscribers rising from 176 million in 2016 (ex China) to 215 million in 2022. Of these digital subs, IP-enabled box penetration (17% in 2016) is forecast to rise to 32% – 68.8 million subscribers – by 2022. It’s only a question of how soon, Couto said, adding that the traditional ecosystem is being replaced or augmented by a new “ecosystem” witha competitive landscape featuring players with no legacy costs. He also highlighted the rise of local-language online video platforms, which he said had only just begun.
Online video’s share of revenue in the Asia-Pacific region is forecast to double from this year’s 15% (US$17.7 billion) of the total US$118 billion to 30% (US$48 billion) of US$160 billion in 2022. Pay-TV will drop from a 38% share (US$44.8 billion) of this year’s US$118 billion to a 28% share (US$44.8 billion) of US$160 billion in 2022.
Of the video industry’s incremental revenue of US$42 billion between 2017 and 2022 (including China), 67% (US$28 billion) will go to digital, 32% (US$13.4 billion) will be from pay TV and 1% (US$0.42 billion) from free-to-air. Excluding China, pay-TV takes the lion’s share of the video indus- try’s US$13 billion incremental revenue, with 54% (US$7 billion), digital 40% (US$5 billion) and free to air 6% (US$0.8 billion). In Japan/Australia, 100% of the incremental revenue will be from digital, dropping to 20% in India, 30% in Korea and 35% in Southeast Asia.
Behind this change is “rapid transformational growth in wireless broadband”, from 32% penetration (excluding China) of the Asia Pacific population of 2.3 billion in 2016 to 63% of the 2.4 billion population in the region in 2022. Fixed broadband will grow more slowly, from 22% penetration of 555 million households in the region (excluding China) to 25% of 598 million homes in 2022.
“The subscription ecosystem is changing rapidly,” Couto said, adding that SVOD reach would continue to grow substantially to 80 million subscribers in 2022 from less than 30 million last year. Revenue growth, he added, would be more moderate. And, he warned, a “hard reset” was on the way for SVOD platforms with churn at 70% in year two and 60% in year three.
Published on ContentAsia's Issue Three 2017