Among the bigger questions about Singapore-based regional telco giant Singtel's new ambitious over-the-top (OTT) play is this: How much local content will new service Hooq be able to acquire to drive take-up in specific Asian markets, particularly since many of the biggest broadcasters favour their own platforms?

The second question is when - or whether - other U.S. studios will add blockbuster titles to an international slate currently driven by the venture's first partners, Sony Pictures Television and Warner Bros Entertainment, and much of that is on a non-exclusive basis. Question 2A is whether - or how soon - Hooq bosses will greenlight original content that it can own and control. And the third - despite agreement that Hooq is a sensible defensive play against, among others, Netflix - is Singtel's appetite for a video-streaming environment of low forecasts and uncertain returns over the next five years. And then there are the issues that will play a defining role in the success of OTT services in Asia, and not just for Singtel: digital infrastructure, con-tent costs, price sensitivity, high levels of piracy..."The market for the legal consumption of OTT services in Asia Pacific is at an early stage with monetisation models nascent in most countries," says Media Partners Asia (MPA) executive director, Vivek Couto.

MPA expects online video revenue to hit US$12.4 billion by 2020 from US$3.5 billion in 2014 across 13 Asia-Pacific markets, according to new research report, Asia Pacific Online Video Distribution 2015. MPA says advertising will contribute more than 80% to the region's online video pie by 2020. The subscription revenue opportunity, largely driven by subscription video-on-demand (SVOD) platforms, will grow from less than US$700 million in 2014 to more than US$2.3 billion by 2020. MPA says active Asia-Pacific OTT video subscribers reached 594 million in 2014. China accounted for more than 85% of the market size in 2014 and will represent 80% by 2020. Ex-China, the largest markets in 2014 were Korea, India, Japan and Hong Kong. By 2020, MPA projections indicate that active OTT video customers will reach 977 million.

By 2020, in Asia ex-China, India will emerge as the second largest market, followed by Korea, Japan and Hong Kong. In Southeast Asia, Malaysia will be joined by Indonesia and the Philippines as market leaders. MPA says the market for subscription-based OTT video reached 75.3 million active subs in 2014 and is expected to reach 225 million by 2020. China will be the largest contributor, driven by internet-enabled TV and set-top box platforms and online video companies offering premium services. Japan, Korea, India and Australia "will emerge as material opportunities", powered by SVOD, but India will trend towards more of a freemium-oriented model, MPA says.

Clearly Singtel and its telco partners around the region are optimistic enough to take the risk. Not to mention encouraged by obvious audience shifts to streaming services in other parts of the world. Reports out of the U.S. say that as much as 40% of TV rating dips in the second half of 2014 were because of streaming services.This isn't the first time Singtel has gone down the on-demand streaming route, and the telco can't have any desire to repeat the expensive content lesson of its early Mio TV days in Singapore when, among other forecasts that were way off, multi-million dollar rights costs were out of line with audience appetites. Singtel killed its U.S. studio day-and-date Season Pass on-demand platform in 2013 after five years. Neither usage stats nor losses were made public.

Many industry post-mortems put high content costs at the centre of what went wrong.Hooq chief executive, Peter Bithos, acknowledges the OTT industry's oft-repeated headache - the cost of compelling content."Particularly in Asia, the challenge is working with and convincing international content owners on issues such as pricing... We need a lot more innovation to stimulate the market and combat piracy to generate incremental revenues for everyone in the industry," he says.Two months after its January launch, Hooq had announced one market roll out. The video streaming platform went public in the Philippines with local partner telco Globe Telecom. Services were scheduled to launch in first half 2015. At press-time, no further announcements had been made.The Philippines seems a logical place to start.

Globe Telecom had a little over 44 million mobile subscribers at the end of 2014 and 2.79 million wireless/wired broadband subscribers.Pricing for the Philippines' platform has been kept low - Ps199/US$4.50 a month for all content. The on-demand platform will offer more than 10,000 movies and TV series from Sony Pictures Television and Warner Bros Entertainment and from local studios to stream or download to view offline.The local content question has been well answered in deals with the Philippines' two largest national broadcasters - ABS-CBN and GMA - as well as Viva Communications and Regal Entertainment. Local titles include My Husband's Lover, A Secret Affair, Shake Rattle and Roll and Ang Tanging Ina. A key movie title is Metro Manila, currently among the best local independent films in the Philippines.Hollywood movies include Harry Potter, SpiderMan, Inception, Angels & Demons, Salt, Legion and Wrath of the Titans. TV series include Gossip Girl, Friends and Smallville.

Talks are ongoing with other studios and distributors.Singtel's other telco associates in Asia - including Telkomsel in Indonesia and Bharti Airtel in India - are the low-hanging fruit for early Hooq roll-outs. Singapore, a teeny-tiny market in comparison, may come later - ornot at all. India is the only one of Hooq's target markets that appears on Asia's Biggest OTT Markets lists. The country has 254 million internet users, according to the Telecommunications Regulatory Authority of India (TRAI). Singtel's Indian partner, Airtel, has about 215 million mobile subscribers. In Thailand, Singtel's 23.3% stake in AIS gives it access to about 42 million subscribers, while in Indonesia, Singtel's 35% stake in Indonesian operator Telkomsel gives the telco access to 122 million mobile subscribers. Smartphone penetration in Hooq's markets is, however, still way lower than market leaders such as Singapore and Hong Kong (both at 87% penetration) and Malaysia (80%) for now.

Thai smartphone penetration last year was 49%, while in Indonesia this drops to 23%, according to Nielsen stats. Indonesia has about 278 million mobile subscribers, and Thailand has about 93 million. In the Philippines, 15% of about 106 million mobile subscribers use smartphones. China is by far Asia's biggest OTT force - and will continue to be. Although Singtel has been active in China in the past year, launching a 5G innovation programme with Huawei, there is neither any sign that China is on Hooq's radar for now, nor any indication that Singtel plans to take on the likes of powerful online players Youku Tudou, iQiyi and others in a fiercely political market largely unfriendly to outside media competitors.Other than the Philippines, pricing for platforms in Hooq's target markets has not been set but are likely to be around the US$3 a month. There are plans to offer premium pay-per-view content as well.

Singtel faces fierce competition in Asia, from established standalone services such Viki to new OTT efforts by traditional broadcasters, such as India's Zee TV, with access to decades of library content. U.S. streaming platform Netflix is another potential competitor, although for now the U.S.-based platform's focus is Japan, Australia and New Zealand, with vague murmuring about a possible China roll out and the unlikelihood of this happening with a local partner.A wild card in the OTT space is the Catcha Group's iflix, which plans to roll out in Malaysia and the Philippines in the second quarter of this year, with other Southeast Asian markets, including Thailand, Indonesia and Vietnam, to follow in the second half of 2015.iflix was founded by tech entrepreneur Patrick Grove, Catcha Group chief executive, with media-focused merchant bank Evolution Media Capital.

Grove says the mobile-focused iflix will offer content on every platform for less than the price of a pirated DVD.Licensing deals had not been announced at press time, but iflix's website shows images for Philippines and Malaysia from Warner Bros Entertainment (The Dark Knight Rises, Arrow, The Vampire Diaries, The Big Bang Theory, Harry Potter and the Chamber of Secrets, Person of Interest), Starz Entertainment (Spartacus War of the Damned) and BBC (Sherlock, Dr Who), among many others. iflix says the platform will offer more than 10,000 hours and that content deals have been signed with about 30 distributors.One of Hooq's bigger advantages is that the video platform can be bundled with Singtel's and partner data/broadband subscription plans, and billed to existing subscribers. Among other commonly cited advantages, this billing relationship will allow the platform to overcome any shortcomings in online payment ecosystems. Singtel has about 500 million mobile customers in Asia.

Hooq's Bithos says the biggest challenge is "making sure Hooq provides a great and impressive customer experience at launch with the offering of quality and in-depth content".His priority for 2015? "Getting the service up and running in the targeted markets by the end of 2015." Original content will come later. "We recognise the need for high quality stories to be built by Asia for Asia... content that resonates well across Asia with quality scripting and production. We look forward to filling that need ... This will be part of our journey in the years ahead." - research by Pooja Varma and Malena Amzah

ContentAsia Issue 1, 2015