Fifteen players – led by YouTube with revenues of more than US$4 billion – will dominate Asia-Pacific online video revenue in 2019, taking 70%, or US$18.9 billion, of total online subscription/advertising revenue of US$27 billion, according to Media Partners Asia’s (MPA) new Asia Pacific Online Video & Broadband Distribution 2020 report.

Excluding China, three platforms – YouTube, Amazon and Netflix – could take 54% of 2019 revenues. In the next five years, online video revenue in Asia Pacific is forecast to be US$50 billion; Chinese platforms will still take more than half, but their share will drop from an expected 59% this year to 55% by 2024 because of economic deceleration, market maturity and increased regulatory oversight.

In addition to dominating online video revenues, China is also spending the most on online content. Across the whole region, online content spend this year will be US$16.8 billion. US$13.3 billion will be spent in China. The rest of the region will spend US$3.5 billion, including sports. Excluding China, online content spend is led by Japan (US$1.3 billion), India (US$0.8 billion) and Australia/New Zealand (US$0.7 billion), for a total of US$$2.8 billion. All the other countries combined will spend US$700 million. In Southeast Asia, online video investment this year is forecast to be US$400 million, double that of Korea, which will spend an estimated US$200 million, according to MPA forecasts.

Outside of Chinese platforms iQiyi, Tencent Video, Youku and ByteDance and the global streamers, online revenue is led by the Disney-owned Hotstar (India) and two Japanese platforms – Hulu Japan and dTV, all of which have estimated revenue of less than US$300 million this year. The last five on the list – Stan, Niconico, Foxtel Now/Kayo, Viu and Korea’s new platform Wavve – are estimated to have ad/subscription revenues of less than US$250 million each.

Expected influences on ad/subscription revenue and content spend in the next two years are the arrival of Disney+, Apple TV+, and possibly NBCUniversal’s Peacock. Amazon may ramp up Prime Video in the region, expanding from its current focus on Japan and India. Regional players are also spreading their wings. Hotstar is expected to roll out beyond its home base in India into Southeast Asia. iQiyi and Tencent already have a foothold in Taiwan and Southeast Asia. ByteDance is already planting a flag in India, Japan and Southeast Asia.

Key to fulfilling online video’s potential is subtle regulation, says MPA executive director Vivek Couto. He says efforts to align OTT regulations with broadcasting and pay-TV and imposing TV content standards on niche online services “may be counterproductive”. Best case regulatory scenarios are no foreign direct investment limits and no pricing restrictions.

Meanwhile, standalone OTT video remains loss-making in Asia Pacific. Profits are possible in the next three to five years “either in large domestic markets, such as China/India/Korea, or as part of an expanding global and regional footprint,” Couto says. And the rest? Consolidation seems inevitable.

Published in ContentAsia Issue Five 2019, 3 October 2019