Local players cling on as video streaming wars open new battlefronts in SE Asia

A $150-million investment in Indonesian over the top (OTT) services provider Vidio earlier this month capped two frenetic years for the streaming market in Southeast Asia. Local players iflix and HOOQ bowed out of the market last year, while new entrant Disney+ has managed to make impressive strides in the region.

The battle, however, is far from over. In fact, it has only just begun. With a penetration of less than 5% and a limited presence beyond the big cities, the region’s VOD market is anyone’s to win.

The next stage of growth, which is expected from second and third-tier cities, will largely hinge on flexible pricing and payment options and content curated to suit local preferences.

These factors will require platforms to diversify their content offering and revenue streams. Livestreaming, gamification and merchandising of original content are expected to be growth drivers where foreign players will exercise their capital spend and local players will leverage on their grasp of home markets.

Ripe for disruption

Two recent developments in Southeast Asia’s VOD market indicate room for growth and disruption – Disney+ becoming the largest player in the region only a year since its launch and the latest investment by private equity firm Affinity Partners in Indonesia’s Vidio.

Disney+, which entered the region in September last year, had more than 7 million subscribers at the end of September this year, outperforming both Netflix and Viu, according to estimates by Media Partners Asia (MPA) published last week.

Hong Kong-headquartered Viu, which has been operating in the region since 2016, had 6.1 million subscribers.

MPA does not disclose Netflix’s subscriber count. It said that despite losing in terms of subscription numbers, the platform retained its lead in Southeast Asia in terms of total minutes streamed in the third quarter with a 39% share. Meanwhile, Viu and other platforms such as Tencent-backed WeTV and Baidu-backed iQiyi competed for second place.

The US and Chinese players are dominant across most markets in the region. Indonesia remains an exception where local players GoPlay, Mola TV, Vidio and Vision+ have used a hyperlocal strategy and leveraged their domestic networks to defend themselves.

Among Indonesian players, Vidio, which is owned by the Indonesian media conglomerate Emtek Group, is the largest. As of September, it had 62 million average monthly active users (MAUs) and 2 million paying subscribers.

Vidio, which ranks number one on the Google Play Store in the entertainment category, was the top OTT platform in August in terms of unique visitors, according to Comscore, and had the most daily active users across Southeast Asia in Q2, per MPA.

MPA estimates that Vidio accounted for 17% of video streaming minutes in Q3, behind Netflix and Viu (22% each).

Top 3 platforms’ share of premium video streaming minutes in Q3 2021

Source: Media Partners Asia, AMPD Research

The investment by Affinity Partners will further help turbocharge user acquisition and content production at Vidio as it seeks to double subscriptions to four million next year. The funding also reflects strong confidence in the ability of local players, particularly those that are country-focused, to fend off foreign competition.

Vidio is the second Indonesian VOD startup to receive external funding after GoPlay raised an undisclosed sum from a group of investors in June last year.

Beyond the metro cities

Helped in part by the rapid digitalisation during the pandemic, VOD subscriptions are expected to grow 30% this year, according to Google, Temasek and Bain & Company’s SEA e-Conomy 2021 report. This follows a 38% growth in 2020. The report adds that subscriptions “have multiplied” beyond metro areas on the back of ready internet access and convenient access to digital payment infrastructure.

The report does not specify the number of subscriptions but concludes that despite the rapid growth it is “still in early stages.”

Search volumes for select video subscription services indexed to 2017 levels

Source: e-Conomy SEA 2021 report by Google, Temasek, and Bain 

A study by MPA estimates Southeast Asia had 33 million OTT users as of September. That is a 4.8% penetration in a market of 676 million users. Move to Indonesia, the region’s largest market, and it dips below 4% to 11.2 million. If one accounts for multiple subscriptions held by a single user, the numbers could be far lower.

“The next battle seems to be more towards the non-metro areas which require innovative pricing mechanisms [such as sachet pricing] and multiple payment options as most of the users are still unbanked,” said Aldi Adrian Hartanto, partner at ARISE, a joint fund between MDI Ventures and Finch Capital.

Hartanto said that to compete with deep-pocketed global players, local players would have to focus on what they do best – hyperlocal content, non-metro market focus, and cost-conscious spending on content acquisition with a mix of advertising arrangement.

Agreeing with Hartanto on the role of advertising, Golden Gate Ventures partner Michael Lints said advertisers that are interested in local and regional demographic can leverage local streaming services for better reach.

“Localisation is key in this market. The global players have deep pockets and are able to buy titles that appeal to a mass audience. Local titles can play to a large but more curated audience, and it’s a big differentiator,” said Golden Gate Ventures partner Michael Lints.

The fight for content

In the battle for market share, securing the right balance between international and local content could well set the winners and losers apart.

Last month, Chinese internet giant Tencent, which owns WeTV and iflix, picked up a minority stake in publicly listed Indonesian film production company MD Pictures to gain access to the latter’s local content portfolio.

Disney+ has been working closely with Bumilangit, Indonesia’s largest intellectual property rights holder of superhero comics content, for the distribution of films and series such as Gundala and TIRA.

It is rumoured that Disney+ has been looking to pick up a stake in Bumilangit, which is partly controlled by Indonesian business mogul Erick Thohir, who currently serves as the country’s minister of state-owned enterprises.

Meanwhile, local players are seeking to offer more than the traditional fare of feature films and series.

GoPlay, which is owned by Indonesia’s largest tech conglomerate GoTo, has diversified to include live streaming programmes across various categories, such as hobbies, music, sports, comedy and games. Earlier this year, the company launched the GoPlay Studio app, a professional user-generated content (PUGC) application to allow influencers and content creators to onboard their videos faster and directly interact with followers.

“Given the size of the market in Indonesia and the huge talent pool here, there is definitely room for multiple players to grow the creative industry,” said GoPlay CEO Edy Sulistyo, while adding that GoPlay’s live streaming business had recorded 19 times increase of MAU from April to August this year, outperforming its VOD offering.

Vidio, which has been broadcasting live streams of local TV stations and sports events, is also tapping independent content creators. The biggest among them is celebrity couple Raffi Ahmad and Nagita that boasts the largest social media following in the country. Under RANS Entertainment, the couple runs a reality show on their family, a music channel and a sports entity covering football, basketball and esports.

Vidio’s parent, publicly listed Surya Citra Media (SCMA), acquired a minority stake in RANS in October, according to SCMA CEO Sutanto Hartono. Emtek is also partnering with Wattpad, an online social storytelling platform backed by South Korean media company NAVER Corp. Under the partnership, Vidio will acquire some of Wattpad’s popular stories and stream them on its platform.

Blibli, which is backed by Indonesian conglomerate Djarum Group, is sticking to sports programming, particularly soccer, to beef up its live streaming offering. The company holds the broadcasting rights for all championships under Indonesia Football Association (PSSI), the English Premier League and Germany’s Bundesliga, among others.

The Indonesia playbook

OTT players in the archipelago are counting on the support provided by their parent companies’ ecosystems and a large pool of local content and talent to keep larger rivals at bay.

Startups that are backed by large media conglomerates such as Vidio and Vision+ have benefitted from the cross-pollination of resources under their parent companies. These resources include vast collections of films and series held by TV stations under Emtek and MNC Media, respectively, as well as their formidable marketing infrastructure.

Emtek also controls a majority stake in e-commerce giant Bukalapak and digital payments startup DANA, both of which have been tapped by Vidio for promotions.

GoPlay is also unique due to its position as part of the GoTo ecosystem, which boasts 100 million MAUs via subsidiaries: ride-hailing giant Gojek, e-commerce powerhouse Tokopedia and Indonesia’s largest digital payments app GoPay. GoPlay is a native tile in the Gojek application, while Tokopedia helps sell its live streaming vouchers.

Having the support of large parent companies also means startups such as GoPlay and Vidio are under less pressure to turn a profit. At the same time, their ability to raise funding independently means a lower financial burden for their parent entities.

Thailand and Vietnam are two of the most promising markets where local players could potentially emulate Indonesia’s playbook. Both markets have large consumer bases with populations of close to 70 million and 100 million, respectively.

Thailand is already a competitive market for VOD with a subscription count that is comparable to Indonesia, according to MPA, albeit dominated by foreign players. As one of the region’s top destinations for film and video production historically, the country also has a lot of local content to offer.

Vietnam, on the other hand, is the region’s third most active destination for tech investments after Singapore and Indonesia. The development of homegrown tech companies, particularly in e-commerce, ride-hailing and fintech, should incentivise content production as companies compete to increase adoption and user retention.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.