The Asia Pacific region is seen as one of the key drivers for growth in the global streaming industry, but is still feeling the squeeze as investment spirals and cost conscious consumers cut back on subscription spend.
Speakers at this year’s APOS conference looked at strategies to increase profitability in the pandemic hangover era, including aggregation, introducing ads, forming partnerships and rationalizing sky-high content costs.
In a first day session, Kelly Day, Amazon Prime Video VP International, said that a combination of original content and aggregated channels, delivered through a single app and billing relationship, was key to driving usage in an era where customers face overwhelming choices and “we’re starting to see a little bit of subscription fatigue”.
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“At Prime Video we’re focused on delivering great selection – and that can come from our original SVOD content and sports. But it’s also increasingly coming from our partners – services like Paramount+, HBO Max, Starz and BritBox – we have over 500 channels and partners, who are also delivering incredible value to customers, along with FAST channels, AVOD and our TVOD store,” Day said.
Day also addressed Amazon’s decision to introduce advertising to its service, announced last week, echoing Netflix’s move into advertising announced last year. “Obviously it’s very early, but we want to continue to invest in great content in lots of different countries, and this is one way we can subsidise the costs of producing super high-quality content.”
She continued: “We’ve announced the first wave of countries – there are nine countries where ads will be introduced into Prime Video next year and customers will have the option to buy out of that experience. We think it’s going to be a great way for us to be able to keep prices low and keep delivering that value.”
Day also said that local content continues to drive customer acquisition and retention, sitting alongside international originals such as The Lord Of The Rings, Citadel and Jack Ryan, which “really resonate with our Prime customers all over the world”.
When asked if Prime Video was reining in local content investment, she said the service has invested in 280 local original titles across 25 countries since early 2022, with a focus on Japan, India and increasingly Korea in the APAC region. “I would not say we’re reining in investment, but we are looking to continually diversify, so we don’t necessarily need to always produce and own everything ourselves.”
Also in a first day session, Janice Lee, managing director of regional streamer Viu, talked about how Korean content is “driving pan-regional consumption” but that hyper local content in smaller markets, in particular Thailand and Indonesia, is still a key component of the programming mix.
She added that while Viu is known for its Korean drama and unscripted shows, the streamer is now working with that content in various ways: “Apart from just acquiring Korean content, we’re investing into Viu Korean originals and have also been adapting the Korean IPs into local languages.” Among other remakes, Viu has produced a Malay-language adaptation of Korean drama Black.
However, intense competition between global, regional and local streamers to produce local-language content has inevitably driven up costs. In his opening presentation, Vivek Couto, executive director of APOS organiser Media Partners Asia, described content costs in Asia Pacific as “a little out of control” and that they need to be “measured over the next five years”. One of Couto’s five key takeaways was that “as online video penetrates deeper, per unit content costs needs to be rationalised and subsidised with ads.”
Couto also noted that local content dominates in Korea (79%), Japan (68%) and India (48%), and that streamers with high levels of local content are winning in those markets. But he said that while Korean content can be monetized globally, content in India has become over-valued as costs will balloon from $5.5BN in 2023 to around $10BN in 2028, mostly driven by sports which will account for 30% of spend. In comparison, content spend in Korea will increase marginally from $4.8BN in 2023 to $5.9BN in 2028.
JB Perrette, Warner Bros Discovery CEO and President, Global Streaming and Games, talked about how India’s high content investment and low per user revenue led to the decision to form partnerships and licence its content rather than go direct-to-consumer by launching Max in that competitive market.
Defining WBD’s three major success metrics as “profitability, share and scale”, Perrette added: “India is a fantastic market, but if part of our measure of success is profitability, we need the conviction that content costs and our differentiation in the market are viable enough to have a profitable business over a three to five year time horizon.
“If the answer is no, because ARPUs are too low, or the market is way over served by a ton of other players who are spending a ton on content and losing money, then we may say it’s not the right time.”
WBD signed a licensing deal with Viacom18 in April under which JioCinema is the new streaming home of HBO, Max Original and Warner Bros content in India. WBD has also recently announced licensing deals in APAC territories including Japan and Australia, although it has not ruled out launching Max in those markets. Plans are also underway to integrate WBD’s existing streaming service in Southeast Asia, HBO Go, into Max through a launch in select Asian markets expected later next year.
Putting the sector into perspective, Couto also explained in his opening presentation that premium video accounts for a tiny fraction of APAC’s overall digital market, with annual revenues of $7BN, compared to social and user-generated, which generate revenues of $123BN. Leaders in that larger segment include Google, Amazon Prime, Meta, TikTok and YouTube.
APOS is taking place at the Ayana Resort in Bali, Indonesia (September 26-28) in an in-person format for the first time since the beginning of the pandemic.
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