The once-sizzling streaming business might be cooling off, but don't tell Asian telcos.
Pay TV is a core strategy for the region's major operators, including streaming services, but in some cases direct investment in TV content.
Tellingly, Asia is the one region where Netflix grew its subscriber base in the first quarter. It added 1.1 Asian subs, while losing a combined 1.3 million in other regions and predicting a loss of 2 million subs in the next quarter.
The disclosure last week sent shockwaves through the TV business. Netflix's stock plunged 35% and other big brands including Disney, Discovery and Paramount were marked down (see Netflix is in crisis as streaming hits the buffers).
Multiple factors are at play but the biggest is that the streaming market in North America and Europe is over supplied.
The view from Asia is very different. Not only is it Netflix's sole source of subs growth, but it's also a region where the streaming firm is continuing to invest in fresh content – as are big Hollywood players and a handful of regional telcos.
The attraction is the untapped potential of southeast Asia. Indonesia, Thailand and the Philippines have vastly different demographic profiles from the US and Europe and a limited demand for Hollywood content as well as hunger for local productions.
PCCW-owned Viu was a pioneer in going after those markets with local language content five years ago (see Viu Develops Own Content in Asia). It's now finding extra growth by exporting some of these programs to viewers in neighboring markets and even to the US.
The company, which grew revenue last year by 37% and subscriptions by 70%, is the number 2 streaming platform in southeast Asia with 7 million subs as of December 2021. That puts it just behind Disney's Hotstar, which has 7.2 million subs, and ahead of Netflix with 6.8 million.
The other distinctive factor in Asia, both for telcos and the streaming market, is global media powerhouse South Korea.
The two big operators, never shy about pursuing diversification, are not staying on the sidelines.
KT Corp has just announced it will invest 500 billion won (US$400 million) in original content to increase media revenue by around 40% to 5 trillion won ($4 billion) in the next four years.
Its dedicated media unit KT Studio Genie, whose properties run from webtoons and music to TV and novels, has just taken a 100 billion won ($79.8 million) investment from one of Korea's biggest entertainment conglomerates, CJ ENM. That follows the 175 billion won ($140 million) KT injected into the business last September.
Rival SK Telecom last year unveiled its own plan to spend around $880 million on Wavve, its partnership with three local terrestrial networks, by 2025. For 30 billion won ($23.9 million) it also took a 20% stake in the streaming platform owned by its broadcast partners.
A shake-out in the streaming business looks inevitable, but southeast Asia remains a growth market for OTT players and telcos willing to invest in satisfying local tastes.
- Netflix is in crisis as streaming hits the buffers
- Netflix shares plummet 25% amid loss of 200K subs, slowing revenues
- Viu Develops Own Content in Asia
— Robert Clark, contributing editor, special to Light Reading