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Local Players Race for Dominance of Asian OTT Markets

With eyes so often focused on the China’s huge streaming video market, it is easy to overlook the ongoing battles for dominance of the OTT sector across the rest of Asia.

The combatants include global giants Netflix and Amazon and the regional leaders such as Hong Kong-based PCCW Media which is rolling out its Viu service, US-based Crunchyroll, China’s LeEco and a host of operators from South East Asia and Korea.

The arrival of Netflix in Asia in 2015 (in Japan and Australia) and early 2016 (in the rest of the region except China and North Korea, where it has not attempted a launch) sent shockwaves through the OTT market in the region.

Local players responded by focusing on the U.S. platform’s weakness in Asian local content and have rushed to supply regional movies and TV shows, before Netflix catches up.

Viu, which operates on a freemium model offering free access to users, already has 9 million subscribers in 10 Asian territories. The company says it is confident with markets outside of China, including Korea, India, Japan, Hong Kong and Southeast Asia. Viu said OTT TV ad revenue will reach $40 billion by 2020, citing a projection by research firm The Diffusion Group. Viu said its app has been downloaded 1.2 million times within six months of its Hong Kong launch, and It has recently rolled out services in India, Singapore, Malaysia and Indonesia.

Janice Lee, managing director of PCCW Media, said localization of content in local languages will be the key. “In meeting viewers’ needs, we are committed to offering localized version of the latest programs,” Lee said.

While Viu’s focus is streaming acquired content from Korea, Japan, Taiwan and mainland China, it is also beginning to venture into original content production.

Its Indian launch in March included Viu Originals’ chat show “What the Duck,” co-created with CA Media Digital’s celebrity network Fluence. “We don’t want to forgo this opportunity [in original content production,” Lee said.

China’s leading OTT player LeEco, which relies on a mix of subscriptions and integration of its content platform with its smart devices, is strengthening its Asia-Pacific headquarters in Hong Kong as part of a regional expansion plan. It is investing US$2.6 million (HK$20 million) to hire Hong Kong scriptwriters to produce original TV content. In May the platform formed a pact with THEMA Singapore to launch new music channel iConcerts in Hong Kong.

The other response has been for local players to rush for scale.

Taiwan’s Catchplay, which has until this year been a one territory distributor, this year launched Catchplay on Demand. Operations have been rolled out to Singapore and Indonesia already.

Moving even faster is Malaysia-based Iflix, which has launched in Malaysia, The Philippines, Indonesai and Thailand. Along the way it has attracted investment from MGM and more recently European pay-TV giant Sky.

Hollywood investors including Sony and Warner Bros. are also both on board Hooq, an OTT proposition launched by Singapore telco SingTel. Following a launch in The Philippines, it is now operational in India and Thailand.

Crunchyroll, the US-based animation and Asian content streaming platform, said it will multiply its investment in original content production in order to capture a global audience. It will also evaluate its business strategies to see if it will expand its physical presence in Asia, according to Kun Gao, founder and general manager of Crunchyroll.

“Last year we already invested in 20 titles, so this year we will see a multiple of that,” Gao told Variety.

Crunchyroll offers both free and paid services, and shares subscription revenues with partners. It boasts 20 million registered users and 750,000 paid subscribers worldwide and has been striking deals with Japanese corporate partners including Sumitomo and Kadokawa to produce original anime for global audiences.

Gao says Crunchyroll is also building a digital lifestyle for fans outside Asia, offering sales of figurines, DVDs and mangas at its online store and opportunities to meet anime creators at conventions. That is an echo of the all-encompassing ‘ecosystems’ being promoted by the Chinese operators. LeEco recently launched a car! Crunchyroll is evaluating an expansion of these offline services within Asia.

Media Partners Asia’s 2015 report estimated that the OTT market in Asia Pacific will generate $12.4 billion revenue by 2020. India will be the largest ex-China market, followed by South Korea.

Local players in South Korea were anxious about the arrival of Netflix and up the investment in OTT content and development. Among them, mobile operator SK Telecom pledged to allocate $435 million in content over the next five years.

Whether local players can keep out Netflix is uncertain, as the U.S. platform is also working on its shortcomings. Six months after its global launch, Netflix premiered “Hibana”, the streaming platform’s Japanese original series shot in 4K, beginning of June to its 81 million subscribers in 190 countries.

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