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APOS: Online Video Headed for 15% Annual Growth, Disrupting Asia Markets

A blistering 15% annual growth of online video will give the Asian video industry (TV, pay-TV, home entertainment and streaming) a growth rate nearly double that of North America for the next five years.

According to a new report from Media Partners Asia, published on the eve of the APOS conference in Indonesia, Asia’s online video business is forecast to grow from $26 billion in 2019, to $52 billion in 2024. Asia will have a 4.5% annual growth rate that compares with just 2.5% forecast for North America over the same period. The overall Asian video business will have revenues of $154 by 2024.

With the Asian TV business growing at just 1% per year, online will expand and account for fully a third of the Asian video business by 2024.

The Asia figures are skewed by China’s enormous digital appetite – it counted 612 million long form video users and 648 mil. short video users, at the end of 2018 – but with China separated out the forecast growth in the region is still strong. Online video in the rest of the region is also forecast to enjoy 15% annual growth, and to increase its revenues from $10 billion in 2019 to $21 billion by 2024.

“China remains at the forefront in online video scalability and innovation, although monetization models are starting to scale in other major markets… driving new economic value for content creators, aggregators and sports-rights owners,” said Vivek Couto, executive director at Media Partners Asia.

“The still lucrative legacy TV industry continues on a low-growth trajectory in many markets, although under increasing pressure. In certain markets, the value erosion across legacy TV is unlikely to be replaced over the medium term, but digital video monetization will grow and margins will recover as costs recalibrate.”

The balance between advertising and subscription revenue is changing in Asia. Advertising’s share of Asia-Pacific video revenues will decline from 55% in 2019 to 53% by 2024 as subscription grows further in China. Ex-China, advertising’s contribution will remain constant over 2019-24, accounting for 56% of video revenues with subscription providing 44%.

Industry investment on video content is expected to grow at a 3% annually in Asia Pacific to reach $73 billion by 2024, up from $64 billion in 2019. That reflects a contraction by the TV sector as budgets rationalize, especially on third party content and sports rights. Online video content spend will climb at 10% annually to reach $33 billion by 2024, driven by growth across the region, as well as cost inflation for Asian entertainment, sports rights and Hollywood content. China will be the biggest buyer with $27 billion spent on online video content in 2024, followed by Japan at $1.7 billion and India at $1.4 billion.

Video industry revenues in China will expand by a 5.4% annually from 2019 to create a $70 billion industry by 2024, in which online video accounts for 44%. The demand for local content is very strong, with 99% of online video users watching local content on video platforms. The appetite for foreign content also grows, with approximately 45% of users consuming some form of international shows.

Short videos had become extremely popular in China. ByteDance is the leader in this arena, having launched three of the most popular short form apps in the country, including Douyin (the local version of Tiktok). All the top three video platforms (iQIYI, Tencent, and Youku) had also expanded beyond their core video business to embrace short video. iQIYI launched three short video apps last year, giving it four. Tencent has several short video apps, with the latest Yoo Video. And Youku recently rebranded Tudou as its short form platform.

Japan is forecast to enjoy a digital dividend as online video growth offsets declines in TV. The overall market is forecast to hit $28 billion in 2024, with online video accounting for 22%.

India’s overall video market is set for an 8% compound growth rate from 2019, the fastest growth in the region, hitting almost US$20 billion by 2024. TV will still enjoy 6% growth, but online video is forecast to leap forward with 22% annual growth.

Video industry revenues in South East Asia should expand at a 4% to reach US$11 billion by 2024, with Indonesia, Thailand and Vietnam contributing almost 65%. Indonesia is forecast to see 24% annual growth in online video, though most of that will be ad-supported, not from subscriptions.

The growth of online video will keep the mature Australian and New Zealand markets growing at 5% per year till 2014. MPA forecasts that online will become the dominant force, disrupting the legacy TV industry, and accounting for 53% of the $11 billion market.

Online video revenues should grow at 17% per year from a low base between 2019 and 2024 in Korea. The group forecasts overall video industry growth of 3% annually to $10 billion, and a sharp slowdown in TV.

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