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Asia’s Online Video Market Passes $30 Billion as Paying Subscriptions Grow

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Asia’s online video market surpassed $30 billion for the first time in 2020, according to new research. For the first time too, subscription income overtook advertising revenue across the region as a whole. Taking the huge China market out of the picture, AVOD (advertising-supported video on demand) accounted for the majority of sector revenues in Asia, but the gap is narrowing.

The data was presented this week as part of a wide-ranging study “Asia Pacific Online Video & Broadband Distribution 2021,” published by research house Media Partners Asia. Its other findings include: the number of subscriptions per household reaching an average of 3.8 in Japan and Australia; the potential for Disney Plus to reach 80 million paying subscription in India; and YouTube and China’s TikTok-owner Bytedance emerging as the two largest AVOD players in the region.

The MPA report showed region-wide online video revenues of $30.5 billion in 2020. The company forecasts average growth of 12% per year, to reach $54.5 billion by 2025. Ex-China revenues grew by 14% in 2020, to reach $14 billion. These are forecast to grow faster yet, at a compound rate of 16% per year to hit $30 billion by 2025, with the SVOD:AVOD ratio by then moving to 52:48.

Even as China moves to account for less than half of the regional total, Chinese companies will continue to play an outsize role.

“A trifecta of Chinese players – Tencent Video, iQIYI and Tiktok – owned by Bytedance – are expanding across Asia Pacific and globally. Tiktok has been the most successful in terms of consumption and engagement in Southeast Asia and Japan, though monetization lags. The app has been banned in India. iQIYI has commercially launched in Malaysia and soft launched in most other SEA market,” Vivek Couto, MPA’s executive director told Variety.

“Both Tencent, iQIYI are hoping their premium Chinese dramas and movies scale up in Southeast Asia while they add anime, Korean content and where relevant local acquisitions and originals. Tencent Video’s WeTV has been particularly successful in Thailand (bolstered by local content) and has started to grow meaningfully in Indonesia.”

The global giants have not been slouches either.

YouTube is the dominant player with some 60% of total AVOD revenue in Asia Pacific, ex-China. “The platform is a destination for promotional clips and often entire episodes of professional content in Korea, Japan and Southeast Asia. Content creators source, trial and market concepts on the platform. Libraries of professional content are available on the site,” MPA explains in the report. While YouTube is dominant, local players are slowly growing share, especially as broadcasters with local content and sports rights transition online.

Global platforms have enjoyed success in SVOD. “Netflix has built a strong business in Asia Pacific, generating an estimated $2.5 billion in revenue in 2020 on the back of growing success in Japan, Korea and Australia and the popularity of its premium Asian content (Korean and Japanese) and global originals,” MPA estimates. Netflix does not publish country-specific data in Asia.

“In India, Netflix’s total addressable market has expanded through a new deal with Jio. Amazon Prime Video is successful in India and Japan and is growing in Australia. Prime Video has signaled interest in Indian cricket rights, which are critical to Disney Plus Hotstar’s growth in the India market,” MPA said.
Disney Plus ended 2020 with 30 million subscriptions in Asia (25 million India and the remainder in Indonesia, ANZ and Japan), MPA estimated. “Its subscribers in India are low-ARPU but the platform could secure 80-100 million subscribers in India if it can retain key sports rights and invest in local originals.

The launch of Disney Plus Hotstar in Indonesia has met with early success especially in terms of reach and paid subscribers,” the report said.

While subscriber growth will decelerate in 2021 and the production of new content will remain impacted by the pandemic in the first half of 2021, “the scale and velocity of investment in premium content is such that net new customer additions will remain robust over the medium term,” the report said.

Profitability should grow more rapidly than revenues and subscribers as online businesses scale. This is particularly true in larger markets such as Australia, China, Japan and Korea. In India and South East Asia the road to profitability may be longer, due to high levels of competition and low average revenues per user.